SCOR Model

Workshop

A Lecture-Presentation by Prof. Deepak

Jakate
Supply Chain Operations
Reference (SCOR) Model
Agenda
1. Origin & History
2. What is it ?
3. How it can be used.
4. Scope & details.
5. SCOR Level-1 Metrics definitions & SCOR Card
(example).
6. Implementing & using SCOR
7. Available software tools.
Agenda
1. New approaches – SCOR & ERP implementation
project
- Integrating with six sigma / Lean six sigma
- Supporting with balanced Score card
- Inclusion of Supply Chain Risk
- Maximizing Supply Chain Visibility Solutions
2. Case Study
Supply Chain Operations Reference
Model (SCOR): Information about (SCC)
• Developed by Supply Chain Council (SCC)
• SCC: Independent, not – for - profit corporation
organized in 1996 by :
• Global management-consulting firm, Pittiglio Rabin Todd &
McGrath (PRTM) and
• Market research firm, Advanced Manufacturing Research
(AMR) in Cambridge, Massachusetts.
• Started with 69 voluntary companies;
now close to 1000 members.
• SCC Objective : To develop a standard
supply - chain process reference model
enabling effective communication among
the supply chain partners, by
• Using standard terminology to better
communicate and learn the supply
chain issues
• Using standard metrics to compare
and measure their performances
Supply Chain Operations Reference Model
• SCOR: Integrates Business Process
Reengineering, Benchmarking, and Process
Measurement into a cross-functional
framework.
Capture the “as-is”
state of a process and
Capture the Quantify the Characterize derive the desired “to-
“as-is” state operational the be” future state
performance management
of a of similar practices and
Quantify the operational
process performance of similar
companies software companies and
and derive and establish solutions that establish internal targets
the desired internal result in “best- based on “best-in-class”
“to-be” targets based in-class” results
on “best – in performance Characterize the
future state -class” results management practices
and software solutions
that result in “best-in-
class” performance
Business Process Benchmarking Best Practices
Reengineering Analysis Process Reference
Model
• The Primary Use of SCOR :
– To describe, measure and evaluate supply chain
configurations.
• SCOR contains :
– Standard descriptions of management processes
– A framework of relationships among the standard
processes
– Standard metrics to measure process performance
 – Management practices that produce best – in - class
performance
• Enables the companies to :
– Evaluate and compare their performances with other
companies effectively
– Identify and pursue specific competitive advantages
– Identify software tools best suited to their specific
process requirements
Added value of the SCOR-model
• Process - mapping and comparison
– As - is situation
– To - be situation
• Logistics performance measurement (KPI’s)
• Identify area’s of improvement
• Provide supporting tools to achieve improvement
and support business processes
• All market interactions, from the understanding of
aggregate demand to the fulfillment of each order
• SCOR does not attempt to describe every business
process or activity, including :
•Sales and marketing (demand generation)
•Research and technology development
• Product development
• Some elements of post - delivery customer
support
• SCOR spans :
• All customer interactions, from order entry through
paid invoice.
• All product (physical material and service)
transactions, from supplier’s supplier to customer’s
customer, including equipment, supplies, spare parts,
bulk product, software, etc.
• All market interactions, from the understanding of
aggregate demand to the fulfillment of each
ordersupport
• SCOR does not attempt to describe every business
process or activity, including :
•Sales and marketing (demand generation)
•Research and technology development
• Product development
• Some elements of post -delivery customer
support
Supply Chain Operations Reference
Model (SCOR) : Boundaries
SCOR describes processes not functions. In other
words, the Model focuses on the activity involved, not
the person or organizational element that performs
the activity.
Supply Chain Operations
Reference Model (SCOR) : Basic
Management Processes
Plan

Deliver Source Make Deliver Source Make Deliver Source Make Deliver Source

Return Return Return Return

Return Return
Supplier’s
Customer’s
Supplier Customer
Supplier Customer
(Internal or (Internal or
Your Company
External) External)

Plan – Source – Make – Deliver - Return provide

the organizational structure of the SCOR-model
Scopes of Basic Management
Processes
• Plan (Processes that balance aggregate demand and
supply to develop a course of action which best
meets sourcing, production and delivery
requirements)
– Balance resources with requirements
– Establish / communicate plans for the whole supply
chain
• Source (Processes that procure goods and services
to meet planned oractual demand)
– Schedule deliveries (receive, verify, transfer)
• Make (Processes that transform product to a
finished state to meet planned or actual demand)
– Schedule production
• Deliver (Processes that provide finished
goods and services to meet planned or
actual demand, typically including order
management, transportation
management, and distribution
management)
– Warehouse management from
receiving and picking product to load
and ship product.
• Return (Processes associated with
returning or receiving returned products)
– Manage Return business rules
Three Levels of Process Detail
Level
# Description Schematic Comments

1 Level 1 defines the scope and content for the

Plan Supply chain Operations Reference-model. Here
Supply Chain Operations Reference Model

Top Level Source Make Deliver basis of competition performance targets are set.
(Process Types)
Return Return

2
A company’s supply chain can be “configured-to-
Configuration Level order” at Level 2 from the core “process
(Process categories.” Companies implement their
Categories) operations strategy through the configuration
they choose for their supply chain.

3 Level 3 defines a company’s ability to compete

Process Element
successfully in its chosen markets, and consists
Level (Decompose
of:
Processes)
·Process element definitions
P1.1
Identify, Prioritize, and Aggregate ·Process element information inputs, and outputs
·Process performance metrics
Supply-Chain Requirements
P1.3 P1.4
Balance Production Resources with Establish and
P1.2 ·Best practices, where applicable
Supply-Chain Requirements Communicate
Supply-Chain Plans
Identify, Assess, and Aggregate
Supply-Chain Requirements
·System capabilities required to support best
practices
·Systems/tools

4 Implementation Companies implement specific supply-chain

Level (Decompose management practices at this level. Level 4
Not defines practices to achieve competitive
Process Elements)
in Scope advantage and to adapt to changing business
conditions.
Top Level (Process Types)

Level 1 defines the scope and

content for the Supply chain
Operations Reference-model. Here
basis of competition performance
targets are set.
Configuration Level (Process
Categories)
A company’s supply chain can be
“configured – to - order” at Level 2
from the core “process categories.”
Companies implement their
operations strategy through the
configuration they choose for their
supply chain.
Process Element Level (Decompose
Processes)
Level 3 defines a company’s ability to
compete successfully in its chosen
markets, and consists of :
Process element definitions
Process element information inputs, and
outputs
Process performance metrics
Best practices, where applicable
System capabilities required to support
best practices
Systems / tools
Implementation Level (Decompose
Process Elements)
Companies implement specific
supply -chain management
practices at this level. Level 4
defines practices to achieve
competitive advantage and to adapt
to changing business conditions.
Level 1 Performance Metrics
Customer-Facing Internal-Facing
Supply Chain Responsiveness Flexibility
Reliability
Cost Assets
Performance Attributes
Delivery performance 
Fill rate 
Perfect order fulfillment 
Order fulfillment lead time 
Supply Chain Response Time 
Production flexibility 
Total SCM cost 
Cost of Goods Sold 
Value-added productivity 
Warranty cost or returns processing cost 
Cash-to-cash cycle time 
Inventory days of supply 
Asset turns 
Level 1 metrics
Delivery (# orders delivered on time and in full)/(total # of orders
performance received) = %
Fill Rate (#orders filled from stock shipped within 24 hrs of order
receipt)/(total # of stock orders) = %

Order fulfillment (Sum actual lead times for all orders shipped)/ (total # of
lead time orders shipped) = time (in days)

Perfect order (total orders shipped on time and in full – orders with
fulfillment faulty documentation – orders with shipping
damage)/(total # of orders received) = %

Supply Chain (order fulfillment lead time + source cycle time) = time (in
response time days)

Production flexibility 1.(# days required to achieve an unplanned sustainable

20 % increase in production) = days
2.(% of order reduction sustainable at 30 days prior to
delivery with no inventory or cost penalties) = %
Total Supply (Sum of supply chain related costs for MIS,
Chain finance, planning, inventory carrying, material
management cost acquisition and order management)/total
revenue = %
Value added (total gross annual sales – total annual
productivity material purchase)/total employment (in FTE)
= value €
Warranty cost (total costs for warranty)/(total revenue) = %

Inventory days of (5 point annual average of gross value of

supply inventory at standard cost)/(annual cost of
goods sold/365)
Cash-to-Cash (inventory days of supply + days of sales
Cycle time outstanding – days of payables outstanding) =
time in days
Asset turns (total gross annual sales)/(total net assets)=
turns per year
Level Metrics Facts

• Level 1 Metrics are primary, high level

measures that may cross multiple SCOR
processes.
• They do not necessarily relate to a SCOR Level
1 process (Plan –Source – Make – Deliver
-Return).
• There is hierarchy among the metrics in
different levels.
• Level 1 Metrics are created from lower level
calculations (Level 2 metrics)
Level 2 Metrics :
• Associated with a narrower subset of
processes.
•Example :
» Metric related with Delivery
Performance : Total number of
products delivered on time and in full
based on a commit date.
» Metric related with Production :
Ratio Of Actual To Theoretical Cycle
Time
Level 2 Process Types and
Definitions
• Planning : A process that aligns expected resources
to meet expected demand requirements.
– Balance aggregated demand and supply
– Consider consistent planning horizon
– (Generally) occur at regular, periodic intervals
• Execution : A process triggered by planned or actual
demand that changes the state of material goods.
– Scheduling / Sequencing
– Transforming product
– Moving product to the next process
• Enable : A process that prepares, maintains, or
manages information or relationships on which
planning and execution processes rely
Level 2 Process Categories
P1: Plan Supply Chain
P2-P5: Plan SCOR Process
S1: Source Stocked Product
S3: Source Engineer-to-Order
Product
S2: Source Make-to-Order Product
M1: Make-to-Stock
M2: Make-to-Order
M3: Engineer-to-Order
D1: Deliver Stocked Product
D2: Deliver Make-to-Order Product
D3: Deliver Engineer-to-Order
Product
D4: Deliver Retail Product (New in
Version 6.0)
SR1/DR1: Return Defective Product
(Source Return/Deliver Return)
SR2: Source Return MRO Product
(Maintenance, Repair and
Overhaul)
DR2: Deliver Return MRO Product
SR3/DR3: Return Excess Product
(Source Return/Deliver Return)
EP, ES, EM, ED, ER: Enable
corresponding SCOR Processes
Process Category: Source Process Number: S1
Stocked Product
Process Category Definition
The procurement, delivery, receipt and transfer of raw material items,
subassemblies, product and or services.
Performance Attributes Metric
Reliability % Orders/lines processed complete
Responsiveness Total Source Cycle Time to
Completion
Flexibility Time and Cost related to Expediting
the Sourcing Processes of
Procurement, Delivery, Receiving and
Transfer.
Cost Product Acquisition Costs
Assets Inventory DOS
Best Practices Features
Joint Service Agreements None Identified
Alliance and Leverage agreements
Process Element: Transfer Process Element Number:
Product S1.4
Process Element Definition

The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the
activities associated with repackaging, staging, transferring and stocking product. For service this is the transfer or
application of service to the final customer or end user.

Performance Attributes Metric

Reliability % Product transferred damage free

% Product transferred complete
% Product transferred on-time to demand requirement
% Product transferred without transaction errors

Responsiveness Transfer Cycle Time

Flexibility Time and Cost Reduction related to Expediting the Transfer

Process.

Cost Transfer & Product storage costs as a % of Product

Acquisition Costs

Assets Inventory DOS

Best Practices Features

Drive deliveries directly to stock or point-of-use in Pay on receipt

manufacturing to reduce costs and cycle time Specify delivery location and time (to the minute)

Specify delivery sequence

Capability Transfer to Organization None Identified

Inputs Plan Source Make Deliver

Product Pull Signals M D

Product Inventory Location ES.4

WIP Inventory Location EM

Finished Goods Inventory ED

Location

Outputs Plan Source Make Deliver

Inventory Availability P2.2 ES.4 M1.2, D1.8,
M2.2, D4.2
M3.3

Daily Replenishment D4.1

Requirements
Loaded Cart D4.4
Some Graphical Tools
1st Step in configuring a SC: Illustrate physical
layout, material flow and place Level 2
execution process categories to describe
activities at each location.
SCOR Process Maps
2nd Step: Create the SCOR Process Maps: Place
planning process categories, using dashed lines to
show links with execution processes
SCOR card (example)
Overview
metrics KPI's SCOR level 1 Actual Target Value Value improvement
Reliability Delivery Performance 96.11% 99% €19,500,000  
 
€19,500
  Fill rate 90.20%  98% ,000  
  Perfect order fulfillment 85.07% 95% €19,500,000  
Responsiveness Order fulfillment LT NM      
 3
d
a
y
Flexibility Supply-Chain response time 20 days s    
  Production flexibility NA      
Total supply chain management €1,755,000.
Cost cost 9% 8% 00 €195,000.00
€13,650,000
  Cost of goods sold 70% -2% .00 €273,000.00
  Cost of non-quality NM      
€3,258,904.
Assets Inventory days of supply 61 50 00 €587,671.00
€4,434,246.
  Cash-to-cash cycle time 83 60 00 €694,520.00
Savings
  Asset turns NM
Supply chain cost : 195,000.00€      
Cost of goods : 273,000.00€
Cash to cash : 694,520.00 x 13% =90,287.00€
SCOR Level 1
Dashboard
SCOR Metric Drill Down
Structure
Level one metric

Level two metric Level two metric

Level three metric Level thee metric

Level three metric
 Delivery
Performance
SCOR Drill
SCOR Project Road Map
SCOR Diagnose Define
Analyze and improvement
Configure projects
Map processes Define
SCORE-Card projects
Gap-analyses Define
Define Improvement measurable
opportunities targets
Define possible Define
savings measurable
SCOR Implementation Implement
Project Align systems improved
Set-up and procedures processes
Set-up: Define system Implement
Project changes changes
structure Design new Test
Project processes Measure
plan Cost/benefit results
analyses
Templates Set-up
implementation
project
Measure and define the mission
Learn SCOR training
Transfer of knowledge
Measure performance
Discover Define SCOR-cards
Map processes
Define competitive advantage
GAP-analyses
Decompose metrics
Analyze Link metrics with processes
Define opportunities
Define TO-BE processes
Define Define improvement projects
Most important step!!!!!!

Implement

If you do not implement….

You do not improve
Supply Chain Improvement Benefits
Typical Quantified Benefits from
Integrating the Supply Chain
Delivery Performance 16% – 28%
Inventory Reduction
Fulfillment Cycle Time 25% – 60%
Forecast Accuracy 30% – 50%
Overall Productivity 25% – 80%
Lower supply chain 10% – 16%
Costs
Fill Rates 25% – 50%
Improved Capacity 20% – 30%
Realization 10% – 20%
Software Package for Modeling
SCOR: ARIS EasySCOR
•The ARIS Toolset and ARIS Easy Design are
process modeling tools. The ARIS Toolset is
a BPR tool, Easy Design is used for process
capture.
•The EasySCOR Modeler is a software
package that includes the ARIS Easy Design
modeling kit and the SCOR model in ARIS
format.
•ARIS EasySCOR consists of process models
that describe the SCOR levels 1 to 3.
Implementation level, level 4 is not
included.
Process Map Example created in ARIS EasySCOR

Suppliers Suppliers Assemble/ Package Distribution Centers Geo Ports of Entry

Supplier

Americas--->

Europe--->

Asia--->
BI Performer - SCOR based SAP
BW Solution from Infosys
•Provides SCOR based reports that enable
improvements in supply chain efficiency.
•A user friendly portal guides business users through
these reports enabling them to analyze their supply
chain performance on demand. These reports can be
downloaded into spreadsheets for further analysis.
•The robust logical data model uses
standardized metadata thereby
allowing business to seamlessly
integrate it with existing multi –
system landscape.
•Allows best in class portability 7
control over supply chain processes.
•Infosys has enhanced the SCOR model
by providing industry benchmark
values for various parameters.
How does SCOR fit with Six Sigma?
DMAIC SCOR
•Analyze Basis
• Define
of Competition
• Measure •Configure Supply Chain
• Analyze •Align Performance Levels,
• Improve Practices and Systems
•Implement Supply
• Control
Chain Changes
Six Sigma Supply Chain Process
Improvement using SCOR.
DMAIC - Define SCOR
•DMAIC Project Analyze Basis of
Charter Competition
•Identify Customer • SCOR Project
Requirements: Charter
•Kano Analysis; Template
•Voice of the
•
Customer Analysis Supply Chain
•Identify and Definition Matrix
Document the • Chip Exercise
Process: SIPOC • Thread Diagram
Six Sigma – SCOR (Define Phase)
•Kano analysis — a Japanese diagramming
method to measure customer satisfaction
— is structured to collect data for input to
supply chain competitive requirements.
•The SCR project plan incorporates the
SCOR “chip exercise” to help
summarize supply chain performance
priorities between delivery
reliability,flexibility and responsiveness,
supply chain cost, and asset management
efficiency.
Six Sigma – SCOR (Define Phase)
•The SCR project uses the supply chain “thread
diagram” technique to
serve as the high-level SIPOC (suppliers; inputs;
process; outputs;
•customer) process map. This helps maintain metric
integrity from the level 1 SCOR-card all the way down
to the transaction productivity.
Six Sigma – SCOR (Measure Phase)
DMAIC - Measure SCOR
•Appropriate Analyze Basis
Measures: of Competition
CTQ; Stratification •SCOR Metrics
•Operational Template
Definitions •SCOR-card
•Data Baseline and
Sources,Data Gap Analysis
Collection
and Sampling
DMAIC - SCOR
Measure Analyze Basis of
•Sigma Competition
•SCOR Level 2 and 3
Calculation:
Measures for Material
•Unit, Defect, Flow Efficiency and
Defect Transactional
Opportunities Productivity
•Yield
•Cost of Poor
Quality
Six Sigma – SCOR (Analyze Phase)
DMAIC- Analyze
•Data Analysis:
Pareto Chart, Run Chart,
Histogram, Scatter Plot and
Fishbone Analysis.
•Process Analysis:
Detailed Process Maps, Cross
Functional Process Maps,
Process Value and Time
Six Sigma – SCOR (Analyze Phase)
SCOR - Configure Supply Chain;
Align Performance, Practices, and
Systems
•AS IS Material Flow: Geographic
Map;
•Transportation, Inventory,
Warehouse
•and Returns Expense Summary;
•Delivery Performance and Order
Fulfillment
•Lead Time Summary
Six Sigma – SCOR (Analyze Phase)
SCOR - Configure Supply Chain;
Align Performance, Practices, and
Systems
•AS IS Work and Information Flow:
•Staple Yourself Analysis;
•Swim Diagram;
•Transactional productivity for
purchase,
•work, replenishment and sales
orders;forecasts; and return
Six Sigma – SCOR (Improve Phase)
DMAIC - Improve
• Generate Creative Solutions
• “Cook the Solution”
• Select and Solution Impact - Effort
Matrix;
• Decision Matrix;
• Force Field Analysis
• Pilot the Solution
• Full Scale Roll Out
Six Sigma – SCOR (Improve Phase)
SCOR - Configure Supply Chain; Align
Performance, Practices, and Systems;
Implement Supply Chain Changes
•TO BE Material Flow: SCOR Level 2
Configuration
•Strategy and Thread Diagram;
•Appropriate Leading Practices;
•TO BE Work and Information Flow:
SCOR Business Blueprint;
•Application Architecture — Use Case;
•Organizational Design — Swim Lane
Efficiency
TO BE Work and Information Flow:
SCOR Business Blueprint;
Application Architecture — Use
Case;
Organizational Design — Swim
Lane Efficiency
Implement Supply Chain Changes:
Detailed Solution Design;
Pilot and Evaluation;
Roll Out Solution
Six Sigma – SCOR (Control Phase)
DMAIC - Control
•Discipline
•Documenting the Improvement
•Keeping Score
•Process Management Plan
SCOR - Implement Supply Chain
Changes
•Supply Chain Program
Management Office
•TO BE Business Blueprint,
associated Material Flow Thread
Diagrams, Supply Chain Definition
Matrix
•SCORcard
•Organizational Responsibility
Matrix
How can Six Sigma and Lean make
a SCOR model more effective?
•Building a supply chain model or process with using a
highly standardized structure enables an organization
to detect and eliminate process variation. This is
because variation from a well-known standard is
easily detected, analyzed and eliminated using Lean,
Six Sigma and similar improvement methodologies
•Lean methods can be applied to simplify, standardize
and mistake proof process workflows prior to
migration to a SCOR model
•Six Sigma methods can be used to analyze customer
and process data to identify repeatable patterns
associated with the root causes of poor operational
performance. These types of analyses also can be
used to build quantified models of a system's metrics
as described by the Six Sigma expression Y=f(X).
•In other situations, when customization is required to
match a specific supply chain operational design,
Design for Six Sigma tools and methods can be used
to augment the basic SCOR model
SCOR Model's Hierarchal Levels
Integrating Organizational Process Workflows

A SCOR model also helps to integrate organizational process workflows and their
internal operational work tasks into a coherent whole within a global supply
chain. Standardizing operational methodologies ensures that a common
approach is taken by supply chain participants to development of procedures
and metrics. This tends to integrate rather than isolate operational segments.
To the extent that there are process breakdowns Lean Six Sigma methods can be
used to identify and eliminate their root causes.
Six Sigma methods are very useful in identifying and analyzing the voice of the
customer during the deployment of SCOR methodology and development of a
SCOR model within a supply chain.
Lean methods are used to simplify and eliminate non-essential operations by
identifying value-adding and non-value-adding operations.
Integrating Organizational Process Workflows

A major goal of applying a SCOR model is to develop a value stream map

describing a supply chain's major process workflows. Figure 2 shows
that a SCOR model consists of five major process workflows. These
are:
• Demand and supply planning
• Sourcing strategies
• Transformation processes
• Warehousing and delivery
• Reverse logistics
These major process workflows are then broken into lower level workflows.
Definitions, Metrics, Tools and Methods
A SCOR model also provides operational definitions, expected performance
metrics for basic supply chain operations as well as best-in-class tools,
methods and systems for its members to use to modify their process
workflows. This approach enables users to more easily adapt a SCOR model to
their specific process workflows.
Metrics which have been shown to be predictors of best-in-class global
supply chain performance also are provided by a SCOR model. These
include: perfect order fulfillment, order fulfillment cycle time, system
flexibility, cash-to-cash cycle time and similar metrics. A global supply
chain can be analyzed relative to its major components to compare its
actual to best-in-class performance benchmarks using this metric
linkage concept. As a result, supply chains using a SCOR model
provide Lean Six Sigma practitioners with a highly standardized supply
chain process, but, also one that is operationally flexible as its needs
change over time.
How can a SCOR model make Lean Six Sigma more effective?

Lean Six Sigma projects have been deployed to improve

customer service levels and on-time delivery, reduce
overdue backlogs, increase inventory asset utilization
efficiency (turns), reduce unplanned orders, reduce
scheduling changes, improve material availability, improve
forecast accuracy, and reduce operational lead-time. It
would be an easier if processes were standardized upfront
using SCOR principles, prior to deployment of Lean Six
Sigma projects aimed at identifying and eliminating the
root causes for process breakdowns.
SCOR Lean Six Sigma model Deployment
An organization can compare its current supply
chain at all operational levels to the established
SCOR procedures, standards, metrics and
benchmarks. Then value stream map, simplify,
standardize major process workflows. In parallel,
remember to apply Lean Six Sigma methods
wherever there are process breakdowns whose
root cause analysis requires a reduction in process
variations.
Supporting the Innovative SCOR Model with a Balanced Scorecard
• The model is organized around the four primary Supply Chain Management processes
of PLAN, SOURCE, MAKE, and DELIVER. Within each section a hierarchy of metrics have
been established. At the highest level (Level 1) the measurements are stratified into
four diagnostic elements:
Reliability
• Delivery performance
• Order fulfillment performance
• Perfect order fulfillment
Flexibility & Responsiveness
• Supply chain response time
• Production flexibility
Cost
• Total Supply Chain Management cost
• Valued-added productivity
• Warranty cost or returns processing cost
Assets
• Cash to cash cycle time
• Inventory days of supply
 SCOR Level 2 Metrics in a Balanced Scorecard

At the process category level (Level 2) the measurements are stratified into four
diagnostic elements for each specific PLAN, SOURCE, MAKE and DELIVER process

The opportunity that the Balanced Scorecard and the SCOR model together
present is one of a disciplined, organized, and systemic means of effectively
measuring supply chain performance
The Inclusion of Supply Chain Risk in the SCOR Framework

The SCOR definition of risk management reads as follows:

Supply chain risk management is the systemic identification, assessment,
and mitigation of potential disruptions in logistics networks with the
objective to reduce their negative impact on the logistics network’s
performance.
The SCOR view of supply chain risks are that they are a component of all
business risks, and, hence, should be integrated in an enterprise risk
management framework. 
supply chain risk management is one of the most integral aspects of that
enterprise risk management framework, with far reaching effects for
the business, the brand, and for operations.
The Inclusion of Supply Chain Risk in the SCOR Framework

Three phases of risk management are now outlined in the

SCOR 9.0 framework model:
• Phase 1- Risk Identification which can create a list of
potential events that could harm any aspect of the supply
chain’s performance.
• Phase 2- Risk Assessment to provide management with an
understanding of where the greatest risks may exist.
• Phase 3- Risk Mitigation to determine if risks can be
controlled or monitored.
The Inclusion of Supply Chain Risk in the SCOR Framework

• The Version 9.0 framework now includes the following supply chain
risk management enablers, along with some recommended metrics
for measurement:
Plan
• Manage Supply Chain Plan Risk (EP.9)- defined as the process for
identifying, coordinating and managing supply chain risks by aligning
with the overall business risk management program. This enabler
includes identifying the potential risks, assessing the probability and
potential impact of risks, and planning risk mitigation strategies.
Select Performance Attributes:
• Supply Chain Agility 
     Industry Benchmark Comparison (%)
     Options or Hedge Rating (%)
• Supply Chain Costs
     Mitigation Cost overall or event ($)
The Inclusion of Supply Chain Risk in the SCOR Framework

Source
Manage Supply Chain Source Risk (ES.9)- includes the identifying and
assessing of Source risks that could impact the organization’s or the
supplier’s ability to deliver materials in a timely manner, at reasonable
cost, and with acceptable quality.
Select Performance Attributes:
• Supply Chain Reliability
     Supplier Mitigation Plans Implemented (percent)
      VAR of product/customer performance
       Age of Supplier Risk Data (months)
• Supply Chain Responsiveness
     External Event Response (average days)
• Supply Chain Agility
     Internal event Response Time (average days)
• Supply Chain Costs
     Mitigation Cost overall or event ($)
The Inclusion of Supply Chain Risk in the SCOR Framework

Make
Manage Supply Chain Make Risk (EM.9)- the process of managing risks related to
producing products on-time at a reasonable cost with good quality, as well as
planning and implementing responses to Make risks.
Select Performance Attributes:
• Supply Chain Reliability
     Supplier Mitigation Plans Implemented (percent)
     Value at Risk (Make)
     Age of Supplier or Customer Risk Data (months)
• Supply Chain Responsiveness              
     External Event Response (average days)
• Supply Chain Agility                            
     Industry Benchmark Comparison (5)
     Internal event Response Time (average days)
• Supply Chain Costs
     Mitigation Cost overall or event ($)
The Inclusion of Supply Chain Risk in the SCOR Framework

Deliver
Manage Supply Chain Deliver Risk (ED.9)- the process of managing risks
that could impact the company’s ability to deliver product on-time at
a reasonable cost and quality.
Select Performance Attributes:
• Supply Chain Reliability
     Value at Risk (Deliver)
     Age of Product/Customer Risk Data (months)
• Supply Chain Responsiveness
     External Event Response (average days)
• Supply Chain Agility
     Industry Benchmark Comparison (percentage)
     Internal Event Response (average days)
• Supply Chain Costs                             
     Mitigation Cost overall or by event ($)
The Inclusion of Supply Chain Risk in the SCOR Framework

Supply chain risk management has become

an increasingly more critical aspect of
global supply chain strategy.  As the
economy provides a period of business
downturn, now may be the right time for
organizations to take the time to invest in a
global supply chain risk assessment.
Maximizing Supply Chain Visibility
Solutions with SCOR
Maximizing the benefits of Supply Chain visibility solutions is
within reach when the SCOR-model is adopted.
Understanding the advantages of the SCOR-model and
identifying how existing Supply Chain processes relate to
the model can increase the ROI on existing Supply Chain
systems and visibility investments. By defining a Supply
Chain visibility strategy that aligns with the SCOR model,
pertinent information can be analyzed and efficiencies
gained that will deliver measurable and actionable results.
 Leveraging the Visibility Framework
Integrating portions of the SCOR-model into a visibility solution can take
advantage of many inherent features of a visibility framework such as current
integrations, existing metrics, and a common representation medium such as
web-based user interfaces and portals, reports, and alerts.
Incorporating SCOR defined metrics into a visibility solution takes advantage of
existing integration capabilities into multiple supply chain management
systems, thereby increasing the amount of supply chain data available to
access. A high-quality supply chain visibility solution can take advantage of
well integrated systems as well as disparate systems that are not fully
integrated by extracting the information needed, applying standardized
calculations across multiple systems, and presenting a final output.
Attempting to integrate SCOR defined metrics separately into multiple,
independent systems could be costly, redundant, and require a lengthy
development cycle.
Leveraging the Visibility Framework

Incorporating the SCOR-model into a supply chain visibility

solution will have the greatest impact if the standardized metrics
are defined properly, implemented correctly, executed timely,
and acted upon if necessary. Actionable data is possible when
visibility solutions provide access to lower level, detailed
information in support of higher level metrics.
The SCOR-model adds value to visibility solutions through the
addition of standardized supply chain metrics, increased
continuity in definitions and terminology across the supply
chain, and increased ROI through leveraging current
investments in the visibility solution framework.
Case Study : Supply Chain Excellence at Agilent
• Agilent Technologies used the SCOR Lean Six Sigma frame
work to successfully streamline supply chains shipping $2
billion of products annually
• The project involved a massive transformation of both its
manufacturing processes and its supporting global supply
chain in it’s Electronic Measurement Group(EMG), Known
as the War on Waste (WoW) Program.
• EMG used the Supply-Chain Council’s Supply-Chain
Operations Reference model (SCOR) in conjunction with
Lean Manufacturing and Six Sigma tools to streamline and
standardize widely disparate global supply chains
supporting a singlemanufacturing site.
Case Study : Supply Chain Excellence at Agilent
• WoW has been recognized by the SCC with
a2008 Award for Supply Chain Operational
Excellence.
The Business Challenge
The Asia Manufacturing Centre (AMC) had to
support numerous complex and unique supply
chains as it delivered $2 billion of shipments
annually across multiple divisions. A 19-day order
delivery lead time posed on-time delivery and
consequently, customer satisfaction
challenges.Asset management was also an area of
focus -- in 2006, Asia AMC carried inventory
amounting
to 53 days of supply.
 How They Solved It
AMC leadership turned to the SCOR framework in
conjunction with Lean and Six Sigma methodologies
to help create a common platform for data
acquisition and analysis.
Agilent used the SCOR framework to build visual stream
maps comparing the different divisions’ supply chain
metrics against those of competitors
 How They Solved It
The SCOR-based analysis found three major
areas of concern: responsiveness, supply chain costs,
and asset velocity. Lean Six Sigma tools were then
used to analyze each area of constraint found in the
value stream maps to dig out the root cause. The
AMC then used SCOR best practices and Lean Six
Sigma tools to build improvement projects designed
to address constraints found within each of SCOR’s
key business flows: Plan, Source, Make and Deliver.
 How They Solved It
The company also prioritized and aligned each improvement initiative within
one of the following five WoW key strategies:
• Culture and Workforce Transformation
• Process Re-engineering
• Redesign for Lean
• Yield Improvement
• Collaborative Planning, Forecasting and
Replenishment with Customers and
Suppliers. The result was an AMC-wide initiative to
completely transform AMC’s supply chain
processes.
 Benefits/Results
Agilent has already achieved significant improvement in terms of responsiveness, asset
velocity and productivity.
More than 100 projects were identified from the converged SCOR /Lean Six Sigma models,
helping AMC to achieve the following early results:
• Lead time reduction: AMC reduced order fulfillment lead time from 19 days
to 13 days, a 32 percent improvement. It also saw an order to revenue conversion
improvement of 5 percent, generating an incremental $50 million of revenue.
• Lower inventory levels: The company reduced inventory by $16 million, from $104
million to $88 million essentially paring inventory by six days’ worth of supplies. This
was done while supporting 11 percent revenue growth.
• Productivity improvement: AMC improved productivity by 21 percent year on year.
With the first year of the three year project showing such a record of success, AMC looks
forward to reaping further rewards as the WoW transformation extends to supply
partners in the next phase.
Questions?
 Deepak Jakate
Managing Partner
Envision Management Services
Supply Chain Excellence
Six Sigma
Training & Education
Business Consulting
Investment Advisory
Secondary Research

email : deepak.jakate@rediffmail.com
mobile : 09892700607