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Supply Chain Excellence

SCOR “Certification”:

Results from the Field

March 31, 2004

Copyright 2004 SCE Limited and The AIT Group

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Session Discussion Points

Your Lean – Six Sigma – SCOR Integration Number The Concept of Certification Pilot Project Examples

Supply Chain Scope and Resource Support SCOR Metrics and Defect Analysis Material Flow Opportunity Analysis Transactional Productivity – Application Value Capture Project List

Ways to Get Involved Supply Chain Council SIG – Lean, Six Sigma, and SCOR

Convergence


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Lean – Six Sigma – SCOR Integration Number An integration number

attempts to define the level of implementation experience an organization has for each of the three methods

Using a sliding scale from 0 to 9, describe your company’s implementation experience with each method 1 – No Experience 3 – Education Completed 5 – Pilot Project(s) Completed 7 – First Year of Full Scale

Implementation Completed 9 – Have Sustained Multiple

Years of Full Scale Implementation

Examples of integration numbers when the SCOR “Certification” process started 3 – 3 – 5

Lean 3 Six Sigma 3 SCOR 5

7 – 9 – 1 1 – 1 – 5 1 – 1 – 1


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The Concept of Certification Training attempts to build the

knowledge and skill level of an individual to be able achieve an acceptable level of performance (on defined tasks) which ultimately helps his/her organization achieve its goals

Certification is an official recognition by the organization that the individual can perform at an acceptable level

The basic process of training involves four steps Tell – Instructor lead Lecture Show – Instructor lead examples Practice – Instructor facilitated

guided practice Do – Trainee lead independent

practice with instructor facilitated review and evaluation

The basic process of certification involves three steps Completed Project Demonstrated Results “Board” Certification

There are some very familiar training – certification models APICS – CPIM and CPFIM Six Sigma – Black Belt and Master

Black Belt


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SCOR – Lean – Six Sigma Synergy The SCOR Framework drives

project portfolio and selection The Lean and Six Sigma

approaches drive implementation – execution

Lean and Six Sigma analytical tools supplement the SCOR Analysis

Lean and Six Sigma have greater impact as the overarching Program – SCOR is a tool that takes a subordinate role

Six Sigma project portfolios needed some refreshing

Conclusion SCOR Certification could be

modeled after Black Belt Certification

Need to Develop the Path


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Phase 0

Planning

Phase 1

PerformanceBaseline

Phase 2

Material FlowOpportunity

Analysis

Phase 3

Work &Information Flow

OpportunityAnalysis

Phase 4

Project PortfolioImplementation

Planning

Black BeltTraining Wave

Candidate Black Belt Projects

Green BeltTraining Wave

Candidate Green Belt Projects

Black BeltTraining Wave

Green BeltTraining Wave

Candidate Green Belt Projects

Candidate Black Belt Projects

ProEx™ Approach to SCOR Certification


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Initial “Pilot” Projects

Twelve companies were founding companies of the SCOR/Six Sigma/Lean Convergence SIG

These companies generated 8 “pilot” projects in the past twelve months where the basic 5 steps were applied

What did they do?

ProEx™ Phase0 – Supply Chain Scope

and Resource Support

1 – SCOR Metrics and Defect Analysis

2 – Material Flow Opportunity Analysis

3 – Transactional Productivity – Application Value Capture

4 – Project List


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Supply Chain Scope and Resource Support Teaching Point – key points to

assemble a Supply Chain Definition matrix… Customer/channel groups

define the columns – double clicking gets you to a customer ship to address

Products/businesses define the rows – double clicking gets you to an item number

Put an X where products are sold to customers

The Data behind each X includes revenue, inventory, unit volume, and gross margin

US Retail Markets

US Distributor Markets

US Direct-to-Consumer Markets

US OEM - Key Accounts

US Government

US Home Delivery

International

Food Products X X X X X

Technology Products X X X

Durable Products X X

Geography - Customer or Market Channel

Pro

du

ct

Supply Chain Definition Matrix


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Supply Chain Scope and Resource Support

US Retail Markets

US Distributor Markets

US Direct-to-Consumer Markets

US OEM - Key Accounts

US Government

US Home Delivery

International

Food Products X X X X X

Technology Products X X X

Durable Products X X

Geography - Customer or Market Channel

Pro

du

ct

Supply Chain Definition Matrix

Create a supply chain definition matrix for your company Which Xs or fraction of Xs will be the focus of your pilot?


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Supply Chain Scope and Resource Support

Project Resources Project Leader FT

Master Black Belt Black Belt Functional Leader

Design Team PT – FT Green Belts Black Belts Functional Leaders -

Analysts

Project Resources Executive Sponsor PT Steering Team PT

Executive Leaders Project Leader Executive Sponsor


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SCOR Metrics and Defect Analysis SCOR Metrics are the only

cross industry standard measures for supply chain processes… Identify the SCOR Level

One Measures considered in scope for the pilot

Develop a data collection plan Definition Sampling Plan Appropriate Segmentation Defect Analysis

SCOR Metrics On Time and In Full to

Customer Commit – Request Perfect Order Fulfillment Order Fulfillment Lead Time Supply Chain Responsiveness COGS Total Supply Chain

Management Costs Cash-to-Cash Cycle Time Inventory Days of Supply Asset Turns Gross Margin Operating Margin Net Operating Margin Return on Assets


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SCOR Metrics and Defect Analysis

Order Fulfillment Lead Time Customer Authorization to Order Entry Complete Order Entry Complete to Start Manufacture Start Manufacture to Manufacturing Ship Manufacturing Ship to Order Received at Warehouse Order Received at Warehouse to Order Shipped to

Customer Order Shipped to Customer to Customer Receipt of Order Order Received at Customer to Installation Complete


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SCOR Metrics and Defect Analysis

Days Frequency Cumulative %0 128 .85%1 798 6.13%2 1332 14.95%3 1567 25.32%4 1526 35.42%5 1842 47.62%6 1917 60.31%7 1861 72.63%8 1140 80.17%9 550 83.81%

10 514 87.22%11 335 89.43%12 273 91.24%13 310 93.29%14 192 94.57%15 120 95.36%

OFLT Customer Authorization to Shipment

Mean 6.616311399Standard Error 0.043617208Median 6Mode 6Standard Deviation 5.360836942Sample Variance 28.73857272Kurtosis 18.44894773Skewness 3.316870203Range 77Minimum 0Maximum 77Sum 99946Count 15106Largest(1) 77Smallest(1) 0Confidence Level(95.0%) 0.085494971


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Material Flow Opportunity Analysis Key deliverables for this phase

AS IS Geographic Map and Thread Diagram

Disconnect Analysis TO BE Geographic Map

and Thread Diagram Opportunity Analysis

Other material flow analytical techniques Spaghetti Diagram Value Stream Map Network Analysis

Disconnect and Opportunity Analysis Brainstorm individual

disconnects by metric Use an affinity diagram to

group like disconnects Develop problem Statements

for each group Conduct root cause analysis

for each group using fishbone diagrams

Quantify the value of eliminating the problem

Categorize ease of implementation and size of opportunity using Effort – Impact Diagram


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Material Flow Opportunity Analysis Disconnect and Opportunity

Analysis Statistics Average 16 disconnects per

person Average 26 problem

statements per project Range of operating income

improvement value is from 1.0% to 3.5% to sales

2 Quick Hit projects identified for Green Belt or Black Assignment

Top 5 Problems Data Integrity Poor Poor Equipment Utilization

Run Time Unplanned Down Time Planned Down Time

Ineffective Sales and Operations Planning

Disconnect Scheduling, Tactical Planning, and Sales and Operations Planning

Long Manufacturing Lead Times


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Transactional Productivity – Application Value Capture

S1.1 S1.2 S1.3 S1.4 S1.5 AssumptionsVolume

PO 3655 All Purchase Orders 2002Receipts 12560 3.4 Lines per Receipt

QA Record 12560 1 QA Record per LineTransfers (Lines) 12560 1 Transfer per Line

Invoices 12560 1 Invoice per ReceiptEvent Time 49 4 5 18 6Elapsed Time 4510 10 1440 10080 10080Yield 71.0% 97.0% 92.1% 42.4% 46.3%

People Minutes w/ Yield 252246 51793.8 68186.8 533208 162765People Minutes w/o Yield 179095 50240 62800 226080 75360

124800 Minutes = 1 Person @ 1 Year


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Transactional Productivity – Application Value Capture

Event TimeElapsed

Time Yield Event TimeElapsed

Time Yield Event TimeElapsed

Time Yield

Mean 19 2543 84% 41 4843 96% 122 6720 94%50% Percentile 5 3000 90% 60 120 95% 180 5760 94%70% Percentile 4.2 1848 90% 37.6 76 95% 110 4032 95%90% Percentile 3.4 696 90% 15.2 32 96% 40 2304 96%

Source Stocked Product - S1 Level Three Comparison

S1.3

Verify Product

Initiate QA Record to Release Product for Use

S1.2

Receive Product

Physical Arrival to Complete Receipt Transaction

Schedule Product Deliveries

S1.1

Create Signal to PO Receipt at Supplier


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The SCOR Business Blue Print

DR2.1 -Authorize

MRO ProductReturn

DR2.2 -Schedule

MRO ReturnReceipt

DR2.3 -Receive MRO

Product

DR2.4 -Transfer MRO

Product

Customer

D1.1 -ProcessInquiry &Quote

D1.2 -Receive,Enter &ValidateOrder

D1.3 -Reserve

Inventory &Determine

Delivery Date

D1.4 -Consolidate

Orders

D1.5 - Plan &Build Loads

D1.6 - RouteShipments

D1.7 - SelectCarriers &

RateShipments

D1.8 -Receive

Product atWarehouse

D1.9 - PickProduct

D1.10 - LoadVehicle, Generate

ShippingDocumentation,

Verify Credit & ShipProduct

P3 - PlanMake

P4 - PlanDeliver

P5 - PlanReturn


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Project List

Description Cost Yr1 Benefit

Yr2 Benefit

Yr3 Benefit

Savings ROI

1 Poor Planning 2,200 3,956 6,330 15,825 26,111 11.9 2 Supply Management 150 690 1,102 2,757 4,549 30.3 3 Reactive Logistics Planning

and Execution 250 598 956 2,390 3,944 15.8

4 Disparate Systems 6,500 311 498 1,246 2,055 .3 5 Poor Data Integrity 1 533 853 2,134 3,520 3520 6 Hit-or-Miss Product Life Cycle

Management 500 1,110 1,776 4,440 7,326 14.7

7 Undisciplined Order Management

250 587 939 2,349 3,875 15.5

8 No Formal Return Management

1,200 9,500 15,200 13,300 38,000 31.6


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Effort – Impact

Ease Of Implementation EASY TOUGH

1 8

B I G

P A Y

O F F

6

2

5 7 3

4

B u s i n e s s I m p a c t

S M A L L

P A Y

O F F


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Implementation Approach Software Implementation

Detailed Design Configuration Test Go-Live

Six Sigma Define Measure Analyze Improve Control

Lean Manufacturing Workplace Organization – 5S Flow Production – Value

Stream Map Company Culture Continuous Improvement Visual Controls Empowered Teams

Class A Processes Strategic Planning People Team Total Quality and Continuous

Improvement New Product Development Planning and Control


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More Information The Supply Chain Council – SCOR Advisor Program The Supply Chain Council SIG Lean, Six Sigma, and SCOR Convergence –

www.supply-chain.org Leadership Forum Case Studies Education Materials Projects are underway

The AIT Group – www.theaitgroup.com – Developers of the ProEx™ approach to SCOR Certification

www.scorwizard.com – SCOR Project Managers Toolkit www.scelimited.com – the SCOR users resource center Supply Chain Excellence: A Handbook for Dramatic Improvement Using the

SCOR Model Peter Bolstorff – [email protected]

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