Gardner - Supply Chain Performance Management at the ...

Supply Chain Performance 

Management at the 

Department of Veterans Affairs 

Using a SCOR Baseline 

Nelson Gonzalez 

Strategic Sourcing Program Manager 

Office of Acquisition & Logistics Programs & Policy 

Department of Veterans Affairs 

Brian K. Frank 

Associate 

Booz|Allen|Hamilton, Inc. 

Brian L. Shaw 

Associate 


Supply Chain World North America – April 4, 2012 

© 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Supply Chain Perf. Mgmt. at VA | Slide 1 | 28 March 2012

Table of Contents 

VA Supply Chain Transformation 

SCOR Baseline 

Supply Chain Performance Metrics 

Prototype Supply Chain Dashboard 

Supply Chain Performance Management Framework 


We have an obligation to provide assistance for Veterans for their 

entire lives. The size and complexity of the supply chain to support 

this network dwarfs any other government or commercial organization 

4.1 million Veterans & survivors receiving compensation & pension benefits (end of FY10) 

45.8 billion in active compensation & pension benefit accounts (end of FY10) 

8 million Veterans enrolled in healthcare programs 

13 million bed days of care (FY10) 1 

75 million outpatient visits (FY10) 

111,800 interments in FY10 

- - - - - - 

16.3 million items consumed 4 

5 major commodity groups 

1.3 million contract actions 2 

$17.4B in annual spend 

174,722 contracts 3 

27,176 suppliers 3 

5000 PMs/COTRs 

5500 logistics staff 

3000 contracting officers 

6 leaders of contracting 

$12.7B value of equipment 5 

366 million hours of direct labor 1 

- - - - - - 

56 Regional Benefit Offices, 350 Local Offices & Intake Sites 

153 Medical Centers, 807 Outpatient Clinics, 288 Vet Centers 

3.1 million gravesites and 131 national cemeteries in 39 states 

© 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Supply Chain Perf. Mgmt. at VA | Slide 3 | 28 March 2012 

Sources: 1-DSS; 2-FPDS (does not include purchases

VA Supply Chain Management Transformation 2012 - 2015 

Workforce Development 

Supply Chain Performance Dashboard 

Technology Integration 

Strategic Sourcing / 

Acquisition Savings 

GS1 Data 

Standardization 

Process Improvement / 

Inventory Reduction 

Supply Chain 

Governance Board 

Supplier Relationship 

Transformation 




SCOR Baseline 





We conducted interviews and collected data from various sources to 

help define the baseline, assess the supply chain and ultimately, 

recommend a performance management strategy 

Data Collection 

SCOR Project Approach 

Deliverables 

SCOR 

Process/Metrics 

VA OA&L Functional 

Interviews 

Booz Allen Supply Chain/ 

Logistics Expertise 

VA Procurement 

Reform Task Force Report 

Current VA 

Organization Charts 

VA OA&MM 2006-2010 

Strategic Plan 

VA 2011 Budget 

PwC Supply Chain 

Transformation Study 

VA Handbook 

7002 

VA’s “13 Greatest 

Challenges” 

VHA CP&LO 

Interviews 

NCA Functional 

(Logistics) Interview 

OAL and VHA 

Resource Libraries 


Baseline 


Maturity Assessment 

Performance 

Measurement 

Strategy 

Enable Supply Chain 

VAAA 


SDC 

P 

EP ES 

OAL 

MBR 

IT 

VACO 

Center for 

Acquisition 

Innovation 

CFM 

Med/ 

Surg HCS 


Measurement Framework 

D 

R 

Mission, Vision, 

Goals 

SCOR Framework 


Measures 

1. Define Scope 

2. Design 

ES S 

ER 

National Acquisition 

Center 

Technical Acquisition 

Center 

Suppliers 

Pharm 

Nutrition 

PLANNING AND EXECUTION 

Enablers 


Management 

IT/Data 

Collection and 


Production 

Risk 


Denver 

Acquisition 

and Logistics 

Center 

. 

Inventory 




Distribution/ 

Transportation 

Infrastructure 


S 

Regional 

Contract Center 

S 

Veterans 

Procurement 

Returns/ Retrograde 

Customer 

Relations 


SAO-E 

SAO-C 

SAO-W 

VHA 

Product Lifecycle 


P 

ES EP 

VBA 

OAL 

NCA 

S 

P 

M 

R 

Administrations 

Benefit Offices/ 

Centers 

OAL 

Hospitals/ 

Cemeteries 

Clinics 

D 

Human Resources 


Service Providers 

3. Develop & Test 

4. Implement 

OAL Performance 

Measurement Dashboard 


The existing VA supply chain management construct and doctrine 

were then compared to standard Supply Chain Operations 

Reference-model (SCOR) processes and metrics for further analysis 

Plan 

Deliver 

Source 

Make 

Deliver 

Source 

Make 

Deliver 

Source 

Make 

Deliver 

Source 

Source: SCC 

Return Return 

Return Return Return Return Return Return 

Suppliers’ 

Supplier 

Supplier 

VA 

Acquisition and Logistics 

Service 

Providers 

Veterans 

SCOR takes the segments of a supply chain, shows the players within each segment and the processes they perform, 

and then shows the interrelationships of these processes. 

There is a material flow, an information flow, and a cash flow associated with these processes. 

SCOR provides… 

Standard processes: 

Plan, Source, Make, Deliver, Return, Enable 

Standard metrics: 

Perfect Order Delivery, Supply-Chain Cost, etc. 

Best practices: 

EDI, CPFR, etc. 

Pre-defined relationships among processes, 

metrics and practices 

SCOR allows… 

Common supply chain terminology that 

translates across industries and organizations, 

which permits: 

– Meaningful benchmarking with other 

organizations 

– Common metrics for performance assessment 

and comparison 

– Incorporation of industry best practices to 

improve supply chain performance 


In the baseline, we identified the customers and suppliers as well as 

the products required by the customers to define the supply chains 

Who are the stakeholders 

What are their responsibilities 

What processes are used 

Service Provider Profiles 

RACI Matrix 

What do we procure for 

our customers 

Supply Chain Management Scope 

Which customers require what products 

Supply Chain Definition Matrix 


Understanding organizational supply chain relationships and 

hierarchical process linkages are key to identifying performance 

measurement dependencies 

Enable Supply Chain 

P = Plan 

S = Source 

M = Make 

D = Deliver 

R = Return 

E = Enable 

VA Acquisition 

Academy 

Transactions 

Formal Relationships 

S 

R 

Supply 

Distribution 

Center 

P 

EP ES 

OAL 

Marketing & 

Business 

Relationships 

Pharm 

IT 

ES S 

ER 

VACO 

ES S 

ER 

Strategic 

Acquisition 

Center 

D 

R 

Center for 

Acquisition 

Innovation 

Suppliers 

Nutrition 

CFM Med/ 

Surg HCS 

National Acquisition 

Center 

ES S 

ES S 

ER 

ER 

Technical Acquisition 

Center 

ES 

S 

Denver ER 

Acquisition 

and Logistics 

Center 

M 

SAO-E 

SAO-C 

SAO-W 

ES S 

ER 

Regional 

Contract Center 

S 

Veterans 

VHA 

P 

ES EP 

VBA 

OAL 

NCA 

S 

P 

M 

R 

Administrations 

Service Providers 

Benefit Offices/ 

Centers 

OAL 

Medical Centers/ Cemeteries 

Clinics 

D 


The medical supply chains are enabled by prime vendor contracts, 

as well as, national and local contracts 

Veterans 

GOODS and SERVICES 

$$$/POLICY/GUIDANCE 

INFORMATION and REQUIREMENTS 

Oversight 

Requests 

Requirements 


The Supply Chain Maturity Assessment is designed to provide a 

diagnostic approach to improving supply chain operations 

Supply Chain Maturity Model Process 

Benefits 

Best practice assessment for 

each supply chain capability 

Aligned with SCOR framework 

Booz Allen’s Supply Chain Expertise 

Major findings by capability area 

Improvement opportunities 

mapped against organization 

priorities and supply chain 

capability areas 

Structured Analytic Approach 


Source: VA Interviews and Surveys, Booz Allen Hamilton Analysis 

Focus areas for improvement can be gleaned by comparing 

organizational priorities to process maturity 


The Supply Chain Maturity Assessment results provide the foundation 

for pursuing improvement initiatives; improvements in these four 

focus areas will have a positive effect on the remaining areas 

Improvement 

Areas 

Improvement Initiatives 

Objectives 



Organizational 

awareness/alignment 



Quantified and 

consistent business 

outcomes 

IT/Data Collection 

and Management 

Enterprise visibility of 

supply chain 

requirements, 

resources and 

performance 

 

Risk Management 

Strategically-aligned 

and evidence-based 

resource management 




SCOR Baseline 





Performance metrics will capture how well the supply chain 

organization supports the overall VA value stream 

Plan 

Currently, there is visibility to Veteran-care 

outcomes, but little traceability to supply 

chain drivers, effects, and impact 

Deliver 

Source 

Make 

Deliver 

Source Make Deliver 

Source Make Deliver 

Source 

Return 

Return 

Return Return Return 

Return Return Return 

Source: SCC 

Suppliers’ 

Supplier 

Supplier 

VA 

Acquisition and Logistics 

Service 

Providers 

Veterans 

In addition to the effects on “Outcomes”, leadership is interested in monitoring and 

optimizing the Quality, Responsiveness and Cost of the Supply Chain Organization 

• What is the Quality of supply chain product and service delivery 

• How Responsive is the supply chain to service providers 

• What is the Cost to the enterprise (relative to overall expenditures) 


15

The SCOR model includes metrics related to five performance attributes 

Performance Attribute Definition KPIs 

Responsiveness 

The speed at which a supply chain provides 

products to the customer 

Order Fulfillment Cycle Time 

Physical SCM 

Performance KPIs 

Reliability 

Flexibility 

Delivery of the correct product to the correct place 

at the correct time in the correct condition and 

packaging in the correct quantity with the correct 

documentation to the correct customer 

The agility of the supply chain in responding to 

changes in demand 

Perfect Order Fulfillment 

Upside Supply Chain Flexibility 

Upside Supply Chain Adaptability 

Downside Supply Chain Adaptability 

Financial SCM 

Performance KPIs 

Cost 

Asset 


All costs associated with operating the supply 

chain 

Effectiveness in the management of (fixed and 

working capital) assets used in the process of 

satisfying demand 

Total Cost to Serve 

Cash-to-cash Cycle Time 

Return on Supply Chain fixed assets 


Source: Supply Chain Council – SCOR model 

16

Performance Management Framework: Three distinct levels of 

metrics illuminate the health of the supply chain from the strategic 

(top level), operational, and diagnostic perspectives 

Quality: the measurement of how well the supply chain provides needed 

supplies and services to fill service provider (clinician) requirements 

Cost: sum of the costs associated with 

acquiring, managing, and delivering 

materials and services to clinicians 

Responsiveness: measures how timely the goods and services 

are provided to the service provider (clinician) 

Order 

Fulfillment 

Cycle Time 

SR-01 

Perfect 

Order 

Fulfillment 

SQ-01 

Total 


Chain Cost 

SC-01 

Top-level Performance: 

Measures overall performance in delivering on the mission 

and the strategic goals and objectives. These metrics 

provide a broad end-to-end view of the supply chain. 

EIL 

Indices 

(In/Out Patient) 

Equipment 

Availability Rate 

OR-01 

Estimated Inventory 

Usage Per Patient 

(In/Out Patient) 

Obligation Ratio 

(Labor $: Material $ 

: Overhead $) 

OC-01 

Customer 

Fulfillment 

TSCC as a 

% of Total 

Budget 

OC-02 

Logistics 

Department Flow 

SCM / Operational Effectiveness: 

Measures execution of particular 

aspects of supply chain operations. 

These metrics provide context to supply 

chain functions, often relating one set of 

functions to another. 

OC-03 

OC-04 

OQ-01 

OR-02 

Reutilization 

DC-01 

Average 

Inventory 

Value 

DC-02 

Inventory 

Management -- 

Standard 

Items: On- 

Demand Items 

DR-01 

Inventory 

Stockouts 

DR-02 

Inventory 

Accuracy 

Days of 


Inventory 

Turns 

Value of 

Inventory 

(Long, and 

Inactive) 

Report 

of Survey 

(Value 

and Duration) 

DQ-05 DC-03 DR-03 DC-04 DC-05 

Planned 

Cost to 

Actual Cost 

Ratio 

DC-07 

SCM Diagnostics: 

Help identify factors 

affecting changes in 

performance measures. 

Orders 

Delivered 

in Full 

DQ-01 

Delivery Perf 

To Customer 

Required Date 

DQ-02 

Documentation 

Accuracy 

DQ-03 

Perfect 

Condition 

DQ-04 

Contract 


Lead Time 

Average 

Age Supply 

Chain Policy 

Compliance/ 

Standardization 

Percent 

Purchased on 

Existing 

Contracts 

Percent 

Purchased 

Electronically 

Transportation 

Costs 

DR-04 DQ-06 DQ-07 

DR-05 

DR-06 

DC-06 

Spend Analysis 

(Method of 

Purchase) 

DQ-08 


17

Metric Detail (Example) 

Order Fulfillment Cycle Time 

SR-01 

DEFINITION 

REASON FOR 

METRIC 

CALCULATION 

DATA 

ELEMENTS 

SOURCE 

DATA GAPS 

FREQUENCY 

Average actual cycle time consistently achieved to fulfill customer orders. For each individual order, this cycle time starts from the 

purchase request placed for an order and ends with date of customer acceptance of the order. 

Cycle time improvements have been linked to reduced costs, reduced inventories, and increased capacity. Having to compensate for a 

long cycle time drives a need for increased inventory. An increased inventory increases the days of supply; increased days of supply lowers 

inventory turns. Obviously, an increased inventory raises materiel costs in the supply chain. Order Fulfillment Cycle Time is a top level 

measure of the strategic responsiveness of the supply chain; it is also a point of comparison to work towards cycle time reduction. 

Order Fulfillment Cycle Time = [Sum Actual Cycle Times For All Orders Delivered] / [Total Number Of Orders Delivered] Expressed in days. 

As shown in the example, the sum includes the elapsed time between the date the purchase order is assigned and the date the item is 

received. 

Currently, OFCT is measured as the time from the release of the purchase order to the time the order is received at facility inbound 

logistics. However, OFCT is commonly defined as the sum of the source cycle time and the delivery cycle time. That is, from purchase 

request until it is delivered to the end user, excluding non-value add time. In our case, Source Cycle Time to Primary Inventory is the time 

from purchase request to the time the purchase order is released + time until the order is received at facility inbound logistics; and Delivery 

Cycle Time is the time from order receipt at the VA facility until it is delivered to user, currently only measured to the primary inventory. 

IFCAP 

• Item receipt time-stamp is not regularly recorded 

• Initial requirement date is not regularly recorded 

Monthly 

PurchaseOrderNum SupplyStatus DatePoAssigned PoDate OriginalDeliveryDate DateReceived LineItemIDNum QtyReceived 

XXX-0U8570 Transaction Complete (Amended) 7/8/2010 7/8/2010 7/13/2010 7/14/2010 1 1 



XXX-A02051 Partial Order Received (Amended) 7/14/2010 7/14/2010 8/14/2010 8/18/2010 3 1 



XXX-P02854 Transaction Complete 8/30/2010 8/30/2010 9/9/2010 9/15/2010 1 6 






SCOR Baseline 





The “Manage Performance of Supply Chain” process has been 

visualized in a Prototype Supply Chain Dashboard 

1. Supply Chain 

Health 

2. Opportunities for 

Savings 

3. Progress of 

Improvement 

Initiatives 


Prototype Dashboard Data Processing 

Data Sources: 

– Procurement Records 

– Inventory Records 

– Asset Management Records 

– Labor History 

– Customer Volume Records 

– Policy Records 

FY2010 data – illustrative only 

– Future implementation requires access to source authoritative databases 

Received approximately 12GB of data from legacy systems 

– Limited granularity (e.g., PO numbers do not reveal the items ordered) 

– Many blank fields and records 

Data required some preparatory work 

– Select primary inventories analyzed 

– Excluded some administrative categories, research, training, grounds upkeep, etc. 

– Classified costs as labor, material, overhead, or not applicable 

– Required normalizing 

Did not try to cleanse the data of mistakes or other anomalies 

– Graphics reflect data peculiarities (e.g., negative inventory values) 

– Prototype not connected to live databases 


Dashboard effort focused on metrics that already had available data; 

Where VA does not collect data at the national-level, metrics are “Pending” 

On Display 

● Perfect Order Fulfillment (Notional*) (SQ-01) 

● Order Fulfillment Cycle Time (SR-01) 

● Total Supply Chain Cost (SC-01) 

● Customer Fulfillment (Notional*)(OQ-01) 

● Logistics Department Flow (OR-02) 

● Obligation Ratio (OC-01) 

● TSCC as Percent of Total Cost (OC-02) 

● SC EIL Index (OC-03) 

● Estimated Inventory Cost per Patient Day (OC-04) 

Pending* 

● Equipment Availability Rate (OR-01) 

● Documentation Accuracy (Notional*) (DQ-03) 

● Perfect Condition (Notional*) (DQ-04) 

● Inventory Accuracy (DQ-05) 

● Inventory Stockouts (DR-02) 

● Contract Management Lead Time (DR-04) 

● Percent Purchased Electronically (DR-05) 

● Planned Cost to Actual Cost (DC-07) 

● Orders Delivered in Full (DQ-01) 

● Delivered by Required Date (DQ-02) 

● Average Age Supply Chain Policy (DQ-06) 

● Method of Purchase (DQ-08) 

● Compliance and Standardization (DQ-07) 

● Inventory Management – STD:ODI Ratio (DR-01) 

● Inventory Turnover Rate (DR-03) 

● Percent Purchased on Existing Contracts (DR-05) 

● Reutilization (DC-01) 

● Average Inventory Value (DC-02) 

● Days of Supply (DC-03) 

● Value Long and Inactive Supply (DC-04) 

● Report of Survey Value and Duration (DC-05) 

● Transportation Costs (DC-06) 

* Complete data not yet available 


Reports will be transmitted using various styles of visualization to 

help clarify trends, patterns, and outliers. 

Combination Charts are used to display such metrics as Reports of Survey and 

Perfect Order Fulfillment 

Bubble Charts are used to display Average Policy Age 

Line Charts are used for metrics such as Days of 

Supply, Inventory Turns, and Value of Long and Inactive 

Inventory 

Stacked Column Charts are used to display 

metrics such Standard to On Demand 

Inventory and Average Inventory Value 

Pie Charts are used to display Reutilization 

Bar Charts are used to display comparisons such as 

comparisons of Total Supply Chain Costs and comparisons of 

EIL Indices 

Multi-Series Column Charts are used to display 

metrics such as Obligation Ratio as well as 

aggregate reports. 

Column Charts are used to display comparisons 

such as Percent Purchasing on Existing Contracts 


The dashboard gives the analyst the opportunity to perform 

causative research 

Average Inventory Value (DC-02) 

Long and Inactive Supply (DC-04) 

Days of Supply (DC-03) 

Standard to On Demand (DR-01a) 


The dashboard gives managers at all levels the ability to drill down 

and conduct causative research into data outliers and anomalies 

Data “rolls up” and allows for 

“drill down” transparency 

Identifies inconsistent or 

incomplete data 

Conduct comparative analysis 

between like facilities or 

contrasting metrics 

Highlights data outliers 

Facilitates trend and 

root cause analyses 




SCOR Baseline 





We have the metrics; we have the data; we have the dashboard … 

…so what is next and how does it all fit together 

High data 

confidence, 

integration, 

and accessibility 

lead to accurate 

reports; 

it is the backbone 

of performance 

management 

Data 

Metrics 

Linked to 

strategic goals 

and objectives; 

will provide an 

assessment of 

supply chain 

health 

Establishes the 

processes 

required for 

effective 

performance 

management of 

metrics 

sEP.2.1 

Define 

sEP.2 

Manage Performance 

of Supply Chain 

sEP.2.2 

Monitor 

Process 

sEP.2.3 

Evaluate 

Organization 

Establishes the roles, 

responsibilities, and 

team structure 

sEP.2.4 

Leverage 

Technology 

Provides 

visualization of 

metrics and 

potential 

methods of 

implementation 


Contact us at… 

• Nelson Gonzalez 

VA Strategic Sourcing Program Manager 

Office of Acquisition & Logistics Programs & Policy 

U.S. Department of Veterans Affairs 

Nelson.Gonzalez2@va.gov 

(202) 429-8439 

• Brian K. Frank 


frank_brian@bah.com 

(202) 429-2090 

• Brian L. Shaw 


shaw_brian@bah.com 

(202) 429-2074 

http://www.va.gov/

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