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Supply Chain Improvement Supply Chain Operations Reference (SCOR) model. Peter A. Bolstorff Executive Director, Supply Chain PRAGMATEK Consulting Group, LTD. SCOR - FAQs. Who is the Supply Chain Council? What is SCOR? How do you use SCOR to achieve supply chain performance improvement?
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Supply Chain ImprovementSupply Chain Operations Reference (SCOR) model Peter A. Bolstorff Executive Director, Supply Chain PRAGMATEK Consulting Group, LTD.
SCOR - FAQs • Who is the Supply Chain Council? • What is SCOR? • How do you use SCOR to achieve supply chain performance improvement? • How can this apply to my company? • How can I learn more about SCOR?
Supply Chain Council • The Supply-Chain Council (SCC) is an independent, not-for-profit, global corporation with membership open to all companies and organizations • Over 800 Company Members (Practitioners, Technology Providers, Consultants, Academicians, Government) • Wide range of industries (Manufacturers, Distributors, Retailers, CPG) • The SCC endorses the Supply Chain Operations Reference-model (SCOR) as the cross-industry standard for supply-chain management The SCC was organized in 1996 by Pittiglio Rabin Todd & McGrath (PRTM) and Advanced Manufacturing Research (AMR), and initially included 69 voluntary member companies
The Two Faces of SCOR Process Reference Applied
Plan Plan Plan Plan Plan Return Deliver The SCOR Framework The integrated processes of Plan, Source, Make, Deliver and Return, spanning your suppliers’ supplier to your customers’ customer, aligned with Operational Strategy, Material, Work & Information Flows. Source Make Deliver Source Make Deliver Source Deliver Make Source Suppliers’Supplier Customer’sCustomer Your Company Supplier Customer Internal or External Internal or External Supply Chain Operations Reference Model
SCOR Project Roadmap • Supply Chain Scope • Performance Metrics • Supply Chain SCORcard • Competitive Performance Requirements and SCORcard Gap Analysis Operations Strategy Analyze Basis of Competition • AS IS Material Flow • Disconnect & Gross Opportunity Analysis • Material Flow Strategy and Best Practice Analysis • Supply Chain Strategy • TO BE Material Flow Material Flow Configure Supply Chain Align Performance Levels, Practices, and Systems Information and Work Flow • AS IS Work/Information Map • Transactional Analysis • Design Specifications • TO BE Work/Information Map • Prioritized List of Changes • Master Schedule of Projects • ROI Analysis • Technology Selection • Detail Requirements, Solution Design, Configuration, Test & Go Live Implementation Implement Supply-Chain Changes
Software Selection & Implementation Business Requirements Cost Reduction – Productivity Improvement Direct Indirect Application optimization Upgrade Utilization Implement Operational Strategy Network Analysis – Material Flow Design SKU Rationalization Delivery Performance Improvement OTIF – Perfect Order Synchronize Lead-time Supply Chain Six Sigma and Lean Enterprise Continuous Improvement Organizational Learning Efficient Consumer Response Forecast Accuracy Category Marketing CPFR Applications of SCOR
Implementation Results • 2X to 6X ROI within 12 months • Stock price improvement • Income statement and balance sheet improvement • Self fund technology investments • Fully Leverage Capital Investment in Systems • Utilization of current applications • Business blue print to leverage needed upgrades • Roadmap for e-investments • Framework for supply chain process management and continuous improvement
Project Approach Educate Discover Analyze Design Develop Implement Support Opportunity Strategy Solution Prototype Install • Workshops • Executive Briefings • Customized Training • SCOR Boot Camp for Project Managers • Performance Metrics • Benchmarks • SCORcard • Competitive Requirements • Prioritized Supply Chain Changes • Opportunity Analysis • Master Schedule of Projects • Supply Chain Project Office-Continuous Improvement Plan • Detailed Design • Technology Selection • “Conference Room” Pilot • Material Flow Design • Disconnect Analysis • Work and Information Flow Design • Application Architecture • Preliminary Implementation Plan • Discovery Checklist • Project Charter • Stakeholder Interviews 6+ Months 1-2 Weeks 3-4 Months 1 Week
Key Points Develop an “Evangelist” Establish Core Team Buy IN Enroll an Active Executive Sponsorship Deliverables General SCOR Workshops Customized Workshops Executive Briefings SCOR Boot Camp for Project Managers Supply Chain Management for Dummies, Oct 2000, SCTN; Supply Chain University, April 2001 SCTN; Spreading the Word, Oct 2001, SCTN Educate for Support
Key Points Uses a checklist to collect appropriate information to paint an appropriate business context Actively involves your entire business team – key stakeholders Scopes your project respecting all supply chain factors The Project Charter is the critical output Deliverables Business Context Summary Project Charter Scope Organization Plan A Model of Project Management, Sep/Oct 1999, SCTN; Scale versus Scope, Dec 2001, SCTN Discover the Opportunity
Strategic Background Strengths Weaknesses Opportunities Threats (SWOT) Value Proposition Critical Success Factors Critical Business Issues Competitive Analysis Business and Financial Information Profit and Loss Statement Balance Sheet Internal Profile Organization Physical Locations Other Key Performance Indicators External Profile Market/Customers Suppliers Business Context
Supply Chain Scope • Project is defined by the unique combination of • Geography • Customer(s) • Item(s) or Products • Process(es) • Supplier(s)
I. Introduction Maintenance of the Project Charter II. Project Overview Scope Business Objectives Project Objectives III. Project Approach Methodology Project Schedule Project Milestones & Deliverables Dependencies IV. Project Budget V. Project Organization Organization Chart Project Resources Roles and Responsibilities VI. Measures of Success Stakeholder Expectations Benchmarks Benefit Analysis VII. Project Communication Communication Plan Control Procedures Project Charter
Project Organization BU Advisory/Steering Committee BU Project Sponsor BU Project Manager Content SME Experienced Project Manager BU Design Team BU Extended Team
Key Points Balances Customer, Internal, and Shareholder Facing Metrics Incorporates multiple sources of useful benchmarks SCORcard data queries “Hot Links” to the P&L Provides the foundation for strategy, priority, and cascading goals Deliverables SCOR v5.0 Metrics Competitive Performance Requirements SCORcard www.pmgbenchmarking.com, www.marketguide.com Target the Impact, Cut the Risk, June 2000, SCTN; How to SCOR with Six Sigma, September 2001, SCTN Analyze to Align Strategy
Advantage Parity Competitive Requirements • Performance • Attribute *Performance vs. Competition Supply Chain 1 Supply Chain 2 *From your Organization’s Point of View Delivery Reliability Flexibility/ Responsiveness Supply Chain Cost Asset Legend Superior
Key Points Includes all Internal & External Physical Locations Incorporates P/N classification SCOR L2 Stock versus To Order RM versus FG versus WIP Illustrates “P/N” Routes Transportation Cost Inventory Level Leadtime Disconnect Analysis drives savings opportunity Deliverables AS IS Material Flow Disconnect Analysis List and Group Quantify Prioritize TO BE Material Flow When Performance is no Joking Matter, April 2000, SCTN Design Material Flow
Classify Items Plan Source Make Deliver S1 Source Stocked Products M1 Make-to-Stock D1 Deliver Stocked Products S2 Source MTO Products M2 Make-to-Order D2 Deliver MTO Products Suppliers Customers S3 Source ETO Products M3 Engineer-to-Order D3 Deliver ETO Products R1 Return Defective Product R2 Return MRO Product R3 Return Excess Products Return
As Is Material Flow Suppliers Suppliers Distributors Dealers Warehouse Factory Factory Factory Warehouse Warehouse Dealers Distributors Warehouse Dealers Factory Distributors Factory 3rd Party Supplier Far East Suppliers Distributors Distributors Dealers Dealers Factory Australia Suppliers Warehouse Dealers Suppliers Distributors Suppliers Factories Factories Warehouses Warehouse Distributors = Inbound Distributor Dealers = Outbound Dealer Physical Material Flow
Disconnect Analysis • Identify individual disconnects (brainstorm) • Group disconnects using an Affinity Diagram approach • Quantify Disconnects • Analyze Cause and Effect with Disconnect Group using Fishbone Analysis • Estimate Performance Opportunity using Test Scenarios for each Fishbone • Validate Savings
TO BE Material Flow • Identifies appropriate leading practices to improve material flow • CPFR, cross-dock, VMI, rapid replenishment, supplier agreements, product rationalization • Eliminates inefficiencies identified in disconnect analysis • Transportation cost, inventory turns, lead-time, delivery performance
Key Points Integrates the work and information flow which moves the material Incorporates application modules and sub-modules Organization roles illustrated using “Swim Diagram” Blueprints the impact of “e” to yourbusiness Focuses performance on transactional productivity Deliverables AS IS Work & Information Flow Revised Disconnect Analysis Productivity Quality TO Be Work & Information Flow SCOR Cheat Sheet Before You Buy, Re-connect, February 2000; Slow Down to Speed Up, Nov/Dec 1999; Putting the “e” in Enterprise, August 2000, SCTN; How to Design a Business Blueprint, August 2000, SCTN Design Work & Information Flow
Purchase Order Work Order Sales Order Return Authorization Planning Event Forecast Replenishment Order Staple Yourself to an Order Process Steps (Level 4) Inputs and Outputs Enabling Technology Business Rules Transactional Productivity Volume Cycle Time Event Time Elapsed Time Yield Transactional Analysis
Transactional Analysis PROCESS: M1.2 Make (Stocked Product) : Issue Material INPUT / OUTPUT: Staged Components Production Schedule Pull Instruction M1.2 PROCESS STEPS: 1. Locate Components 2. Wand Components out of Warehouse 3. Move components to in process staging area 4. Sequence components based on schedule TECHNOLOGY USED: Oracle Manufacturing, , Manual, RF, Excel VOLUME: 1300 pcs / hr CYCLE TIME: Event 1 hr / Elapsed = 4 hrs YIELD: 85 % BUSINESS RULES: 1. Don’t let the production line stop. DISCONNECTS: 1. Pull materials from receiving area.
S1.2 Receive Product S1.3 Verify Product S1.4 Transfer Product Purchase Order Warehouse S1.1 Schedule Product Deliveries Receipt of Purchase Order Purchasing Payment Product Packing Slip Purchase Order S1.5 Authorize Supplier Payment AP D1.2 D1.10 D1.13 Supplier Invoice SCOR Level 3 – Source
Plan Element Relationships P1 Plan Supply Chain P2 Plan Source P3 Plan Make P4 Plan Deliver D1.3 Reserve Inventory & Promise Date S1.1 Schedule Product Deliveries D1.5 Plan & Build Loads M1.1 Schedule Manufacturing Activities
Key Points Recommendations address all factors of performance Portfolio of Projects managed as a whole; initiates ROI analysis Integrates with Application Detailed Business Requirements Definition and Solution Design Transition Teams from “Design” to “Implementation” Deliverables Master Schedule of Projects ROI Schedule Implementation Organization Keeping Your Focus, December 2000; and Who SCORed my Cheese?; February 2001, More Faster, Less Later, June 2001, SCTN Develop Integrated Solution
Balanced Project Mix Pace of Change Balanced Project Mix Fast Measured Focused Improvement Continuous Improvement Tactical Scope of Change Focused Restructuring Business Process Innovation Strategic
Annual Budget & Business Strategy Ongoing Business Requests Monthly Project Review Maintain Master Schedule Create Project Charter Monthly Status Report Prepare Project Close Report Create Project Plan Assign Project Manager Create Budget Spreadsheet Maintain Project Plan Create Communication Plan Manage Change Generate Statement of Work and Funding Request Document Project Performance Establish Roles and Responsiblities Report Performance Manage Issues Create Risk Plan Cost Control Quality Control Create Project Charter Manage Risks Stakeholder Approval Close Project Contracts Create Procurement Plan Manage Procurement and Contracts Plan Plan Initiate Close Plan Execute/Control Implement the Changes Project Management Office Project Management Methodology
Toro Adoption Progress 1st SCOR Project Phase 1 Implemented Enterprise SCOR
Project Life Cycle – Adoption Discover Analyze Design Develop Implement 1 Week 4 Weeks 8-12 Weeks 24 - 32 Weeks • Discovery Checklist • Customized Training • Project Charter • Detailed SCORcard w/Benchmarks • Opportunity Assessment • AS IS & TO BE Material Flow • Detailed Disconnect Analysis • Design Specifications • AS IS & TO BE Work and Information Flow • Prioritized List of Supply Chain Changes • Technology Selection • Master Schedule of Projects • ROI Analysis • Technology Selection • Detail Design (Requirements) and Configure • Pilot (Test) and Roll Out or Go Live Business Case To Be Solutions Recommendations for Change 2X to 6X ROI within 12 months
Resources • www.supply-chain.org • www.supplychaintech.com • www.forbes.com • www.pmgbenchmarking.com • www.Toro.com - 3Q Earnings Announcement (NYSE:TTC) – 5 by Five Initiative • www.pragmatek.com