richard j. sherman from emeritus supply chain council on ‘keeping scor in your supply chain’...

Keeping SCOR in Your Supply Chain

Rich Sherman, Director of North America Supply Chain Council www.supply‐chain.org

Agenda

• Who is the Supply Chain Council? • The Role Of The SCOR Model In Optimizing Supply Chain Performance

• A Case Example • Conclusion

2 AMR 2009 ‐ SCC & SCOR Executive Overview

Who is the Supply Chain Council?

SCC: An independent, non‐profit global association

• Formed in 1996 to create and evolve an open industry process reference model of the supply chain for the benefit of helping companies rapidly and dramatically improve supply chain operations

• SCC has established the supply chain world’s most widely accepted framework – the SCOR® process reference model – for evaluating and comparing supply chain activities and their performance

– SCOR is an open industry process standard containing over 200 process elements, 550 metrics, and 500 best practices including risk and environmental management and HR skills requirements for each process

– It lets companies quickly determine and compare the performance of supply chain and related operations within their company or against other companies and can be used as an unbiased foundation for value based outsourcing relationships (e.g., DoD PBL standard)

• SCC continually advances its tools and educates members about how companies are capitalizing on those tools

– With membership open to all interested organizations

SCC ‐ ISM/NAPM April 2010

Global Scope With Over 800 Member Organizations

Also developing chapters in India and the Middle East

0% 10% 20% 30% 40% 50%

Non-Profit/Academic

Consultant

Enabling Technology

End User

SME

Government

Member Affiliation

Member Distribution Geographic

China

Australia/New Zealand

South Africa Latin America

Southeast Asia

Japan

Europe

North America

Industry Membership Scope

SCC Membership Accelerates a Company’s Use of–and Benefits

From–SCOR And Related Models Reference models, benchmarking, tools research and help from SCOR experts

Chapters, events, workgroups, and forums to share SCOR and supply chain knowledge and experience

Training, certification, professional and career development and volunteer opportunities

THE ROLE OF THE SCOR MODEL IN OPTIMIZING SUPPLY CHAIN

PERFORMANCE


What is SCOR®?

9

Customer processes Su

pplie

r pr

oces

ses

Supply Chain

Customer processes Su

pplie

r pr

oces

ses

Supply Chain

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

Deliver Make Source

Return Return

Plan

• SCOR is a supply chain process reference model containing over 200 process elements, 550 metrics, and 500 best practices including risk and environmental management

• Organized around the five primary management processes of Plan, Source, Make, Deliver and Return

• Developed by the industry for use as an industry open standard ‐ Any interested organization can participate in its continual development


Supply Chain Council Extended Frameworks – DCOR and CCOR

AMR 2009 ‐ SCC & SCOR Executive Overview

Sup

plie

r pro

cess

es

Product Design DCOR™

Custom

er processes

Supply Chain SCOR™

Sales & Support CCOR™

Product Management

10

Technical Development Steering Committee Working Groups – Frameworks, Processes, Metrics, Sustainability, Risk, Skills, etc. Special Interest Groups – Industry, Methodologies, Best Practices, etc. Other Ongoing Research Projects

SCOR Processes – Five Levels of Decomposition

Level 1 Level 2 Level 3 Level 4 Level 5

Scope Configuration Activity Workflow Transactions

Differentiates Business

Differentiates Complexity

Names Tasks Sequences Steps Links Transactions

Defines Scope Differentiates Capabilities

Links, Metrics, Tasks and Practices

Job Details Details of Automation

Sets Strategy First Tier Diagnostics

Second Tier Diagnostics

Industry or Company Specific

Technology Specific


S1 Source

Stocked Product

Supply-Chain Source

S1.2 Receive Product

Standard SCOR definitions Company/Industry definitions

EDI XML

Supply Chain Balanced SCORcard

Standard Strategic (Level 1) Metrics

Attribute Metric (Strategic)

Reliability Perfect Order Fulfillment

Responsiveness Order Fulfillment Cycle Time

Agility Supply Chain Flexibility

Supply Chain Adaptability†

Cost Supply Chain Management Cost

Cost of Goods Sold

Assets Cash‐to‐Cash Cycle Time

Return on Supply Chain Fixed Assets

Return on Working Capital


† upside and downside adaptability metrics

Cu

stom

er

Inte

rnal

SCORmark Benchmarking – Diagnoses the Areas Most in Need of Improvement

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.

P1 Plan Supply Chain

Metrics Cash-to-Cash Cycle Time

Cost to Plan SC Order Fulfillment Cycle Time Plan Cycle Time Return on SC Fixed Assets

Return on Working Capital

Best Practices Capability to run What-if simulations Change in Demand signal instantaneously “reconfigures” Production and Supply Plans

CPFR On-line visibility of demand Re-balancing on full-stream supply and demand Supply/Demand Processes are fully integrated S&OP Tools support balanced decision making

VMI

The SCOR® model – a cross‐industry open standard

• The five integrated processes provide a boundary‐free view of the true end‐to‐end Extended Supply Chain

• Supports Outsourcing Analysis and Performance Based Logistics/Outsourcing

AMR 2009 ‐ SCC & SCOR Executive Overview

Supplier

Plan

Customer Customer’s Customer Suppliers’

Supplier

Make Deliver Source Make Deliver Make Source Deliver Source Deliver

Internal or External Internal or External

Your Company

Source

Return Return Return Return Return Return Return Return

16

SCOR Case Example


18 SCOR 8.0 PBL

Define Business Scope

Electronics Supplier

Refrigerant Supplier

OEM Supplier

Motor Supplier

Retail Warehouse

Commercial Warehouse

Commercial Customer

Retail Customer

Basic Unit Plant

Controls Plant

Suppliers ComfyCo Customer

Scoping identifies all parties involved in program

19 SCOR 8 0 PBL

Create a Geo Map of ComfyCo (US)

Customer Entities

Major Level 2 processes

Basic Flow Indication

Basic Geographic

Context

ComfyCo Entities Major

Suppliers

OEM Supplier ( D 1 )

Refrigerant Supplier

( D 1 )

Electronics Supplier

( D 1 )

Motor Supplier ( D 1 )

Basic Units ( P 1 , P 2 , P 3 , S 1 ,

M 1 , M 2 )

Controls Plant ( P 3 , S 1 , M 1 )

Retail Distribution ( P 4 , D 1 )

Commercial Distribution ( P 4 , D 2 )

Retail Customers

( S 1 )

Commercial Customer

( S 2 )

20 SCOR 8.0 PBL

Develop a SCOR Thread Diagram

Level 2 Processes

Basic Process Flow

Key Entities

Planning Notation

Business Context

21 SCOR 8.0 PBL

Captured SCOR Level‐3 Model

Fact

ory

Dis

trib

utio

n

M 2 . 1

Schedule Production Activities

M 2 . 2

Issue Sourced / In - Process

Product

M 2 . 3

Produce and Test

M 2 . 4

Package

M 2 . 5

Stage Finished Product

M 2 . 6

Release Finished

Product to Deliver

D 2 . 1

Process Inquiry & Quote

D 2 . 2

Receive , Configure , Enter and

Validate Order

D 2 . 3

Reserve Resources &

Determine Delivery Date

D 2 . 4

Consolidate Orders

D 2 . 8

Receive Product from

Source or Make

D 2 . 6

Route Shipments

D 2 . 5

Build Loads

D 2 . 9

Pick Product

D 2 . 10

Pack Product

D 2 . 11

Load Product & Generate Shipping

Documentation

D 2 . 12

Ship Product

D 2 . 13

Receive & Verify Product by Customer

D 2 . 14

Install Product

D 2 . 15

Invoice

D 2 . 7

Select Carriers & Rate

Shipments

S 1 . 4

Transfer Product

22 SCOR 8.0 PBL

Benchmark to Identify Process Parity, Advantage, or Superiority

Attribute Metric (level 1) Company Parity Adv Superior Parity Gap

Req Gap

Reliability Perfect Order Fulfillment 98% 92% 96% 98% -6%

Responsiveness Order Fulfillment Cycle Time 14 days 8 days 6 days 4 days 6 days 8 days

Flexibility Ups. Supply Chain Flexibility 62 days 80 days 62 days 40 days -18 days

Cost Supply Chain Mgmt Cost 10.1% 10.8% 10.4% 10.2% -0.7%

Assets Cash-to-Cash Cycle Time 22 days 45 days 30 days 20 days -23 days

Scoping Identifies one or more targeted metrics for improvement

Parity Median of Statistical Sample

Advantage Midpoint of Parity and Superior

Superior 90th percentile of population

Potential Outsource Opportunity

24 SCOR 8.0 PBL

SCOR/PBL Project – Baseline

• The SCOR perspective of “supplier’s supplier” through “customer’s customer” is measured by the degree of integration – Internal Integration – External Integration – Enterprise Optimization

• Performance Based Logistics (PBL) maturity is measured in the same way – Partnerships between suppliers and customers – Managed by metrics, enabled by processes and innovation

• The SCOR model provides a toolkit to design and implement, manage, and measure PBL processes throughout the life cycle of the relationship.

The Member Journey

1 Learning 2 Piloting 3 Deploying 4 Integrating 5 Renewing

• Begins with introduction to the disciplines of SCOR

• Progresses through initial pilot applications of SCOR to individual supply chains

• Wide scale deployment of SCOR discipline follows early successes

• Final integration of SCOR with all Quality Management techniques and organizations

• Resulting in endless renewal of the knowledge framework in the company from Council and intra‐company experience

Closing Thoughts

Rich Sherman, Director of North America Supply Chain Council www.supply‐chain.org

Change

What Happened?

Pair‐a‐dime Shift!

Rules Are Rules

• The Good news: It was a normal day in Sharon Springs, Kansas, when a Union Pacific crew boarded a loaded coal train for the long trek to Salinas, Kansas.

• The Bad news: A few miles into the trip, a wheel bearing became overheated and melted, letting a metal support drop down and grind on the rail, creating white hot molten metal droppings spewing down to the rail.

Rules Are Rules

• The Good news: A very alert crew noticed smoke about halfway back in the train and immediately stopped the train in compliance with the rules.

• The Bad news: The train stopped with the hot wheel over a wooden bridge with creosote soaked ties and trusses.

Rules are Rules

• In defense of the crew, according to Sixgun Jr., the crew tried to explain to their Supervisors the situation; but, they were instructed not to “move the damn train”!

Rules Are Rules – Houston, We Have a Problem!

Rules Are Rules – Houston, The Problem is Escalating!

RULES ARE RULES – When you have a Problem‐ Don't let common sense get in the way of a good disaster!!!

Thank You and Safe Travel!

www.supply-chain.org

Rich Sherman, Director of North America Email: [email protected]

Direct: +1 512-266-9041 Mobile: +1 512-294-6558