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Supply Chain Uncertainty
• Process Uncertainty • Supply Uncertainty • Demand Uncertainty • Control Uncertainty

Uncertainty Reduction
• Look internally (Reduction in Process Uncertainty) • Move externally (MRP, Better stock keeping)

Performance Measurement Systems • Traditional system of Measurements • Supply Chain Measurement System .

• Balanced Scorecard – Financial – Customer – Internal Processes – Learning and Growth .

• The Performance Prism – Stakeholder Satisfaction – Strategies – Processes – Capabilities – Stakeholder Contribution .

– Std. • A process reference model contains: – – – – Std descriptions of management processes A framework of relationships among the std. alignment to software features and functionality. Standard metrics to measure process performance. processes.SCOR MODEL (Cross industry standard) • Process reference models integrate the well known concepts of BPR. Benchmarking and Process Measurement into a cross. Management practices that produce best in class performance. .functional framework.

• Understand the Context of SCOR – Process – Metrics – Best Practices • Understand the 7 Steps of a Benchmarking Program .

Make. Source. 550 metrics.The SCOR® model – an industry open standard • SCOR is a supply chain process reference model containing over 200 process elements. and 500 best practices including risk and environmental management • Organized around the five primary management processes of Plan.Presentation . Deliver and Return • Any interested organization can participate in its continual development Plan Deliver Return Source Return Make Deliver Return Source Return Make Deliver Return Source Return Make Deliver Return Source Return Suppliers’ Supplier Supplier Internal or External Your Company Customer Internal or External Customer’s Customer 9 SCOR Benchmarking .

Presentation .2 Receive Product Level 4 Workflow Level 5 Transactions EDI XML Differentiates Business Defines Scope Differentiates Complexity Differentiates Capabilities Framework Language Names Tasks Links. Metrics.SCOR Processes Level 1 Scope Supply-Chain Source Level 2 Configuration S1 Source Stocked Product Level 3 Activity S1. Tasks and Practices Framework Language Sequences Steps Job Details Links Transactions Details of Automation Framework Language Industry or Technology Company Specific Specific Language Language Standard SCOR definitions 10 Company/Industry definitions SCOR Benchmarking .

Presentation .Performance Metrics Customer Attribute Metric (Strategic) • SCOR metrics: Standard Strategic (Level 1) Reliability Perfect Order Fulfillment Metrics Responsiveness Agility Cost Internal Assets Order Fulfillment Cycle Time Supply Chain Flexibility Supply Chain Adaptability† Supply Chain Management Cost Cost of Goods Sold Cash-to-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital † upside and downside adaptability metrics 11 SCOR Benchmarking .

12 SCOR Benchmarking . Process.Best Practices • Best practice: "A current.Presentation . proven and repeatable method for making a positive impact on desired operational results. Scope." – Current Must not be emerging and can not be antiquated – Structured Has clearly stated Goal. 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. structured.

Presentation .What is Benchmarking • Qualitative Benchmarking – Comparing best practices among organizations – Maturity Assessments • Quantitative Benchmarking – Comparing levels of measured performance – Assessment of Performance Gaps • Competitive Benchmarking – Quantitative Benchmarking between companies – Identifies superior relative performance 13 SCOR Benchmarking .

7 Steps of a Benchmarking Program • • • • • • • 14 Supply Chain Definition Supply Chain Prioritization Supply Chain Strategy Selecting Metrics Sourcing Data Creating a Balanced SCORcard™ Performing Benchmark SCOR Benchmarking .Presentation .

What is a Supply-Chain Product Management Customer processes Supplier processes Product Design DCOR™ Sales & Support CCOR™ Supply Chain SCOR™ 15 SCOR Benchmarking .Presentation .

Supply-Chain Definition • Supply Chains are the Totality of processes spanning operations from supplier to end-customer. work and information flow • We use a tool called the Supply Chain Definition Matrix to define the supply-chains within an enterprise • The Supply Chain Definition (i/o Matrix) Matrix helps determine the number and size of supply chains • Columns: Customers (Output) • Rows: Products (Input) • The intersection of each column and row – if the goods or services flow to the customer – is a supply chain 16 SCOR Benchmarking . focused on material.Presentation .

Examples: Level 1 Europe. Western Region Level 2 Major Accounts Grouped Accounts One-Time Buyer Level 3 Same-Day Shipping Bulk Shipping MOQ 1 Ordering SCOR Benchmarking . Retail Eastern.g. US Commercial. Asia. level by level. channels or segments or customers – start with making a list of customer groups.Column Definition • The columns in the matrix are focused on demand e. • Ask your Sales or Marketing functions for customer segmentation information • Where you have one customer base with different fulfillment models create two customer segments one for each model • In general you can go to any level of detail you want but be sensible.Presentation 17 .

Row Definition • The rows in the matrix are focused on supply e.Presentation 18 . business lines or products or locations or suppliers – start by making a list of products. level by level • Ask product divisions for product hierarchy data • If you have the same product that may be build two different create two different products.g. • In general you can go to any level of detail you want but be sensible. Examples: Level 1 Business Divisions Fulfillment Models Planning Models Level 2 Product Lines Supplier Groups Warehouses Level 3 Product Families Parts SCOR Benchmarking .

The Matrix • We now place the customer list as column headings repeating until finished • And then the products list as row headings repeating until finished • For each product that flows to a customer. we put an “X” in the cell • It’s that simple.Presentation X X X 19 . Group 1 Customer A Product 1 Business 1 Product 2 Product 3 Business 2 Product 4 Customer B Group 2 Customer C Customer D X X X X SCOR Benchmarking .

Example: Air Conditioning Company • Columns are Retail/Commercial. and sub-segmented • Rows are the Major Product Lines Customer/Market/Channels Your Company Supply-Chain Definition Matrix Retail Internet Big Box Direct Commercial Mom & Major Pop Building Account Stores Distrib Lines of Business Product Families Air Conditioners Big Airco Small Airco Custom Industrial Standard Industrial x x x x x x x x x x 20 SCOR Benchmarking .Presentation .

Logical Supply Chain • Some supply-chains are not unique.Presentation 21 . group supply chains together where they have common management and goals • Each group is considered a logical supply chain • Key Differentiators: Build Strategy Make Buy Model BTO BTS ETO Lifecycle Introduction Mid-Life Commodity EOL Other Region Tax Regime Logistics Strategy Customs/Duty ERP System SCOR Benchmarking .

and sub-segmented • Rows are the Major Product Lines Customer/Market/Channels Your Company Supply-Chain Definition Matrix Retail Internet Big Box Direct Commercial Mom & Major Pop Building Account Stores Distrib Lines of Business Product Families Air Conditioners Big Airco Small Airco Custom Industrial Standard Industrial x x x x x x x x x x 22 SCOR Benchmarking .Example: Air Conditioning Company • Columns are Retail/Commercial.Presentation .

and margin). 23 SCOR Benchmarking .Supply Chain Prioritization • We use a tool called the Supply Chain Prioritization Matrix to order the supply-chains according to relevance • Each supply chain can be ranked by a number of features • We suggest: – size (revenue. volume. – complexity (# SKUs) – strategic importance • You can also look at them by – – – – Cash Consumption Risk Volume variability Etc.Presentation .

Presentation 24 .Supply Chain Priority • Each supply chain is given a rank in each category • The total of the values gives the final overall ranking • Weightings and other criteria may apply Revenue Gross Margin % 2 1 3 # of SKUs 2 3 1 Unit Volume 2 3 1 Strategic Value 2 1 3 Rank 11 10 9 Big Air Small Air Commercial 3 2 1 1=low 3=high SCOR Benchmarking .

Presentation 25 .Supply Chain Strategy • We use a tool called the Supply Chain Strategy Matrix to Identify priority strategic features or attributes of supply-chains. • Each supply chain strategy is indicated by a collection of ranked features: Reliability On time? Complete? Undamaged? Responsiveness From Customer Request to final acceptance Flexibility How long to scale up? How expensive to scale down? Cost Cost of Processes? Cost of Goods Sold? Assets Working Capital? Return on Investments? SCOR Benchmarking .

Presentation 26 .Comparative Ranking • We advocate using a simple ranking system for industry comparison • Each rank corresponds to a specific percentile in industry performance • We do not use averages or other statistical tests • Our key ranks: Performance Superior Advantage Parity Percentile 90th 70th 50th Choices 1 2 2 Interpretation “Top 10” performer “Top Half” performer “Half better/Half worse” SCOR Benchmarking .

Reliability 1. Assets 2. Cost 2. Cost 2. Assets 1. Assets 2. Flexibility 2.Presentation . Cost 1. Reliability 1.Supply Chain Strategy in 5 Minutes Build Strategy Buy Make ETO BTO BTS Start Middle Commodity Model Lifecycle Likely Priority 1. Reliability 2. Cost EOL 27 SCOR Benchmarking . Assets 2. Response 1. Response 1.

Presentation . NOT where you want to improve the most 28 Internal External SCOR Benchmarking .Supply-Chain Strategy Matrix Supply-Chain Strategy Matrix Big Airco Small Airco Comm’l Reliability P P A A S S Responsiveness A A P P Flexibility Cost Assets • Each unique combination of ratings defines Your Supply Chain Strategy for the channel • Think of the rating as a desired state.

• Each SCORcard™ is built from a subset of hundreds of SCOR metrics.Presentation . 2 and 3 metrics • The SCOR Manual provides all necessary definitions 29 SCOR Benchmarking .The SCORcard • We use a tool called the Supply Chain SCORcard™ to Identify performance characteristics of supplychains. • For supply-chain benchmarking we generally use only Level 1.

Presentation 30 .Performance Metrics • SCOR metrics: Standard Strategic (Level 1) Attribute Metric (Strategic) Metrics Reliability Customer Responsiveness Agility Cost Internal Assets Perfect Order Fulfillment Order Fulfillment Cycle Time Supply Chain Flexibility Supply Chain Adaptability† Supply Chain Management Cost Cost of Goods Sold Cash-to-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital † upside and downside adaptability metrics SCOR Benchmarking .

Presentation 31 .SCORcards in 5 Minutes Philosophy • You need to have the most data where performance is most critical • You need to have least data where performance is least critical For Every Select Superior Level 1 Metric and Level 2 Metric and Level 3 Metric Advantage Level 1 Metric Level 2 Metric Parity Level 1 Metric SCOR Benchmarking .

% Orders Received DamageFree Free 32 SCOR Benchmarking .A Metrics Architecture Supply-Chain SCORcard Reliability Reliability Reliability Reliability Reliability External Reliability Reliability Reliability Reliability Reliability Reliability Reliability Perfect Condition Accurate Documentation Shipping Documentation Accuracy Billing Documentation Accuracy Delivery Performance to Commit Date S/A/P S Level-1 Metric Perfect Order Fulfillment Level-2 Metric Level-3 Metric Summary Perfect Order Fulfilment % Orders Delivered in Full Delivery Item Accuracy Delivery Quantity Accuracy % Orders Delivered in Full Delivery Item Accuracy Delivery Quantity Accuracy Delivery Performance to Commit Date Date Achievement Location Achievement Date Achievement Location Achievement Accurate Documentation Shipping Documentation Accuracy Billing Documentation Accuracy Perfect Condition % Orders Received Damage.Presentation .

Presentation .Metrics Selection Supply-Chain SCORcard Responsiveness Responsiveness External Responsiveness Responsiveness Flexibility Cost Assets Internal Assets Assets Assets P S/A/P A Level-1 Metric Order Fulfilment Cycle Time Level-2 Metric Level-3 Metric Summary Order Fulfillment Cycle Time Source Cycle Time Source Cycle Time Make Cycle Time Make Cycle Time Deliver Cycle Time Deliver Cycle Time Upside Supply-Chain Flexibility Total Supply Chain Management Cost Cash to Cash Cycle Time Upside Supplly-Chain Flexibility Total Supply Chain Management Cost Cash to Cash Cycle Time P A Days Sales Outstanding Days Payables Outstanding Inventory Days of Supply Days Sales Outstanding Days Payables Outstanding Inventory Days of Supply 33 SCOR Benchmarking .

Cost Center Reports – Must be Verified by Financial Team (Controller) • Non-Financial Data – Customers • Delivery Performance • Total Cycle-Time Performance – IT Systems • Process-to-Process Transactions • Planning System Parameters (Lead Times) – Suppliers – 3PL Providers 34 SCOR Benchmarking .Presentation .Planning Data Gathering: Sources of Data • Financial Data – 10-K data. Company Annual Reports.

17 Owner Logistics 3PL Provider Deliver Team Due Date 2/2/2008 2/15/2008 2/22/2008 Status Complete 50% Collected Not started Metric On-Time Delivery Undamaged Order Fulfillment Cycle Time Etc… SCOR Benchmarking .16 D1.17 D1.Data Gathering Plan • • • • • Look at who owns the data Consider where the transactions may be Organize to alert data owners to gather data Collect and assess Data Quality Use SCOR Metrics Definition as a guide Process D1.Presentation 35 .1 – D1.

The Create the SCORcard • Based on average data averaged over many samples • Comes from root transactions. Supply Chain Flexibility Supply Chain Mgmt Cost Cash-to-Cash Cycle Time You 97% 14 days 62 days 12.2% 35 days Parity Adv Superior Gap SCOR Benchmarking .Presentation 36 . not aggregates • Six-Sigma team support a big help Attribute Reliability Response Flexibility Cost Assets SAP S A P P A Metric (level 1) Perfect Order Fulfillment Order Fulfillment Cycle Time Ups.

an electronic report is returned with the results of comparison against selected demographic groups • The principal function of the Benchmark is to determine the gap between actual performance and performance corresponding to desired strategic positioning. • The Benchmark is a component of Phase I and II of the SCOR Implementation Roadmap 37 SCOR Benchmarking .Presentation . and data for most metrics are gathered • Data are submitted electronically to the SCORmark™ system • With days or weeks.SCORmark™ • Once the SCORcard is defined.

Performance. Supply Chain Flexibility Supply Chain Mgmt Cost You 97% 14 days 62 days 12.2% Parity 92% 8 days 80 days 10.4% Assets A Cash-to-Cash Cycle Time 35 days 45 days 33 days 20 days 2 Days 38 SCOR Benchmarking .8% Adv 95% 6 days 60 days 10.Presentation . and Performance Goals Attribute Reliability Response Flexibility Cost SAP S A P P Metric (level 1) Perfect Order Fulfillment Order Fulfillment Cycle Time Ups.2% Gap 1% 8 Days 0 1.4% Superior 98% 4 days 40 days 10.Interpreting the Data • Used for choosing target performance • Critical to understand Performance in a particular Demographic • Can be “internal” (competing against other supply chains in same company) • Aligns Strategy.

Presentation 1-2 Day 1 Day Data 1 Day 1 Day Days/Weeks .Planning • Supply-Chain Definition workshop • Supply-Chain Prioritization Gathering • Supply-Chain Strategy workshop • Supply-Chain Performance workshop • Data and Benchmarking 39 SCOR Benchmarking .