SCOR in Action: SAP Supply Chain Performance Management

SCOR in Action: SAP Supply Chain 

Performance Management 

© 2010 Supply Chain Council. ALL RIGHTS RESERVED. | < filename > | Slide 0 | 11 February 2011 

Greg Gilbert | Supply Chain Solution Principal

Agenda 

1. Why Supply Chain Performance Management 

2. Measurement and Metrics 

3. SAP Supply Chain Performance Management 

4. Path Forward 

© SAP 2010 / 1

Supply Chain Excellence is Imperative in Times of 

Economic Uncertainty 

• Supply-chain generally accounts for between 60% 

and 90% of all company costs 1 

Fortune-10 Company Supply- 

Chain Cost as % of Total 

Costs 2 

• A2%i improvement tin process efficiency i for supplychain 

processes has 3000% - 5000% the impact of a 

2% improvement in efficiency for… IT… HR… 

Finance 1 … Sales… 

GM 94% 

Ford 93% 

Conoco 90% 

Wal-Mart 90% 

• Decreasing spending by 5% raises net income by 

45% 4 , increasing sales by 5% raises net income only 

Chevron 

IBM 

88% 

77% 

by 5%. 

Exxon 75% 

Domestic Product) 3 

• In 2007, US business logistics costs rose to an all 

GE 63% 

time high of $1.4 trillion (10.1% of US nominal Gross 

1 Exclusive of Financial Services companies 

2 Source: Hoovers 2006 Financial Data, Supply-Chain Council 2006 SCM Benchmark data on SCM cost for discrete & process industries 

3 CSCMP 19 th Annual State of the Logistics Industry 

4 ASUG / SAP benchmarking 2007 

Focused initiatives in Supply Chain Management can result in 30-35% cost 

reductions, liberation of working capital, and revenue increases of 3-5% 

2

Supply Chain Performance Management 

Being efficient is no longer enough 

Supply Chain Reduce Supply Chain 

Costs Working Capital Reliability 

? ? ? 

Effectiveness = ??? 

CEO / CFO 

Inter-enterprise 

end-to-end 

processes 

DESIGN SOURCE MAKE STORE MOVE SELL SERVICE 

Strategic 

Tactical 

Collaborative Demand and Supply Planning 

Efficiency = 

VP Supply Chain 

Execution 

Manufacturing Network 

Planning & Execution 

Logistics and 

Fulfillment management 

Logistics Manager 

© SAP 2010 / 3 

SC Analyst


Improving Supply Chain Effectiveness 

Supply Chain 

Performance 

Management 

Supply Chain Reduce Supply Chain 

Costs Working Capital Reliability 

CEO / CFO 

strategic impact 

financial impact 

compliance impact 

Inter-enterprise 

end-to-end 

processes 

DESIGN SOURCE MAKE STORE MOVE SELL SERVICE 

Strategic 

Tactical 

Collaborative Demand and Supply Planning 


Execution 

Manufacturing Network 

Planning & Execution 

Logistics and 

Fulfillment management 



SC Analyst

Agenda 






Why Measurement Matters 

Dealing with Information Overload 

• Right measures drive right behavior 

• Right behavior drives performance 

• Pick metrics that matter 

• Tie metrics to action (and processes) 


Foundation: SCOR 

Supply Chain Operations Reference model 

SCPM 1st Level KPI’s 

Cash to Cash 

Cycle Time 

Order 

Fulfillment 

Cycle Time 

Perfect Order 

Fulfillment 

Cost of Goods 

Sold 


Management 

Costs 

Return on 

Working 

Capital 

Return on 


Fixed Assets 

PLAN 

SOURCE MAKE DELIVER RETURN 

http://www.supply-chain.org/ 


Putting It All Together 

360º View for Better Control Along Processes 

CEO / CFO 


Effectiveness 

+ 


Perfect Order 


Fulfillment 

+ 

Management Cost 

- 


Order 

Management Cost 

- 

Material 

Acquisition Cost 

Planning and 

Finance Cost 

Outbound 

Transportation Cost 

Finished Goods 

Warehouse Cost 

Customer 

Service Cost 

SC Analyst 

Fuel Cost Express Freight Returns Invoices Outstanding 


Agenda 







SAP BusinessObjects 


Demo

It’s not about fancy Dashboards 

Appearances may be deceiving 


It’s not about fancy Dashboards 

Need for full solutions instead 

• No business model, no metrics management, no content 

• Custom-built approach is expensive, risky, not sustainable 

• Consequences: Over budget, behind schedule, project failure 


Beyond SCOR and Dashboards 

1. Not just measurement; compare against goals and 

benchmarks 

2. Not just status-quo; what-if analysis to validate 

impact of lower level metrics against top-level 

targets 

3. Eliminate searching for issues; setup automated 

alerts when targets not met 

4. Save snapshots; create briefing books as part of 

standard management performance reviews 


Agenda 






Packaged apps: faster time to value 

At lower cost, lower project risk 

• Configure and extend 

• Set up users 

• Personalize 

• Gather requirements 

• Define business questions 

• Design and build data model 

• Design and build reports 

• Define metrics 

• Design and build dashboards 

• Design and build analytic workflows 

• Define business meta build 

• Define data staging and loading 

• Define scope 

• Identify best practices 

• Select components 

Build 

Time and 

Cost Savings 

• Configure and extend 

• Set up users 

• Personalize 

• Gather requirements 

• Define business questions 

Packaged Application 

(like SAP BO SCPM) 


Fast Time to Value 

Metrics Management Functionality 

• SCOR based 

• Best practices 

• Self-defined 


Get started with metrics that matter – 

Customer Centric 

C 2 

Customer 

Centric 

Forecast 

Accuracy 

Perfect Order 

Fulfillment 

Delivery 

Performance 

Order 

Fulfillment 

Cycle Time 

• The Opportunity – Improving Performance on Customer Centric 

Metrics 

∼ Focus: Identify the contributing factors to customer service performance 

∼ 

Benefit: Develop organizational understanding of how different 

organizational processes impact the supply chain’s customer centric 

performance. 

• Sample Business Scenario 

∼ A VP of Supply Chain tracks declining delivery performance over a period of time. 

∼ Upon further investigation, he learns that forecast accuracy for one product 

family is suspect. 

∼ A detailed d analysis then shows that t one important t input in the forecasting 

process- the customer forecast- has been missing for some time now.

Get started with metrics that matter – 

Enterprise Centric 

EC 

Enterprise 

Centric 

Return on 

Return on 


Supply Chain working Management 

Assets 

Capital 

Costs 

Cash To Cash 

Cycle 

Cost of Goods 

Sold 

• The Opportunity – Improving Performance on Enterprise Centric 

Metrics 

∼ 

∼ 

Focus: Identify the contributing factors to internal financial performance metrics 

Benefit: Develop organizational understanding of how the supply chain’s 

performance is contributes to the overall financial performance of the 

organization. 

• Sample Business Scenario 

∼ 

∼ 

∼ 

∼ 

The VP of Supply Chains tracks increasing supply chain costs over some time. 

Upon further investigation, he learns that the cost of transportation has been 

increasing. 

A further drill down into the data shows that for one customer, the sales team has 

been demanding air freight, impacting costs. 

Further analysis shows that one late shipment drove the unofficial mode change.

SAP BO SCPM Solution Summary 

Evaluate 

and 

Improve 

Receive pro-active alerts about deviations for 

performance targets, and better balance trade-off 

decisions for improved supply chain performance 

Identify and 

Analyze 

At any time, know your operational and related 

financial performance, and understand operational 

drivers affecting performance 

Model and 

Understand 

Comply with leading industry standards from 

performance management (SCOR), focusing on 

metrics that matter 

Collect 

Collect and collate data directly from operational 

processes, such as order-to-cash, from SAP- or non- 

SAP systems 


Key Points to remember 

Right measurement drives superior performance 

Pick the metrics that matter 

Tie metrics to business strategy 

Link metrics to business processes 

Pick a business process and go end-to-end 

Ensure everyone understands d the relationship between supply chain metrics 

and how those metrics impact each other 

Understand the root-causes of poor performance to determine corrective 

options and simulate impact of potential solutions 


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SCOR in Action: SAP Supply Chain Performance Management

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