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SCOR and SCC Overview - Supply Chain Council

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<strong>SCOR</strong> <strong>and</strong> <strong>SCC</strong> <strong>Overview</strong><br />

SCW Europe 2010<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 1 | November 2, 10


<strong>Supply</strong> <strong>Chain</strong><br />

It’s a<br />

SPEAR<br />

!<br />

It’s a<br />

FAN!<br />

It’s a<br />

SNAKE!<br />

It’s a<br />

TREE!<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 2 | November 2, 10<br />

It’s a<br />

WALL!<br />

It’s a<br />

ROPE!


Defining <strong>Supply</strong> <strong>Chain</strong><br />

Supplier processes<br />

Product/Portfolio Management<br />

Product Design<br />

DCOR<br />

<strong>Supply</strong> <strong>Chain</strong><br />

<strong>SCOR</strong> ®<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 3 | November 2, 10<br />

Sales & Support<br />

CCOR<br />

Customer processes


<strong>SCOR</strong>: A Process Framework<br />

• Process frameworks deliver the well-known concepts of business process<br />

reengineering, benchmarking, <strong>and</strong> best practices into a cross-functional<br />

framework<br />

› St<strong>and</strong>ard processes:<br />

Plan, Source, Make, Deliver, Return, Enable<br />

› St<strong>and</strong>ard metrics:<br />

Perfect Delivery, Cash Cycle Time, <strong>Supply</strong>-<strong>Chain</strong> Cost, etc<br />

› St<strong>and</strong>ard practices<br />

EDI, CPFR, Cross-Training, etc<br />

• Pre-defined relationships between processes, metrics <strong>and</strong> practices<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 4 | November 2, 10


End-to-End<br />

<strong>SCOR</strong> contains five key management process categories<br />

of activity which seamless link suppliers, enterprise<br />

supply-chains, <strong>and</strong> customers<br />

Deliver<br />

Suppliers’<br />

Supplier<br />

Source<br />

Make<br />

Supplier<br />

Deliver<br />

Return Return Return<br />

Plan<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 5 | November 2, 10<br />

Source Make Deliver Source Make Deliver<br />

Return Return<br />

Your Company<br />

Customer<br />

Internal or External Internal or External<br />

<strong>SCOR</strong> Model<br />

Return<br />

Source<br />

Return Return<br />

Customer’s<br />

Customer


Performance Metrics<br />

Customer<br />

Internal<br />

<strong>SCOR</strong> metrics: St<strong>and</strong>ard Level 1 Metrics<br />

Attribute Metric (level 1)<br />

Reliability Perfect Order Fulfillment<br />

Responsiveness Order Fulfillment Cycle Time<br />

Agility (Flexibility) <strong>Supply</strong> <strong>Chain</strong> Flexibility<br />

<strong>Supply</strong> <strong>Chain</strong> Adaptability †<br />

Cost <strong>Supply</strong> <strong>Chain</strong> Management Cost<br />

Cost of Goods Sold<br />

Assets Cash-to-Cash Cycle Time<br />

† upside <strong>and</strong> downside adaptability metrics<br />

Return on <strong>Supply</strong> <strong>Chain</strong> Fixed Assets<br />

Return on Working Capital<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 6 | November 2, 10


Best Practices<br />

Best practice: "A current, structured, proven <strong>and</strong> repeatable method for making<br />

a positive impact on desired operational results."<br />

› Current<br />

Must not be emerging <strong>and</strong> can not be antiquated<br />

› Structured<br />

Has clearly stated Goal, Scope, Process, <strong>and</strong> Procedure<br />

› Proven<br />

Success has been demonstrated in a working environment <strong>and</strong> can<br />

be linked to key metrics<br />

› Repeatable<br />

The practice has been proven in multiple environments.<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 7 | November 2, 10


<strong>Supply</strong> <strong>Chain</strong> Assets – Human Capital<br />

• <strong>Supply</strong> <strong>Chain</strong> Skills<br />

› Skill: Capacity to deliver pre-determined results with minimal<br />

input of time <strong>and</strong> energy<br />

› Experience: The knowledge or skill acquired by observation or<br />

active participation<br />

› Aptitude: A natural, acquired, learned or developed ability to<br />

perform a certain kind of work at a certain level.<br />

› Training: A particular skill or type of behavior learned through<br />

instruction over a period of time<br />

› Competency: The state or quality of being qualified, having the<br />

ability, to perform a specific role.<br />

• Skills Assessment<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 8 | November 2, 10


<strong>SCOR</strong> Hierarchy<br />

Level 1 Level 2 Level 3 Level 4 Level 5<br />

Scope Configuration Activity Workflow Transactions<br />

<strong>Supply</strong>-<strong>Chain</strong><br />

Source<br />

Differentiates<br />

Business<br />

Differentiates<br />

Complexity<br />

Defines Scope Differentiates<br />

Capabilities<br />

Framework<br />

Language<br />

S1<br />

Source<br />

Stocked Product<br />

Framework<br />

Language<br />

S1.2<br />

Receive Product<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 9 | November 2, 10<br />

Names Tasks Sequences Steps Links<br />

Transactions<br />

Links, Metrics,<br />

Tasks <strong>and</strong><br />

Practices<br />

Framework<br />

Language<br />

Job Details Details of<br />

Automation<br />

Industry or<br />

Company<br />

Specific<br />

Language<br />

EDI<br />

XML<br />

Technology<br />

Specific<br />

Language<br />

St<strong>and</strong>ard <strong>SCOR</strong> definitions Company/Industry definitions


Maps to Organizations<br />

Level 1 Level 2 Level 3 Level 4 Level 5<br />

Scope Configuration Activity Workflow Transactions<br />

<strong>Supply</strong>-<strong>Chain</strong><br />

Source<br />

CxO<br />

EvP, SVP<br />

Strategic<br />

Decision-Making<br />

Enterprise<br />

<strong>Supply</strong>-<strong>Chain</strong><br />

Requirements<br />

SVP<br />

VP<br />

S1<br />

Source<br />

Stocked Product<br />

Line of Business<br />

Management<br />

Operations<br />

Strategy<br />

S1.2<br />

Receive Product<br />

VP, Director<br />

Line Manager<br />

Activities<br />

Management<br />

Fine-Tuning<br />

Operations<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 10 | November 2, 10<br />

Manager<br />

Team Lead<br />

Team Lead<br />

Individuals<br />

Job Management Transaction<br />

Management<br />

Adjusting<br />

Process<br />

Performance<br />

EDI<br />

XML<br />

Tuning<br />

Technology<br />

Performance<br />

St<strong>and</strong>ard <strong>SCOR</strong> program Company/Industry implementation


The <strong>SCOR</strong> Project Roadmap<br />

Phase Name Deliverable Resolves<br />

Initial BUILD • Organizational Support Who is the sponsor?<br />

I DISCOVER<br />

II ANALYZE<br />

III MATERIAL<br />

IV WORK<br />

V IMPLEMENT<br />

• <strong>Supply</strong>-<strong>Chain</strong> Definition<br />

• <strong>Supply</strong>-<strong>Chain</strong> Priorities<br />

• Project Charter<br />

• Scorecard<br />

• Benchmark<br />

• Competitive Requirements<br />

• Geo Map<br />

• Thread Diagram<br />

• Disconnect Analysis<br />

• Transactions<br />

• Level 3, Level 4 Processes<br />

• Best Practices Analysis<br />

• Opportunity Analysis<br />

• Project Definition<br />

• Deployment Organization<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 11 | November 2, 10<br />

What will the program<br />

cover?<br />

What are the strategic<br />

requirements of your<br />

supply-chain?<br />

Initial Analysis – where<br />

are the problems?<br />

Final Analysis – where<br />

are the solutions?<br />

How to deploy?


The 16-Week <strong>SCOR</strong> Program<br />

Level 1<br />

Level 2<br />

Level 3<br />

Level 4<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 12 | November 2, 10<br />

<strong>and</strong> deploy


SUPPLY CHAIN ARCHITECTURE<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 13 | November 2, 10


Business Strategy<br />

• A product or Service for each Market or Segment<br />

Cost<br />

Quality<br />

Performance<br />

Innovation<br />

Product 1 Product 2<br />

Product 3 Product 4<br />

Style<br />

Br<strong>and</strong><br />

Market �<br />

Product �<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 14 | November 2, 10<br />

A B C D<br />

1 ✔<br />

2 ✔ ✔<br />

3 ✔ ✔<br />

4 ✔ ✔


<strong>Supply</strong> <strong>Chain</strong> Strategy<br />

• <strong>Supply</strong> <strong>Chain</strong> Competitive Attributes<br />

Customer<br />

Internal<br />

Attribute Strategy<br />

Reliability (RL) Consistently getting the orders right,<br />

product meets quality requirements<br />

Responsiveness (RS) The consistent speed of providing products/<br />

services to customers<br />

Agility (AG) The ability to respond to changes in the<br />

market (external influences)<br />

Cost (CO) The cost associated with managing <strong>and</strong><br />

operating the supply chain<br />

Assets (AM) The effectiveness in managing the supply<br />

chain’s assets in support of fulfillment<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 15 | November 2, 10


<strong>Supply</strong> <strong>Chain</strong> Strategy<br />

• <strong>Supply</strong> <strong>Chain</strong> Competitive Attributes<br />

Customer<br />

Internal<br />

Attribute Required Performance<br />

Reliability (RL)<br />

Responsiveness (RS)<br />

Agility (AG)<br />

Cost (CO)<br />

Assets (AM)<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 16 | November 2, 10<br />

S<br />

A<br />

A<br />

P<br />

P


<strong>Supply</strong> <strong>Chain</strong> Performance <strong>and</strong> Governance<br />

Metric My P A S Gap<br />

RL Perfect Order Fulfillment 82 74 81 88 6<br />

RS Order Fulfillment Cycle Time 6 10 6 3 --<br />

AG Flexibility 46 60 45 29 1<br />

CO SC Management Cost 5.1 9.5 6.7 3.9 --<br />

AM Cash-to-Cash Cycle Time 83 98 64 30 --<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 17 | November 2, 10


<strong>Supply</strong> <strong>Chain</strong> Performance <strong>and</strong> Diagnosis<br />

• Diagnostic metric relationships enable root causing<br />

Metric Level<br />

Perfect Order Fulfillment 1<br />

L > On-time 2<br />

L > In-Full 2<br />

L > Correct Items 3<br />

L > Correct Quantities 3<br />

L > Perfect Documentation 2<br />

L > Initial Quality 2<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 18 | November 2, 10


<strong>Supply</strong> <strong>Chain</strong> Configuration <strong>and</strong> Capabilities<br />

• High Level Material Flows <strong>and</strong> Practices<br />

• VMI<br />

• Kanban<br />

• Make-to-Order<br />

• S&OP<br />

• CPFR<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 19 | November 2, 10


<strong>Supply</strong> <strong>Chain</strong> Processes<br />

• Work <strong>and</strong> Information Flows<br />

mp3 Factory mp3 HQ Retail, inc.<br />

S1.1<br />

Schedule Prod.<br />

Deliveries<br />

Customer P.O. Delivery Commit<br />

D2.2<br />

Receive, Enter,<br />

Validate Order<br />

C.O. = Customer Order, Inv. = Inventory,<br />

P.O. = Purchase Order, Prod. = Product<br />

C.O.<br />

D2.3<br />

Reserve Inv.<br />

Calculate Date<br />

C.O.<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 20 | November 2, 10<br />

SOURCE<br />

S1<br />

Source Stocked<br />

Product<br />

S1.1:<br />

Schedule Product<br />

Deliveries<br />

S1.2:<br />

Receive Product<br />

S1.3:<br />

Verify Product<br />

S1.4:<br />

Transfer Product<br />

S1.5:<br />

Authorize Supplier<br />

Payment<br />

S2<br />

Source<br />

Make-to-Order<br />

Product<br />

S2.1:<br />

Schedule Product<br />

Deliveries<br />

S2.2:<br />

Receive Product<br />

S2.3:<br />

Verify Product<br />

S2.4:<br />

Transfer Product<br />

S2.5:<br />

Authorize Supplier<br />

Payment<br />

Enable Source<br />

ES.1: ES.2: ES.3:<br />

Manage Assess Supplier Maintain<br />

Sourcing<br />

Business Rules<br />

Performance Source Data<br />

ES.6:<br />

Manage<br />

Incoming<br />

Product<br />

ES.7:<br />

Manage<br />

Supplier<br />

Network<br />

S3<br />

Source<br />

Engineer-to-Order<br />

Product<br />

S3.1:<br />

Identify Sources of <strong>Supply</strong><br />

S3.2:<br />

Select Final Supplier(s)<br />

<strong>and</strong> Negotiate<br />

S3.3:<br />

Schedule Product<br />

Deliveries<br />

S3.4:<br />

Receive Product<br />

S3.5:<br />

Verify Product<br />

S3.6:<br />

Transfer Product<br />

S3.7:<br />

Authorize Supplier<br />

Payment<br />

ES.4:<br />

Manage<br />

Product<br />

Inventory<br />

ES.8: ES.9:<br />

Manage Manage<br />

Import/Export <strong>Supply</strong> <strong>Chain</strong><br />

Requirements Source Risk<br />

Inter-Company P.O.<br />

ES.5:<br />

Manage<br />

Capital Assets<br />

ES.10:<br />

Manage<br />

Supplier<br />

Agreements<br />

MAKE<br />

M1<br />

Make-to-Stock<br />

M1.1:<br />

Schedule Production<br />

Activities<br />

M1.2:<br />

Issue Product<br />

M1.3:<br />

Produce <strong>and</strong> Test<br />

M1.4:<br />

Package<br />

M1.5:<br />

Stage Product<br />

M1.6:<br />

Release Product<br />

to Deliver<br />

M1.7:<br />

Waste Disposal<br />

S2.1<br />

Schedule Prod.<br />

Deliveries<br />

D1.2<br />

Receive, Enter,<br />

Validate Order<br />

M2<br />

Make-to-Order<br />

M2.1:<br />

Schedule Production<br />

Activities<br />

M2.2:<br />

Issue Product<br />

M2.3:<br />

Produce <strong>and</strong> Test<br />

M2.4:<br />

Package<br />

Enable Make<br />

EM.1:<br />

Manage<br />

Production<br />

Rules<br />

EM.2:<br />

Manage<br />

Production<br />

Performance<br />

EM.6: EM.7:<br />

Manage Manage<br />

Transportation Production<br />

Network<br />

M2.5:<br />

Stage Product<br />

M2.6:<br />

Release Finished<br />

Product to Deliver<br />

M2.7:<br />

Waste Disposal<br />

EM.3:<br />

Manage Make<br />

Information<br />

EM.8:<br />

Manage<br />

Production<br />

Regulatory<br />

Compliance<br />

M3<br />

Engineer-to-Order<br />

M3.1:<br />

Finalize Engineering<br />

M3.2:<br />

Schedule Production<br />

Activities<br />

M3.3:<br />

Issue Product<br />

M3.4:<br />

Produce & Test<br />

M3.5:<br />

Package<br />

M3.6:<br />

Stage Product<br />

M3.7:<br />

Release Product<br />

to Deliver<br />

M3.8:<br />

Waste Disposal<br />

EM.4:<br />

Manage<br />

In-Process<br />

Products (WIP)<br />

EM.9:<br />

Manage<br />

<strong>Supply</strong> <strong>Chain</strong><br />

Make Risk<br />

EM.5:<br />

Manage<br />

Equipment <strong>and</strong><br />

Facilities<br />

DELIVER<br />

D1<br />

Deliver<br />

Stocked<br />

Product<br />

D1.1:<br />

Process Inquiry &<br />

Quote<br />

D1.2:<br />

Receive, Enter &<br />

Validate Order<br />

D1.3:<br />

Reserve Inventory &<br />

Determine Delivery<br />

Date<br />

D1.4:<br />

Consolidate Orders<br />

D1.5:<br />

Build Loads<br />

D1.6:<br />

Route Shipments<br />

D1.7:<br />

Select Carriers &<br />

Rate Shipments<br />

D1.8:<br />

Receive Product from<br />

Source or Make<br />

D1.9:<br />

Pick Product<br />

D1.10:<br />

Pack Product<br />

D1.11:<br />

Load Product<br />

& Generate<br />

Shipping Docs<br />

D1.12:<br />

Ship Product<br />

D1.13:<br />

Receive & Verify<br />

Product by Customer<br />

D1.14:<br />

Install Product<br />

D1.15:<br />

Invoice<br />

D2<br />

Deliver<br />

Make-to-<br />

Order<br />

D2.1:<br />

Process Inquiry &<br />

Quote<br />

D2.2:<br />

Receive, Configure,<br />

Enter & Validate<br />

Order<br />

D2.3:<br />

Reserve Resources &<br />

Determine Delivery<br />

Date<br />

D2.4:<br />

Consolidate Orders<br />

D2.5:<br />

Build Loads<br />

D2.6:<br />

Route Shipments<br />

D2.7:<br />

Select Carriers &<br />

Rate Shipments<br />

D2.8:<br />

Receive Product<br />

from Source or Make<br />

D2.9:<br />

Pick Product<br />

D2.10:<br />

Pack Product<br />

D2.11:<br />

Load Product &<br />

Generate Shipping<br />

Docs<br />

D2.12:<br />

Ship Product<br />

D2.13:<br />

Receive & Verify<br />

Product by Customer<br />

D2.14:<br />

Install Product<br />

D2.15:<br />

Invoice<br />

Enable Deliver<br />

ED.1: ED.2:<br />

Manage Assess Delivery<br />

Deliver<br />

Business Rules<br />

Performance<br />

ED.6: ED.7:<br />

Manage Manage<br />

Transportation Product Life<br />

Cycle<br />

ED.3:<br />

Manage<br />

Deliver<br />

Information<br />

D3<br />

Deliver<br />

Engineer-to-<br />

Order<br />

Product<br />

D3.1:<br />

Obtain & Respond to<br />

RFP/RFQ<br />

D3.2:<br />

Negotiate & Receive<br />

Contract<br />

D3.3:<br />

Enter Order, Commit<br />

Resources & Launch<br />

Program<br />

D3.4:<br />

Schedule Installation<br />

D3.5:<br />

Build Loads<br />

D3.6:<br />

Route Shipments<br />

D3.7:<br />

Select Carriers &<br />

Rate Shipments<br />

D3.8:<br />

Receive Product<br />

from Source or Make<br />

D3.9:<br />

Pick Product<br />

D3.10:<br />

Pack Product<br />

D3.11:<br />

Load Product &<br />

Generate Shipping<br />

Docs<br />

D3.12:<br />

Ship Product<br />

D3.13:<br />

Receive & Verify<br />

Product by Customer<br />

D3.14:<br />

Install Product<br />

D3.15:<br />

Invoice<br />

ED.4:<br />

Manage<br />

Finished<br />

Product<br />

Inventories<br />

ED.8: ED.9:<br />

Manage Manage<br />

Import/Export <strong>Supply</strong> <strong>Chain</strong><br />

Requirements Deliver Risk<br />

D4<br />

Deliver<br />

Retail<br />

Product<br />

D4.1:<br />

Generate Stocking<br />

Schedule<br />

D4.2:<br />

Receive Product at<br />

the Store<br />

D4.3:<br />

Pick Product from<br />

Backroom<br />

D4.4:<br />

Stock Shelf<br />

D4.5:<br />

Fill Shopping<br />

Cart<br />

D4.6:<br />

Checkout<br />

D4.7:<br />

Deliver <strong>and</strong>/or<br />

install<br />

ED.5:<br />

Manage<br />

Deliver Capital<br />

Assets<br />

D1.3<br />

Reserve Inv.<br />

Calculate Date


<strong>Supply</strong> <strong>Chain</strong> Architecture <strong>Overview</strong><br />

<strong>Supply</strong> <strong>Chain</strong><br />

Strategy<br />

<strong>Supply</strong> <strong>Chain</strong><br />

Performance<br />

Business Strategy<br />

<strong>Supply</strong> <strong>Chain</strong><br />

Configuration<br />

<strong>Supply</strong> <strong>Chain</strong><br />

Processes<br />

St<strong>and</strong>ard for <strong>Supply</strong> <strong>Chain</strong>: <strong>SCOR</strong> ®<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 21 | November 2, 10<br />

<strong>Supply</strong> <strong>Chain</strong><br />

Assets<br />

<strong>Supply</strong> <strong>Chain</strong><br />

Skills


<strong>SCOR</strong><br />

CASE IN POINT<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 22 | November 2, 10


ADVA Optical Networking<br />

• The Challenge<br />

• €370.2M Revenue Enterprise1<br />

• Rapid growth in dem<strong>and</strong> for storage, voice &<br />

data transport<br />

• Focus on capturing this growth while<br />

maintaining profitability<br />

• Needed to identify inventory drivers <strong>and</strong><br />

optimize inventory levels to enable ADVA to<br />

reach inventory reduction targets whilst<br />

improving customer satisfaction in Order<br />

Fulfillment Cycle Time (OFCT) <strong>and</strong> On-time<br />

Delivery (OTD)<br />

• Created a transformation plan that would<br />

allow ADVA to proactively plan, drive <strong>and</strong><br />

manage the inventory levels <strong>and</strong> better<br />

achieve the balance of cost <strong>and</strong> service<br />

1 Hoovers.com<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 23 | November 2, 10<br />

• The Solution<br />

• Using <strong>SCOR</strong>, ADVA identified performance<br />

gaps in key metrics between current <strong>and</strong><br />

required to reach parity status<br />

• Also using <strong>SCOR</strong>, identified process<br />

disconnects, drivers of inventory <strong>and</strong><br />

projects required for improvement<br />

• Grouped <strong>and</strong> prioritized proposed projects<br />

based on potential impact <strong>and</strong> amount of<br />

effort/risk<br />

• Agreed to project list including:<br />

› New S&OP Process<br />

› Supplier scorecards <strong>and</strong> quarterly<br />

business reviews with suppliers,<br />

› Information transparency <strong>and</strong> others<br />

• Benefits Achieved<br />

• Gross inventory reduced from €59 million to<br />

€38 million in 10 months<br />

• Inventory days of supply reduced 47% from<br />

initial scorecard


Core Value 1<br />

• Improvement of operating results of an average of 3% in<br />

the initial <strong>SCOR</strong> implementation phase by means of cost<br />

reduction <strong>and</strong> improvement in customer services<br />

• Increase in profitability (between 2x <strong>and</strong> 6x) with regards<br />

to project investments costs within first 12 months of<br />

implementation<br />

• Reduction in IT costs through minimizing system<br />

customization <strong>and</strong> making better use of st<strong>and</strong>ard<br />

functionality<br />

• Continuous actualization of process change portfolio by<br />

continuous conversion of <strong>Supply</strong> <strong>Chain</strong> improvements<br />

with the objective of increasing annual profits by 1% to<br />

3%<br />

1 Poluha (2007) Application of the <strong>SCOR</strong> Model in <strong>Supply</strong> <strong>Chain</strong> Management New York, USA<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 24 | November 2, 10


Douglas Pharmaceuticals Limited<br />

• The Challenge<br />

• Significant growth from 2003 to 2007<br />

› 300% increase in new product development<br />

› 122% growth in production volume<br />

› 61% growth in employees<br />

• Created the “perfect storm” of supply chain<br />

issues<br />

• Converted to new ERP in August 2006<br />

• “Burning Platform”:<br />

› Customer DIFOT (Export) Down to 20%<br />

› Product Lead Times Up to 8 months<br />

› New Product Introduction Lead Times Up to 9<br />

months<br />

› Stock Turns Down to 2.1x<br />

› YTD Sales Down 30%<br />

• Available Spare Capacity Unknown<br />

• Customer complaints impact new licensing<br />

opportunities <strong>and</strong> future earnings growth<br />

• Impact on 2007/8 earnings <strong>and</strong> shareholder<br />

value:<br />

› EBIT (15.9%)<br />

› Enterprise Value ($25.2M)<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 25 | November 2, 10<br />

• The Solution<br />

• “Turning point” for organization – DIY not<br />

always best<br />

• Board m<strong>and</strong>ated review at its April 2007<br />

meeting<br />

• Process established to evaluate options<br />

• SCE program initiated using <strong>SCOR</strong><br />

• 17 week SCE program between May <strong>and</strong><br />

September 2007


Douglas Pharmaceuticals Limited – continued<br />

• The Solution<br />

• Benchmarking <strong>and</strong> Defect Analysis:<br />

› Established emphasis on reliability <strong>and</strong><br />

supply chain cost<br />

› Confirmed size <strong>and</strong> relative importance<br />

of current performance gaps<br />

› Provided early direction on root causes<br />

› Generated basis for calculating<br />

opportunity cost<br />

› Created immediate visibility over<br />

supply chain performance<br />

› Built confidence to move onto Phase<br />

Two<br />

• 24 problem areas impacting reliability<br />

<strong>and</strong> COG<br />

• Portfolio of 50 improvements<br />

addressed key problem areas<br />

• “Drive <strong>Chain</strong>” now forms basis of an<br />

enterprise wide transformation<br />

program<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 26 | November 2, 10<br />

• Benefits Achieved<br />

Metric Improvement<br />

Sales per<br />

employee<br />

20%<br />

COGS % 10%<br />

Inventory days<br />

of supply<br />

Cash to cash<br />

cycle (days)<br />

Shareholder<br />

returns<br />

20%<br />

15%<br />

$4.1 million<br />

IRR 300%<br />

EV Uplift= $12.1m


Typical Potential Improvements 1<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 27 | November 2, 10<br />

Area Improvement<br />

Raw materials purchase cost 25%<br />

Cost of Distribution 35%<br />

Total resource deployed 50%<br />

Manufacturing space 50%<br />

Investment in Tooling 50%<br />

Order cycle time 60%<br />

New product development cycle 60%<br />

Inventory 70%<br />

Paperwork <strong>and</strong> Documentation 80%<br />

Quality Defects 100%<br />

1 Hughes & Michels (1998) Transform your supply chain. Releasing value in business. London, UK


SAAB AB<br />

• Challenge<br />

• US$3.1B Aerospace Technology<br />

Enterprise1<br />

• Three strategic business segments:<br />

aeronautics, defense <strong>and</strong> security<br />

solutions, systems <strong>and</strong> products<br />

• Challenged to execute profitable <strong>and</strong><br />

customer adapted logistics intensive<br />

businesses<br />

› The degree of coordination of<br />

logistics operations highly impact<br />

Saabs cost level for logistics<br />

› Coordination enables CEL<br />

processes to ensure delivery to<br />

customers dem<strong>and</strong>s<br />

• Needed to build competitive<br />

operations, planning, logistics, <strong>and</strong><br />

support<br />

• To do so, wanted to move to a full<br />

1 lifecycle-based Hoovers.com<br />

support concept<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 28 | November 2, 10<br />

• The Saab Common Solution<br />

• One backbone system (today based<br />

on ERP <strong>and</strong>/or Best of Breed)<br />

• Cross-functional collaboration <strong>and</strong><br />

common trust<br />

• Increased Interoperability<br />

• Align SCM Strategy with Corporate<br />

Strategy<br />

• Key Enablers<br />

› Common <strong>Supply</strong> <strong>Chain</strong> Frameworks<br />

<strong>and</strong> Roadmaps<br />

› St<strong>and</strong>ardization<br />

› Codification<br />

› Information Systems


SAAB Coordinated Effective Logistics (CEL)<br />

• Solution<br />

• Step by step approach - no “big bang”<br />

• Multiple supply chains <strong>and</strong> methods<br />

• Lack of structured methods <strong>and</strong> processes<br />

• Knowledge tied to individuals<br />

• Lack of information sharing<br />

• Use of the <strong>SCOR</strong> model<br />

› Common definitions <strong>and</strong> process mapping<br />

› Sustainable <strong>and</strong> structured methodology<br />

being used as framework for realization of<br />

all logistics <strong>and</strong> SCM activities within<br />

Project CEL throughout all of its phases;<br />

from cradle to the grave<br />

• Project management<br />

• Change management<br />

• Engineering technique<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 29 | November 2, 10<br />

• Benefits Achieved<br />

• Creating a Saab Common Logistics <strong>and</strong><br />

<strong>Supply</strong> <strong>Chain</strong> Management Framework<br />

› Delivering incremental capabilities<br />

› Using <strong>SCOR</strong> Methodology, Processes <strong>and</strong><br />

Metrics hierarchy<br />

• Initial business cases have identified<br />

savings of 73 FTEs <strong>and</strong> a total of US$15M


Raytheon IDS<br />

• The Challenge<br />

• US$4.7B subdivision of US$23.1B Defense<br />

Services Provider1<br />

• Rapid growth but antiquated processes <strong>and</strong><br />

procurement focus in supply chain left IDS<br />

facing non-competitive operating costs<br />

• No skills within existing team to background <strong>and</strong><br />

skills for transformational change required<br />

1 Hoovers.com<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 30 | November 2, 10<br />

• The Solution<br />

• <strong>SCOR</strong>/Six-Sigma program assessing all supply<br />

chain processes within IDS, with focus all<br />

<strong>SCOR</strong> process areas<br />

• 8550 people within Raytheon IDS, <strong>and</strong> 7600<br />

supplier partners went through transformation<br />

for accomplishing five key challenges:<br />

› Improving world-class performance<br />

› Connecting every employee to the business<br />

› Creating purposeful, collaborative partnerships<br />

› Accelerating top-line, double-digit growth<br />

› Achieving predictable, best-in-class bottom-line<br />

performance<br />

• Benefits Achieved<br />

• 37 Percent reduction in headcount but increase<br />

of college-educated population to 66%<br />

• 75% reduction in transactional processing for<br />

material acquisition<br />

• 25% improvement in SC Cost-to-Sales<br />

• $57M in bottom-line savings<br />

• 98% supplier conformance to contract


Comparative Data 1<br />

Improvement Area Range<br />

Delivery performance 16% - 28%<br />

Inventory Cost Reduction 25% - 60%<br />

Reduction in order fulfillment cycle time 30% - 50%<br />

Improvement to forecast accuracy 25% - 80%<br />

Increase in overall productivity 10% - 16%<br />

Lower supply chain costs 25% - 50%<br />

Improvement of fill rates 20% - 30%<br />

Improved capacity realization 10% - 20%<br />

1 Stephens (2000) 1997 Comparative Study Pittsburg, USA<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 31 | November 2, 10


SASOL <strong>Supply</strong> <strong>Chain</strong> Optimization<br />

• The Challenge<br />

• US$16B annual South African Petrochemical<br />

Concern 1<br />

• Embarked on <strong>Supply</strong> <strong>Chain</strong> Optimization to<br />

identify synergies <strong>and</strong> improvement<br />

opportunities across multiple business units<br />

• Complex changing political environment <strong>and</strong><br />

introduction of substantial Managerial class<br />

without deep experience<br />

1 Hoovers.com<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 32 | November 2, 10<br />

• The Solution<br />

• The SASOL <strong>Supply</strong> <strong>Chain</strong> Optimization Journey<br />

• Awareness – identified <strong>SCOR</strong> as a tool (2004)<br />

• Embarked on <strong>SCOR</strong> pilot project – tackling<br />

problem area to show benefits <strong>and</strong> underst<strong>and</strong><br />

process<br />

• First in-house project (to build internal success)<br />

• Approval for permanent Center of Excellence<br />

(CoE) competency<br />

• Prioritization of supply chain projects (project<br />

dem<strong>and</strong> exceeds supply)<br />

• Project 2, 3, 4…..X<br />

• Embraced “The <strong>SCOR</strong> Way” (2007)<br />

• Benefits Achieved<br />

• Ongoing CoE for supply chain optimization<br />

• Sample project generated IRR of 139% over the<br />

project lifetime<br />

• Estimated US$1B cost improvements over 3<br />

year period


Even
More
Companies
<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 33 | November 2, 10<br />

$200M Cost Improvements Single<br />

Division<br />

US$2.3B Savings supported with<br />

Merger<br />

$5B Working Capital<br />

$66M Revenue/Inventory<br />

€2M Improvements Single Division<br />

(Peroxides)


SUPPLY CHAIN COUNCIL<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 34 | November 2, 10


<strong>SCC</strong>: An independent, non-profit global association<br />

• Formed in 1996 to create <strong>and</strong> evolve a st<strong>and</strong>ard industry process<br />

reference model of the supply chain for the benefit of helping companies<br />

rapidly <strong>and</strong> dramatically improve supply chain operations<br />

• <strong>SCC</strong> has established the supply chain world’s most widely accepted<br />

framework – the <strong>SCOR</strong>® process reference model – for evaluating <strong>and</strong><br />

comparing supply chain activities <strong>and</strong> their performance<br />

› It can be used to describe supply chains that are very simple or very<br />

complex using a common set of definitions <strong>and</strong> enabling a common<br />

underst<strong>and</strong>ing<br />

› It lets companies quickly determine <strong>and</strong> compare the performance of<br />

supply chain <strong>and</strong> related operations within their company or against<br />

other companies<br />

• <strong>SCC</strong> continually advances its tools <strong>and</strong> educates members about how<br />

companies are capitalizing on those tools<br />

› With membership open to all interested organizations<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 35 | November 2, 10


Global Scope With Over 800 Member Organizations<br />

North<br />

America<br />

Member Distribution<br />

China<br />

Also developing chapters in<br />

India <strong>and</strong> the Middle East<br />

Australia/<br />

New<br />

Zeal<strong>and</strong><br />

Europe<br />

South Africa<br />

Latin America<br />

Southeast<br />

Asia<br />

Japan<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 36 | November 2, 10<br />

Government<br />

SME<br />

End User<br />

Enabling Technology<br />

Consultant<br />

Non-Profit/Academic<br />

Member Affiliation<br />

0% 10% 20% 30% 40% 50%


Industry Membership Scope<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 37 | November 2, 10


SCM Asset Returns: Superior Valuation<br />

• Comparison
of
Fortune‐1000
<strong>Council</strong>

member
company
share
<br />

price
aggregate
growth
from
2003
–
present
to
S&P
500
<strong>and</strong>
<br />

DOW
indices.
<br />

• Growth
inflected
aLer
2
years,
<strong>and</strong>
the
spread
between
<strong>SCOR</strong>
<br />

index
companies
<strong>and</strong>
other
industrials
has
grown
to
almost
30
<br />

points.
<br />

• Growth
is
increasing
exponenPally:
Compound
interest
on
SC
<br />

performance.
<br />

• Correlates
<strong>SCC</strong>
Membership/<strong>SCOR</strong>
investments
with
<br />

Shareholder
value.
<br />

• Same
paSern
evident
in
FTSE‐100,
DAX,
NIKKEI
<strong>and</strong>
other
<br />

indices.
<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 38 | November 2, 10


<strong>SCC</strong> membership accelerates a company’s use of –<strong>and</strong><br />

benefits from – <strong>SCOR</strong> <strong>and</strong> related models<br />

Reference models,<br />

benchmarking, tools<br />

research <strong>and</strong> help from<br />

<strong>SCOR</strong> experts<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 39 | November 2, 10<br />

Training, certification,<br />

career development <strong>and</strong><br />

volunteer opportunities<br />

Chapters, events <strong>and</strong><br />

forums to share <strong>SCOR</strong> <strong>and</strong><br />

supply chain knowledge<br />

<strong>and</strong> experience


Member benefits – Unlimited Employee Access to<br />

Resources<br />

<strong>SCOR</strong> A supply chain process reference model<br />

containing over 200 process elements, 550<br />

metrics, 500 best practices, <strong>and</strong> 200 skills<br />

classifications including risk <strong>and</strong> environmental<br />

management
<br />

Related<br />

Frameworks<br />

Additional process reference models such as<br />

CCOR (customer chain) <strong>and</strong> DCOR (design<br />

chain)<br />

<strong>SCOR</strong>mark Benchmarking of supply chain performance against industry peers<br />

Research Ongoing research on supply chain processes, practices, metrics<br />

<strong>and</strong> skills both globally <strong>and</strong> by industry <strong>and</strong> geographic region<br />

Tools Templates, website, software <strong>and</strong> methods developed <strong>and</strong><br />

contributed by volunteer <strong>SCC</strong> working groups as well academics<br />

<strong>and</strong> third party providers<br />

Publications Case studies, articles, conference proceedings <strong>and</strong> newsletters<br />

Expert<br />

Network<br />

Access to staff, trainers <strong>and</strong> advisors to coach individuals <strong>and</strong><br />

teams in use of <strong>SCOR</strong><br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 40 | November 2, 10


Member benefits – Individual Capability Development<br />

Training Public <strong>and</strong> in-house training courses on<br />

the <strong>SCOR</strong> framework, its implementation,<br />

CCOR <strong>and</strong> DCOR models <strong>and</strong> more<br />

Certification Individual Employee <strong>SCOR</strong> Professional<br />

certification on underst<strong>and</strong>ing of, <strong>and</strong><br />

ability to use, the <strong>SCOR</strong> model as well as<br />

<strong>SCOR</strong> Academic certification for those<br />

entering the workforce from school<br />

Volunteering Participation on numerous committees <strong>and</strong><br />

working groups to develop new models,<br />

tools <strong>and</strong> practices in supply chain<br />

management<br />

Career<br />

Development<br />

Skills identification, career path<br />

identification, online job postings of<br />

positions requiring <strong>SCOR</strong> knowledge, <strong>and</strong><br />

in-person member networking<br />

opportunities<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 41 | November 2, 10


Member benefits – Knowledge Networks<br />

Chapters Chapter meetings, networks <strong>and</strong> materials<br />

in local languages discussing supply chain<br />

issues of greatest regional interest<br />

Events Frequent webinars (over 80 archived for<br />

members) <strong>and</strong> annual regional conferences<br />

such as <strong>Supply</strong>-<strong>Chain</strong> World<br />

Forums Virtual <strong>and</strong> in-person discussion forums for<br />

networking <strong>and</strong> problem-solving among<br />

communities of common interest (such as<br />

industry special interest groups)<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 42 | November 2, 10


For More Information<br />

W: WWW.SUPPLY-CHAIN.ORG<br />

E: INFO@SUPPLY-CHAIN.ORG<br />

T: +1 202 962 0440<br />

© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 43 | November 2, 10

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