Supply Chain Council & Supply Chain Operations Reference (SCOR) Model Overview - PowerPoint PPT Presentation

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Supply Chain Council & Supply Chain Operations Reference (SCOR) Model Overview

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Supply Chain Council & Supply Chain Operations Reference (SCOR) Model Overview
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Supply Chain Council & Supply Chain Operations Reference (SCOR) Model Overview

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  1. Supply Chain Council&Supply Chain Operations Reference (SCOR) Model Overview Scott Stephens Chief Technology Officer Supply-Chain Council, Inc. 303 Freeport Road Pittsburgh, PA 15215 USA www.supply-chain.org

  2. 3% 9% 41% Early 46% On-time Late 45% 56% 10% 4% 16% 36% 47% 45% 51% 43% 48% SCM Project Success Can Be Uncertain Schedule Budget Expectations Completed 23% 28% 49% Above Below Met On Below Over In Process Based on a 1997 Survey of Fortune 1000 Companies by Lockheed Martin and Penn State University

  3. The SCC is an independent, not-for-profit, global corporation with membership open to all companies and organizations interested in applying and advancing state-of-the-art supply-chain management systems and practices. • Over 600 Company Members (Practitioners, Technology Providers, Consultants, Academicians, Government) • Wide range of industries (Manufacturers, Distributors, Retailers) • Over 30 new members per month • The Supply-Chain Council (SCC) has developed and endorsed 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

  4. Organization • Staff – Headquarters in Pittsburgh, Pennsylvania; Executive Management, Administrative Staff, Member Services • Chief Technology Officer, Washington, DC • Managing Director Europe - Amsterdam, Netherlands • Managing Director Japan - Tokyo, Japan • Managing Director Australia/New Zealand – Sydney, Australia • Managing Director Latin America – Mexico City, Mexico

  5. Organization (continued) • Board of Directors – US Enrichment, Intel, Deloitte Consulting, Bayer, Pennsylvania State University • European Chapter Leadership – Chair from Seimens Business Services • Japan Chapter Leadership – Chair from Mitsui Trading Company • Australia/New Zealand Leadership – Chair from Gooding Fielder • Latin America Leadership – Chair from Coca-Cola

  6. Membership • 600+ SCC members • Chapters Approved: Europe, Japan, Latin America, Australia/New Zealand, Singapore • Chapters Under Development: Hong Kong, Thailand, India

  7. Liaison Initiatives • Joint SCM Research with APICS • Recognition by American National Standards Organization (ANSI) to circulate SCOR via Canvass Method for National Approval • OAG / RosettaNet

  8. SCOR Dissemination • “Canvas” copies provided to over 50 related organizations – their comments invited (Part of the ANSI certification process) • SCOR Workshops – Over 300 members have attended SCOR Workshops with companies like Intel, HP, EDS, US Department of Defense, Compaq hosting in-house Workshops

  9. Upcoming Events: • Annual Meeting – in June 2000, Detroit, Michigan, USA • Supply Chain World-Europe – September 25-27, Okura Hotel, Amsterdam, Netherlands • Supply Chain World –Australia, Japan, and Mexico - late Autumn, 2000 • Workshops

  10. Benchmarking Studies • CBSI Self-assessment Studies – one of U.S. members completed and one of European members underway • Performance Measurement Group – Extensive, two-year study underway (approximately 5 years of data)

  11. Supply Chain Council Directions • SCOR Model Revision 4.0 scheduled for 2000 • 20 Workshops (US & International) • 60% North America, 40% International • Research & Technology • Joint research with APICS • New modeling tools being added for SCOR distribution • Phios • Cobre Group • IDS Scheer • Gensym • Joint research with system integrators / consultants / academicians

  12. Plan Deliver SCOR is founded on four distinct management processes Source Make Deliver Source Make Deliver Source Deliver Make Source Suppliers’Supplier Customer’sCustomer Your Company Supplier Customer Internal or External Internal or External

  13. What is a process reference model? Process reference models integrate the well-known concepts of business process reengineering, benchmarking, and process measurement into a cross-functional framework Business Process Reengineering Best Practices Analysis Process Reference Model Benchmarking Capture the “as-is” state of a process and derive the desired “to-be” future state Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results Characterize the management practices and software solutions that result in “best-in-class” performance Capture the “as-is” state of a process and derive the desired “to-be” future state Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results Characterize the management practices and software solutions that result in “best-in-class” performance

  14. 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 • • SCOR Contains 3 Levels Detail Level # Description Schematic Comments 1 Level 1 defines the scope and content for the Supply Chain Operations Reference-model Top Level Plan Source Deliver Make (Process Types) Here basis of competition performance targets are set 2 A company’s supply chain can be “configured-to- order” at Level 2 from approximately 17 core “process categories.” Configuration Level Companies implement their operations strategy through their unique supply chain configuration. (Process Categories) Supply Chain Operations Reference-model Process 3 Element Level (Decompose Processes) P3.1 Identify, Prioritize, and Aggregate Production Requirements P3.4 P3.3 Balance Production Resources with Establish Detailed Production Requirements Production Plans P3.2 Identify, Assess, and Aggregate Production Resources Companies “fine tune” their Operations Strategy at Level 3 Companies implement specific supply-chain management practices at this level Implementation 4 Not Level Level 4 defines practices to achieve competitive advantage and to adapt to changing business conditions in (Decompose Process Scope Elements)

  15. Supply Chain Operations Reference Model (SCOR) – Version 3.0 Plan P1 Plan Supply Chain P2 Plan Source P3 Plan Make P4 Plan Deliver P0 Plan Infrastructure Source Make Deliver Suppliers Customers M1 Make-to-Stock S1 Source Stocked Products D1 Deliver Stocked Products S2 Source MTO Products M2 Make-to-Order D2 Deliver MTO Products S3 Source ETO Products M3 Engineer-to-Order D3 Deliver ETO Products M0 Make Infrastructure S0 Source Infrastructure D0 Deliver Infrastructure

  16. Version 3.1 - Level 2 provides a tool kit of 24 process categories P1 – Plan Supply Chain Plan P2 – Plan Source P3 – Plan Make P4 – Plan Deliver Source Make Deliver D1 Deliver Stocked Product S1 Source Stocked Material M1 Make-to-Stock Customers Suppliers D2 Deliver Make-to-Order Product S2 Source Make-to-Order Material M2 Make-to-Order D3 Deliver Engineer-to-Order Product S3 Source Engineer-to-Order Material M3 Engineer-to-Order Enable

  17. 1 Analyze Basis of Competition Operations Strategy 2 Configure Supply-Chain Intra-Company Configuration Inter-Company Configuration 3 Align Performance Levels, Practices, and Systems Intra-Company Process, Practice, and System Configuration Elements Inter-Company Process, Practice, and System Configuration Elements 4 Implement Supply-Chain Processes and Systems Intra-Company Supply-Chain Improvements Inter-Company Supply-Chain Improvements SCOR Methodology: Applied in Four Steps SCOR Level 1 SCOR Level 2 SCOR Level 3 SCOR Level 4

  18. Level 1 Performance Metrics Customer-Facing Internal-Facing SCOR Level 1Supply-Chain Management Delivery Performance/Quality Flexibility & Responsiveness Cost Assets • Delivery performance  • Order fulfillment performance  • Fill rate • Order fulfillment lead time • Perfect order fulfillment  • Supply-chain response time  • Production flexibility  • Total logistics management cost  • Value-added productivity  • Warranty cost or returns processing cost  • Cash-to-cash cycle time  • Inventory days of supply  • Asset turns 

  19. Analyze Basis of CompetitionSupply Chain Scorecard - Representative Supply Chain Scorecard v. 3.0 Performance Versus Competitive Population SCOR Level 1 Metrics Actual Parity Advantage Superior Overview Metrics Delivery Performance to 50% 85% 90% 95% Commit Date 63% 94% 96% 98% Fill Rates Delivery Performance/ Quality Perfect Order Fulfillment 0% 80% 85% 90% EXTERNAL Order Fulfillment Lead times 7 days 7 days 5 days 3 days Flexibility & 45 days 30 days 25 days 20 days Production Flexibility Responsiveness Total Logistics Management Costs 19% 13% 8% 3% Cost NA NA NA NA Warranty Cost INTERNAL Value Added Employee $122K $156K $306K $460K Productivity) Inventory Days of Supply 119 days 55 days 38 days 22 days Cash-to-Cash Cycle Time Assets 196 days 80 days 46 days 28 days Net Asset Turns (Working 2.2 turns 8 turns 12 turns 19 turns Capital)

  20. Configure Supply Chain Thread Diagram P1 P1 P1 P3 P2 P4 P3 P2 P4 P2 P4 D2 M2 S2 Texas RM Supplier D1 S2 M1 S1 D1 S2 D1 S1 M1 Key Other RMSuppliers ALPHA Alpha Regional Warehouse RM Suppliers Consumer

  21. Integrated Level 2 Metrics P1 Schedule Achievement to 97% Make Cycle Time 30 to 3 days Unit Cost WIP Days of Supply 17 to 25 days $26M to $37M Faultless Invoices to 97% Order Management Cycle Time 1 day Order Management Cost 11.3% to 9.3% $113M to $93M Finished Good Inventory 30 to 15 days $44M to $22M Days Sales Outstanding 107 to 55 days $292M to $151M P3 Supplier On Time Delivery to 97% Source Cycle Time 90 to 1 day Material Acquisition Cost 3.2% to 2.2% $32M to $22M RM Days of Supply 72 to 15 days $107M to $22M P2 P4

  22. SCOR Implementations Thinking is easy, acting is difficult, and to put one's thoughts into action is the most difficult thing in the world. Goethe • Majority of companies adopt SCOR methodology - “top down” strategic to tactical • Following top-down assessment and planning: • Look for “low-hanging” fruit • Develop incremental approach for improvements • Some “enter” Model at Level 2 • Most companies focus on their own enterprise • Baseline processes and performance • Develop strategies for inter-enterprise initiatives

  23. SCOR Projects - MajorRepresentative • Plan, development, and formation of a company to support a new product line (Complete) • Re-engineering of supply chain processes for a corporation (7 divisions) based - (In process) • Implementation of SCOR processes corporate-wide • Level 1 Metrics used as executive evaluation criteria • Re-organization of logistics groups into Plan, Source, Make, Deliver (Complete)

  24. SCOR Projects - Modest • Development of sourcing and customer service contract instruments, strategies, and systems • Vendor Managed Inventory • Continuous Replenishment • Development / coordination of advanced planning system capabilities • Collaborative Planning and Forecasting • Rationalization of SKUs

  25. Superior Performers spend less on Supply Chain Management Best-in-class companies have an advantage in total supply-chain management costs (3% – 6% less in revenue) Total Supply-Chain Management Cost Best-in-Class '97 Average '97 14 13.1 12.2 11.5 11.3 12 10.9 10.3 10 % of Revenue 8 7.1 7.0 6.7 6.5 6.1 5.8 6 4 2 0 Computers Industrial Telecom Chemicals Packaged Overall Goods Source: PRTM’s 1997 Integrated Supply-Chain Benchmarking Study

  26. Supply Chain Improvement Benefits Typical Quantified Benefits from Integratingthe Supply Chain Delivery Performance Inventory Reduction Fulfillment Cycle Time Forecast Accuracy Overall Productivity Lower Supply-Chain Costs Fill Rates Improved Capacity Realization 16% – 28% Improvement 25% – 60% Improvement 30% – 50% Improvement 25% – 80% Improvement 10% – 16% Improvement 25% – 50% Improvement 20% – 30% Improvement 10% – 20% Improvement Source: 1997 PRTM ISC Benchmark Study