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Supply-Chain Council

Executive Overview Supply Chain World North America

This presentation is the exclusive property of the Supply Chain Council. Copyright Supply Chain Council. 2006. All rights reserved. The marks SCOR, CCOR, DCOR and SCOR Roadmap are the exclusive property of the Supply Chain Council.

Agenda Next 4 Hours


Supply-Chains History of SCC & SCOR Focusing on Process SCOR Outline Performance Management & Metrics Varieties of Transformation Benefits of SCOR Case Studies Open Discussion

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Supply Chain Council - Executive Overview

Speaker Introduction
Caspar Hunsche Supply chain operational background: logistics, supply/demand planning, management reporting and central back-office. Wide experience in high tech, chemical, transportation, government, manufacturing, automotive and retail HP/Compaq supply chain merger planning using SCOR SCOR practitioner since version 4.0 Original author of the Design Chain and Customer Chain reference models

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Supply Chain Council - Executive Overview

A Bit of History: 1930-1950

Bank Robber Slick Willie Sutton When asked why he robbed banks, Sutton simply replied "Because that's where the money is."
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Supply Chain Council - Executive Overview

Where the Money Is


Supply-chain generally accounts for between 60% and 90% of all company costs1 A 2% improvement in process efficiency for supply-chain processes has 30,000% - 50,000% the impact of a 2% improvement in efficiency for IT HR Finance1 Sales Any surprise most Process Methodologies or techniques had their origin primarily in Supply-Chain Management?
Six-Sigma Lean BPR ERP ISO MRP-II TQM

Fortune-10 Company Supply-Chain Cost % Total Costs2


GM 94% Ford 93% Conoco 90% Wal-Mart 90% Chevron 88% IBM 77% Exxon 75% GE 63% Citi1 0% AIG1 0%

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

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Supply Chain Council - Executive Overview

What is a Supply-Chain

Product Management Customer processes Supplier processes

Product Design DCOR

Sales & Support CCOR

Supply Chain SCOR

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Supply Chain Council - Executive Overview

Supply-Chain Council
The SCC is an independent, not-for-profit, trade association Membership open to all companies and organizations Focus is on research, application and advancement and advancing state-of-the-art supply chain management systems and practices Developer and endorser of the Supply Chain Operations Reference (SCOR) as a cross-industry standard for supply chain management Offers Training, Certification, Benchmarking, Research, Team Development, Coaching, and Cross-standard Integration focused on the SCOR framework Founded in 1996 Approaching 1000 Association Members Chapters in North America, Europe, Japan, South Africa, Latin America, Australia/New Zealand, South East Asia and Greater China, with developing Chapters India and Middle East

Driving value through the use of SCOR


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Supply Chain Council - Executive Overview

Industry Membership Scope

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Supply Chain Council - Executive Overview

SCOR Curriculum

Learn
Basis Training Executive Track Advanced Track SCOR Framework Executive SCOR Framework

Pilot
SCOR Implementation Executive SCOR Implementation SCOR Adviser

Deploy
SCOR Team Executive SCOR Team Advanced SCOR Modeling Advanced SCOR Analysis Advanced SCOR Workshop Rapid SCOR

Mature
SCOR and SixSigma/Lean Executive SCOR Business Benefit SCOR for PBL SCOR for IT SCOR for HR SCOR for Industries SCOR for Services SCOR Financials

Renew
DCOR Executive SCOR Business Trends SCOR for Risk Management SCOR Practices Benchmarking SCOR for M&A SCOR for ISO9000 SCOR for SOX404 SCOR for Management

Current SCC offering

Future or Vendor offering SCOR Practicum

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Supply Chain Council - Executive Overview

Training & Certification


Level
SCOR Scholar (SCOR/S)* SCOR Professional (SCOR/P) SCOR Expert (SCOR/E)

Key Requirements
SCOR University Curriculum SCOR Level 0 Exam SCOR Framework SCOR Implementation SCOR Level 1 Exam SCOR/P SCOR Project Case Study SCOR Project Peer Review SCOR Level 2 Exam
By Mand at e f r om t h e Boar d of Dir e ct or s By Mand athe f rconfter e ed u pon Dir e ct or s as om h r Boar d of h as conf er r ed u pon

JJoh n Doe oh n Doe

SCOR Master (SCOR/M)

SCOR/E 5 years SCM Experience


2 in SCOR Areas

Having compl et e d t h e r e qu ir e me nt s of and Having compl et e d t h e r e qu ir e me nt s of and r e ceiving t h e t it l e of r e ceiving t h e t it l e of

Ce rrt tif ie dd SCOR Ma ss teerr Ce if ie SCOR Ma t


Give n at Washingt on, D.C. Th is 1 s t s tDay of Give n at Washingt on, D.C. Th is 1 Day of Novembe r 2006 Novembe r 2006
Ch ief Te chnol ogy Of f ice r Ch ief Te chnol ogy Of f ice r

2 years SCOR Experience SCOR Practicum Instruction Workshop SCOR Level 3 Exam Positive Training Evaluations SCOR Subject Master (SSM in)
*reserved for University Students in SCM Studies

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SCOR 8.0 Convergence Training SCOR 8.0 Convergence Training

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SCOR/M Subject Training Positive Subject Training Evaluation

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Benchmarking

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Design Chain
The central role of the Design Chain processes

Product/Portfolio Management

Customer processes

Supplier processes

Product Design DCOR

Sales & Support CCOR

Supply Chain SCOR

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Supply Chain Council - Executive Overview

Customer Chain
The central role of the Customer Chain processes

Product/Portfolio Management

Customer processes

Supplier processes

Product Design DCOR

Sales & Support CCOR

Supply Chain SCOR

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The Value of SCOR

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Why Focus on Process

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In the 80s Company Objectives


Heavy Emphasis was made on organizing a departments activities around corporate goals creating silos of activity

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Department 1

Department 2

Department 3
Supply Chain Council - Executive Overview

In the early 90s Company Objectives


Business Reengineering began to focus even further on optimizing a departments activities deepening the silo. However lack of accountability to customers began to take effect

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Department 1

Department 2

Department 3

Supply Chain Council - Executive Overview

In the late 90s Company Objectives


Resulting in attempts to horizontally integrate departments and processes at the expense of company objectives

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Department 1

Department 2

Department 3

Supply Chain Council - Executive Overview

Customers
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Today Company Objectives


We now recognize both needs for flexibility vertically for company objectives, and horizontally for integrated customer focus.

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Department 1

Department 2

Department 3

Supply Chain Council - Executive Overview

Customers
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Common Denominator: Process


Vertical alignment assures that process goals reflect the organizations strategic goals By aligning strategy, process, and implementation, the organization is better positioned to assure that everyone is working to achieve common objectives At the same time, if change is required, vertical alignment makes it easier to identify exactly what needs to be changed to refocus on new objectives. Horizontal alignment makes sure that customers needs are integrated and focused across organizations. As customer requirements change, horizontal integration also makes it easier to identify exactly what needs to be changed to refocus on new objectives. Both must be achieved simultaneously
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A Spectrum of Approaches
Process Engineering

BPR Lean Six-Sigma MRP BPM ITIL SCOR Baldridge EIS BPA Metrics, Practices
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Class-A EA Workflow

TQM

Benchmarking BSC

Tiger Team ERP

ISO9000 Process Definition

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What is SCOR Exactly

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Supply Chain Council - Executive Overview

SCOR: A Process Framework


Process frameworks deliver the well-known concepts of business process reengineering, benchmarking, and best practices into a cross-functional framework
Standard processes: Plan, Source, Make, Deliver, Return, Enable Standard metrics: Perfect Order Fulfillment, Cash-to-Cash Cycle Time, Cost of Goods Sold, Order Fulfillment Cycle Time, etcetera Standard practices: EDI, CPFR, Cross-Training, Sales & Operations Planning, etcetera

Pre-defined relationships between processes, metrics and practices and inputs and outputs

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SCOR Processes
Plan

Plan
Deliver Return Source Return Make Deliver Return

Source Return

Make

Deliver Return

Plan
Source Return Make Deliver Return Source Return

Suppliers Supplier

Supplier
Internal or External

Your Company

Customer
Internal or External

Customers Customer

SCOR reference model Whether from Cow to Cone or from Rock to Ring SCOR is not limited by organizational boundaries
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SCOR Hierarchy
Level 1
Scope
Supply-Chain Supply-Chain Source Source

Level 2
Configuration
S1 S1 Source Source Stocked Product Stocked Product

Level 3
Activity
S1.2 S1.2 Receive Product Receive Product

Level 4
Workflow

Level 5
Transactions
EDI EDI XML XML

Differentiates Business Defines Scope

Differentiates Complexity Differentiates Capabilities Framework Language

Names Tasks Links, Metrics, Tasks and Practices Framework Language

Sequences Steps Links Transactions Job Details Details of Automation Technology Specific Language

Framework Language

Industry or Company Specific Language

Standard SCOR definitions


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Company/Industry definitions
Supply Chain Council - Executive Overview

Supply-Chain

Supplier processes Supplier processes

Supply Chain Supply Chain


Plan Plan

Customer processes Customer processes Customer processes

Source Source

Make Make

Deliver Deliver

Return Return

Return Return

Process, arrow indicates material flow direction Process, no material flow


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Information flow

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Source Process Elements


Stocked Product (S1) Make-to-Order (S2) Engineer-to-Order (S3)
S3.1 S3.2 Identify Sources of Supply Select Final Supplier(s) and Negotiate Schedule Product Deliveries Receive Product Verify Product Transfer Product Authorize Supplier Payment

S1.1 S1.2 S1.3 S1.4 S1.5

Schedule Product Deliveries Receive Product Verify Product Transfer Product Authorize Supplier Payment

S2.1 S2.2 S2.3 S2.4 S2.5

Schedule Product Deliveries Receive Product Verify Product Transfer Product Authorize Supplier Payment

S3.3 S3.4 S3.5 S3.6 S3.7

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Question: Process Flows


Which of the following flows is/are correct? S2.1
Schedule Product Deliveries

S2.2
Receive Product

S2.3
Verify Product

S2.4
Transfer Product

S2.5
Authorize Supplier Payment

S2.1
Schedule Product Deliveries

S2.5
Authorize Supplier Payment

S2.2
Receive Product

S2.3
Verify Product

S2.4
Transfer Product

S2.1
Schedule Product Deliveries

S2.2
Receive Product

S2.4
Transfer Product

S2.5
Authorize Supplier Payment

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Result: The Workflow Diagram


Retail, inc. (Amsterdam)

S1.1
Schedule Prod. Deliveries

Customer P.O.

Delivery Commit

mp3 HQ (Cupertino)

D2.2
Receive, Enter, Validate Order

C.O.

D2.3
Reserve Inv. Calculate Date

C.O.

S2.1
Schedule Prod. Deliveries

Inter-Company P.O.

mp3 Factory (Shenzhen)

D1.2
Receive, Enter, Validate Order

D1.3
Reserve Inv. Calculate Date

C.O. = Customer Order, Inv. = Inventory, P.O. = Purchase Order, Prod. = Product

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Maps to Organizations
Level 1
Scope
Supply-Chain Supply-Chain Source Source

Level 2
Configuration
S1 S1 Source Source Stocked Product Stocked Product

Level 3
Activity
S1.2 S1.2 Receive Product Receive Product

Level 4
Workflow

Level 5
Transactions
EDI EDI XML XML

CxO EvP, SVP Strategic Decision-Making Enterprise Supply-Chain Requirements

SVP VP Line of Business Management Operations Strategy

VP, Director Line Manager Activities Management Fine-Tuning Operations

Manager Team Lead Job Management

Team Lead Individuals Transaction Management Tuning Technology Performance

Adjusting Process Performance

Standard SCOR program


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Company/Industry implementation
Supply Chain Council - Executive Overview

Metrics
SCOR metrics: Standard Level 1 Metrics

Attribute

Metric (level 1)
Perfect Order Fulfillment Order Fulfillment Cycle Time Supply Chain Flexibility Supply Chain Adaptability

Customer

Reliability Responsiveness Agility (Flexibility)

Cost

Supply Chain Management Cost Cost of Goods Sold

Internal

Assets

Cash-to-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital

upside and downside adaptability metrics


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Strategic Reliability Metric


Metric: Definition: Perfect Order Fulfillment The percentage of orders delivered on-time, in full. Components of perfect include all items and quantities ontime, using the customers definition of on-time, complete documentation and in the right condition [Total Perfect Orders] / [Total Number of Orders] % % % % Orders Orders Orders Orders placed without error scheduled to customer request date received damage free with correct shipping documents

Calculation: Diagnostic Metrics: (examples)

Notes:

An order is perfect only if all L2/L3 metrics are perfect; An order must be: AND on-time AND in-full AND right condition

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Best Practices

Best practice: "A current, structured, proven and repeatable method for making a positive impact on desired operational results." Current Must not be emerging and can not be antiquated Structured Has clearly stated Goal, Scope, Process, and Procedure Proven Success has been demonstrated in a working environment and can be linked to key metrics Repeatable The practice has been proven in multiple environments.

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The SCOR Project Roadmap


Phase Name ORGANIZE Deliverable Organizational Support Supply-Chain Definition Supply-Chain Priorities Project Charter Scorecard Benchmark Competitive Requirements Geo Map Thread Diagram Disconnect Analysis Transactions Level 3, Level 4 Processes Best Practices Analysis Opportunity Analysis Project Definition Deployment Organization Resolves Who is the sponsor?

DISCOVER

What will the program cover? What are the strategic requirements of your supplychain? Initial Analysis where are the problems? Final Analysis where are the solutions?

II

ANALYZE

III

MATERIAL

IV

WORK

IMPLEMENT

How to deploy?

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SCOR Roadmap: Analyze


Analyze Basis for Competition
Scorecard Benchmark Competitive Requirements

Focus: Scorecard: Appropriate Level Metrics Benchmark: Select and Use Industry Source Requirements: Prioritization and Ratification Approach: Initial Data and Transaction Capture Financial Validation Early Defect analysis of performance gaps Deliverables: Defined Metrics for program focus Stage gate: Supply-Chain Selected and Metrics Described

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Performance Management and Metrics

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If You Cant Measure It


Todays Performance to Service Level Objectives This Months Performance Relative to Historic Trends One Divisions Performance Relative to Another Our Supply Chains Performance Relative to Competitors Our Supply Chains Performance Relative to its Industry Our Supply Chains Performance Relative to near Industries

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Supply Chain Council - Executive Overview

Key Metric Requirements


Metrics are Defined One Way
Calculations Interpretations Points of Measurement

Metrics are Owned


Responsible/Accountable Cascading Metrics

Metrics are Appropriate


Simplicity Balanced Scorcards Relevant to Customer/Market

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Supply Chain Council - Executive Overview

Example: ComfyCo
Continuing Information on our Example Company, what are the distinct supply-chains

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Supply Chain Council - Executive Overview

Supply Chain Priority

Supply Chain Priority Matrix When assigning rank; the highest number should correspond to the highest rank. The supply chain with the highest overall rating takes the biggest priority. Your Company Supply Chains taken from the Definition Matrix

Criteria Weight Overall

Revenue 20% Rank


3

Gross Margin % 20% Rank


2

# of SKUs 20% Rank


2

Unit Volume 20% Rank


2

Strategic Value 20% Rank


2

Result
0.6

Result
0.4

Result
0.4

Result
0.4

Result
0.4

Big Air Small Air Commercial

2.2 2 1.8

0.4

0.2

0.6

0.6

0.2

0.2

0.6

0.2

0.2

0.6

1=low 3=high

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Supply-Chain Strategy Matrix


Each unique combination of ratings defines Your Supply Chain Strategy for the channel Think of the rating as a desired state, NOT where you want to improve the most

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Supply-Chain Performance
We use a tool called the Supply Chain SCORcard to Identify performance characteristics of supplychains. Each SCORcard is built from a subset of hundreds of SCOR metrics. For supply-chain benchmarking we generally use only Level1, 2 and 3 metrics The SCOR Manual provides all necessary definitions

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Metrics Selection

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A SCORcard Example
Attribute Reliability Responsiveness Metric (level 1)
Perfect Order Fulfillment Order Fulfillment Cycle Time

You 98% 14 days

Parity 92% 8 days

Adv 96% 6 days

Superio r 98% 4 days

Parity Gap -6% 6 days

Req Gap

Flexibility Cost Assets

Ups. Supply Chain Flexibility

62 days 10.1% 22 days

80 days 10.8% 45 days

62 days 10.4% 30 days

40 days 10.2% 20 days

-18 days -0.7% -23 days

Supply Chain Mgmt Cost Cash-to-Cash Cycle Time

The ComfyCo Commercial Supply-Chain has been prioritized by sponsor for improvement. Weve created a benchmark Weve looked at parity gaps to understand where there may be problems, and to hypothesize what could be root causes
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Parity, Advantage, Superior


Attribute Reliability Responsiveness Flexibility Cost Assets Metric (level 1)
Perfect Order Fulfillment Order Fulfillment Cycle Time

You 98% 14 days 62 days 10.1% 22 days

Parity 92%

Adv 96% 6 days 62 days 10.4% 30 days

Superior 98% 4 days

Parity Gap -6%

Req Gap

minus 8 days
80 days 10.8% 45 days

6 days equals -18 days -0.7% -23 days

8 days

Ups. Supply Chain Flexibility

40 days 10.2% 20 days

Supply Chain Mgmt Cost

Cash-to-Cash Cycle Time

We now link strategy, performance, and benchmark to identify performance required of strategy

Parity Advantage Superior

Median of Statistical Sample Midpoint of Parity and Superior 90th percentile of population
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Supply Chain Council - Executive Overview

Benchmark Data Sources


Source APQC AMR CAPS Hoovers MPI PMG SCC eSCM WERC Benchmark SCM Surveys SCM Procurement Financial Subset SCM SCM-SCOR SCM L1 SCOR SCM Link www.aqpc.org www.amrresearch.com www.capsresearch.org www.hoovers.com www.mpi-group.net www.pmgbenchmarking.com www.supply-chain.org www.escm.org.sg www.werc.org Pricing Free Subscription Subscription Subscription Subscription Per Survey Membership Subscription Subscription Asia Focus Emerging SCC Founder Note Must Share Data SCC Founder

PLUS Internal Benchmarking Data Sources 1:1 Customer Interviews


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Benchmarking

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Varieties of Transformation

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The Top-10 Transformations


Improve/Optimize Performance Merger, Acquisition, Divestiture Streamlining New Business Development Management Alignment Process Audit Balanced Scorecard ERP Implementation Workflow Implementation IT Solution Development

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The SCOR Project Roadmap


Phase Initial Name BUILD Deliverable Organizational Support Supply-Chain Definition Supply-Chain Priorities Project Charter Scorecard Benchmark Competitive Requirements Geo Map Thread Diagram Disconnect Analysis Transactions Level 3, Level 4 Processes Best Practices Analysis Opportunity Analysis Project Definition Deployment Organization Resolves Who is the sponsor? What will the program cover? What are the strategic requirements of your supply-chain? Initial Analysis where are the problems? Final Analysis where are the solutions?

DISCOVER

II

ANALYZE

III

MATERIAL

IV

WORK

IMPLEMENT

How to deploy?

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Supply Chain Council - Executive Overview

A SCM Program with SCOR


Key Events
Supply-Chain Scope Leadership Supply Chain Definition Scorecard Competitive Requirements Geographic Map Analysis Review Brainstorm Event Process Worksheet Project Definition

Key Documents/Templates
Setup Supply Chain Definition Matrix Priority Matrix Scorecard Competitive Requirements Disconnects Geographic Map Thread Diagram Brainstorm Event Fishbone Diagram Pareto Analysis Process Worksheet Process Diagrams Practices Assessment Transaction Analysis RACI Level 4 Processes Opportunity Grid Opportunity Analysis Program Definition

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SCOR Roadmap Initial : Organize


Building Organizational Support Identify appropriate Sponsors, Stakeholders, Evangelists Create Steering, Design, and Analysis Teams Focus: Build a core steering group for the SCOR program Identification of Supply-Chain Scope Communication of SCOR throughout organization Approach: Identification of key players Outline of Complete Supply-Chain being examined Core Steering Teams and Extended Teams Communicate, Communicate, Communicate! Creation of Design Team Creation of Analysis Team Deliverables: Sponsors & Stakeholders Stage gate: Kickoff Event
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SCOR Roadmap Phase I: Discover


Discover the Opportunity Supply-Chain Definition Supply-Chain Priorities Project Charter Focus: Supply-Chain: generate a clear definition Priorities: Align to Business Strategy Resources: identify and secure process owners/actors Approach: Sponsor and stakeholders interviews: Work towards a problem statement based on metrics current v. desired performance Capture customer-identified solutions i.e. a technology or practice Deliverables: Project Charter Stage gate: Project Charter acceptance

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SCOR Roadmap Phase II: Analyze


Analyze Basis for Competition Scorecard Benchmark Competitive Requirements Focus: Scorecard: Appropriate Level Metrics Benchmark: Select and Use Industry Source Requirements: Prioritization and Ratification Approach: Initial Data and Transaction Capture Financial Validation Early Defect analysis of performance gaps Deliverables: Defined Metrics for program focus

Stage gate: Supply-Chain Selected and Metrics Described

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SCOR Roadmap Phase III: Material


Design Material Flow Create a common understanding of to-be process Document proposed to-be (=desired) process Focus: AS IS: SCOR Material Flow Model Disconnect Analysis: Deep Dive on Transactions TO BE: Identify Early changes Approach: Facilitated workshops, dedicated design teams Geographic Mapping, Thread Diagrams Brainstorming, Opportunity Aggregation Deliverables: Process design documentation Opportunities for Change Stage gate: Review captured information with key stakeholders

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Result: The Geographic Map


Retail, Inc S1, P2 HQ P1, P2, D2, S2

Battery Supplier D1, P1, P4

Drive Supplier D1, P1, P4

MP3 Factory P3, S1, M1, D1

Question: No flow from HQ; Why?


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Result: The Thread Diagram

P 4

P 1 P 2 P 3

P 2

S 2 D 1 D 1 S 1
M 1

D 1 S 1 D 1

S 1

Battery Supplier

Drive Supplier

mp3 Inc HQ

mp3 Inc factory

mp3 Inc warehouse

Retail, Inc

Suppliers

mp3 Incorporated

Customers

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SCOR Roadmap Phase IV: Work


Work and Information Flow Design Collect and analyze detail work and information data Create detailed base of changes to SC environment Focus: Transactions: Productivity and Yield Process: Level 3 and Level 4 SCOR information Analysis: As-Is, Disconnect, To-Be Approach: Facilitated workshops, interviews and modeling Staple-Yourself-To" approach Cover all: process, technology, people, objectives RACI, and Practice Assessment Deliverables: Facilitated workshops, interviews and preliminaries Stage gate: Review captured information with key stakeholders

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Staple Yourself Worksheet


The Transaction Analysis Worksheet summarizes information regarding
SCOR Level Three Process Description Primary Input(s) and Output(s) to SCOR Element Information Level Four Process Steps no more than ten with department of person performing the step Work Technology Used to perform Process Steps Transaction (output) Event and Elapsed Time Business Rules (Policy and Informal) Disconnects Causing Event and Elapsed Time Gaps and Yield less than 100%
Supply Chain Council - Executive Overview
Disconne ct Description, Relative Weight, and Fis hbone Number Proce ss Steps (>4 and <11)

Inte rviewees: Accountable Input(s ) - Highlight Primary Input SCOR Element Output(s) - Highlight Prima ry Output

Step 1 2 3 4 5 6 7 8

Description

R esponsible

Event Time

9 10 Technology Used Total Event Time for Process Steps

B usiness Rule s

Disconnect Description

Initials

Relative Weight

Problem Statement Number

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Transaction Productivity Analysis


Status Receipt Entry Allocate Drop Pack Ship POD SCOR D2.1 D2.2 D2.3 M2.1 M2.2- 2.6, D2.8 D2.9- 2.12 D2.12- D2.13 Efficiency 75% 75% 4% 2% 5% 8% 92% Yield 90% 90% 90% 90% 90% 90% 90% Practices 80% 80% 20% 70% 70% 70% 70% Vol 100 100 100 100 100 100 100 Time 1.5h 1.5h 1h 1.5h 6h 2h 44h Elapsed 2h 2h 24h 72h 120h 24h 48h

The yellow sections driven by a Transaction Data Collection effort utilizing order status events and time stamps
Column Column Column Column 1 4 6 8 Order Status Event Order rework Order volume through the status Difference of time stamps

The white sections are based on the Staple Yourself to an Order Interviews

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Supply Chain Council - Executive Overview

And yet more analysis


Multivoting Common Cause Variation Operational Definition Value Stream C&E Matrix Visual Control ANOVA Impact & Effort Kappa Critical Path

Observation

Time Series

Traveler Check sheet

Customer Interview

Stratified Data

Product & Service Grids

Chi-square

Simulation

Range, Standard Deviation, Variance Central Tendency (Mean, Median, Mode)

TPM

Value Stream

Special Cause Variation

RACI

Frequency Plots

5 Whys

CVSM

Degrees of Freedom

Pugh Matrix

5S

Value-Add (VA)

Control Charts

Location Check sheet Stable Population Sampling

Six-

Scatter Plot

Complexity Analysis

Design of Experiment

FMEA

Box Plots

Internal Benchmark CrossIndustry Benchmark

NVA

ImR Chart

Gross Disconnect

Hypothesis Test

PCE Destruction

Lead Time

Flowchart

Frequency or Histogram Non-Normal Distribution

Time Value

p-Chart

Gage R&R

5 Whys

T-test

BIC Benchmark

Lean

Quick Fix

Phase-Gate

Affinity Diagrams

Inferential Statistics

Stratification

Capability Analysis

Fishbone

Work Cell Analysis

Multiple Regression

Cost Estimatio n

Discrimination

Capacity Constraint

BNVA

,r charts ,S charts

Measurement System Analysis

5S

Error Analysis (Type I, II, Power, p-Value

What-if

NVA Cost

KPOV

Normal Distribution

Risk

Takt T ime

Work Cell Analysis

Bias

CVSM

Correlation

Industry Benchmark

Process Cycle Efficiency

WIP TIP Solution Selection Matrix

Central Limits

MistakeProofing

Brainstorm

Descriptive Statistics

Measurement Selection

Np-Chart, C-Chart, uChart

Pareto

Process Balancing

Regression

Stability

Time Trap

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Supply Chain Council - Executive Overview

SCOR Phase V: Implement


Implementation Planning Ensure the implementation or deployment teams have thorough understanding of the designs Designs and plans are validated Focus: Projects: Aggregate Problem Statements into Projects Impact: Decision Matrices Approach: Implementation, Charter, and Sequence Approach: Establish detailed requirements documentation and, if possible, integrate team members in deployment teams Deliverables: High level deployment plans for change projects, to-be process documentation/training materials and/or requirements documentation Stage gate: Release documentation to and education to (staffed, funded and named) process deployment teams

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Supply Chain Council - Executive Overview

Opportunity Analysis Aggregate


Opportunity Analysis
Project Named/Number Description Example Project Example Booking Year of Impact Baseline Net Sales Cost of Sales Total Cost of Sales Gross Profit Supply-Chain Management Expense Order Management Cost Material (Product Acquisition) Cost Planning and Finance Cost Inventory Carrying Cost IT Cost for Supply-Chain Total Supply-Chain Management Expense Operating Income $28,102 $10,796 $5,086 $21,510 -0$65,494 $76,800 (45) 45 (3,338) 3,520 (2,847) 2,944 (2,392) 2,539 (1,491) 1,516 (45) (460) (796) (372) (1,528) (455) (860) (240) (1,145) (250) (750) (240) (1,005) (150) (251) (145) (920) $527,600 $178,000 0 0 182 (182) 147 (147) 147 (147) 25 (25) $705,600 2006 2007 2008 2009 2010

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Supply Chain Council - Executive Overview

Opportunity Analysis by Project


Projected Annualized Benefit Year 1
Perfect Order Fulfillment Order Fulfillment Cycle Time Supply Chain Flexibility Supply Chain Mgmt Cost Cash-to-Cash Cycle Time

Scorecard Baseline Direct Ship Automated ATP 3x Factory Schedule 3x daily pickup Customer EDI Statistical FCST NET Projects Total

95.0% 0.5%

14 (days) 3.0 1.0

62 (days) 2.0

10.1% -0.05% 0.01%

22 (days) 3 1 3 1

0.2%

3.0 1.0 0.5 .25

-1.0 0.5

0.01% 0.02% 0.02% 0.01%

0.7% 95.7%

8.75 5.25

1.3 63.3

0.02% 10.12%

8 14

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Supply Chain Council - Executive Overview

Deploy: Change Management

Key Change Management Attributes


Vision

Result

+ + + + +

Skills

+ Incentives + + Incentives + + Incentives + + Incentives +

Resources

+ Action Plan =>

Change

vision

X +

Skills

Resources

+ Action Plan = Confusion


Anxiety Delays

Vision

Skills

Vision

Skills

+ Action Plan = X + Incentives + Resources + Action Plan =


Resources Resources

Vision

Skills

Vision

Skills

X + Action Plan =Frustration + Incentives + Resources + Action Plan =False Starts X


Supply Chain Council - Executive Overview

2005, Process Core Group

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Deployment Timeline

Entities, Metrics, or Projexts


Plant 1

L+30
Aging Rpt Aging Rpt Direct Ship Direct Ship

L+60

L+90

DC1

DC1 DC1 Shutdown? Shutdown?

Auto-Receiving Auto-Receiving

Supplier Visibility Visibility Planning Plan Replen Plan Replen

RFID

Stat FCST


11d 8d 7d 6d

Cycle Time Cost Improvement

0.1%

0.2%

0.25%

0.3%

Copyright Supply Chain Council. 2006. All rights reserved.

Supply Chain Council - Executive Overview

The Value of SCOR

Copyright Supply Chain Council. 2006. All rights reserved.

Supply Chain Council - Executive Overview

The Value of SCOR

Companies with SCOR process management Are over 780% more profitable on average than peers1. Exhibit greater share growth than leading market indicators2.

1 Supply-chain Council 2003 profit and revenue analysis. 2 Process Core Group Research 2006 SCOR company share performance

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Supply Chain Council - Executive Overview

68

An Open Standard
SCOR, DCOR, CCOR, MCOR are Open Standards
The terms "open" and "standard" have a wide range of meanings associated with their usage. The term "open" is usually restricted to royalty-free technologies while the term "standard" is sometimes restricted to technologies approved by formalized committees that are open to participation by all interested parties and operate on a consensus basis.

Anyone can use and be trained on them with no fee for use Any company can use and implement them with no fee for use Any software organization can use the data for process libraries with no fee for use Any practitioner company, academic organization, consulting organization, software enabling can participate in development

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69

Standard Benefits Seen


Improvement in companys stock market value (beat the DOW) Increase of Profits and Margins (780% the average) Increase of the available financial means by implementation of investments (portfolio management) Reduction of overall costs Optimization of Enterprise Resource Planning

But theres even more data now!

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Supply Chain Council - Executive Overview

70

More Value1
Improvement of operating results of an average of 3% in the initial SCOR implementation phase by means of cost reduction and improvement in customer services Increase in profitability (between 2x and 6x) with regards to project investments costs within first 12 months of implementation Reduction in IT costs through minimizing system customization and making better use of standard functionality Continuous actualization of process change portfolio by continuous conversion of Supply Chain improvements with the objective of increasing annual profits by 1% to 3%
1

Poluha (2007) Application of the SCOR Model in Supply Chain Management New York, USA

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Supply Chain Council - Executive Overview

71

Typical Potential Improvements1


Area Raw materials purchase cost Cost of Distribution Total resource deployed Manufacturing space Investment in Tooling Order cycle time New product development cycle Inventory Paperwork and Documentation Quality Defects
1

Improvement 25% 35% 50% 50% 50% 60% 60% 70% 80% 100%

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

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72

Comparative Data1
Improvement Area Range Delivery performance 16% - 28% Inventory Cost Reduction 25% - 60% Reduction in order fulfillment 30% - 50% cycle time Improvement to forecast 25% - 80% accuracy Increase in overall productivity 10% - 16% Lower supply chain costs 25% - 50% Improvement of fill rates 20% - 30% Improved capacity realization 10% - 20%

Stephens (2000) 1997 Comparative Study Pittsburg, USA

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Supply Chain Council - Executive Overview

73

Maturity Results1
Performance Category Cost Schedule Productivity Quality Low 4.50% 20% 11% 29% Median 38% 50% 50% 50% 14% 3:1 High 87% 90% 376% 94% 55% 13:1

Customer Satisfaction 10% Return on Investment 2:1

1CMU

SEI organization, 4 March 2005 Results

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Supply Chain Council - Executive Overview

74

Case Studies
Royal Australian Air Force United Space Alliance BASF United Defense Molex US Navy

Copyright Supply Chain Council. 2006. All rights reserved.

Supply Chain Council - Executive Overview

Further Information
www.supply-chain.org info@supply-chain.org

Copyright Supply Chain Council. 2006. All rights reserved.

Supply Chain Council - Executive Overview