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© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 1
Copyright © Supply Chain Council. 2011. All rights reserved. The marks SCOR®, CCOR™, DCOR™ and SCOR Roadmap™ are the exclusive property of the Supply Chain Council.
SCOR FrameworkIntroducing all elements of the Supply Chain reference model: Standard processes, metrics, practices and skills
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 2
SCOR Framework Workshop
• Understand the history and context of SCOR• Learn the components of the SCOR framework
› Performance (metrics)› Process› Practices › People (skills)
• Learn how to describe a supply chain with SCOR• Understand how to characterize a supply chain
with SCOR metrics• Apply the SCOR framework using an example
SCOR project roadmap
new
2
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 3
About Supply Chain Council
• Formed in 1996 to create and evolve a standard 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
› It can be used to describe supply chains that are very simple or very complex using a common set of definitions and enabling a common understanding
› It lets companies quickly determine and compare the performance of supply chain and related operations within their company or against other companies
• SCC continually advances its tools and educates members about how companies are capitalizing on those tools
› With membership open to all interested organizations› Global presence, volunteer driven
3
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 4
About SCOR: A Process Framework
• Process frameworks deliver the known concepts of business process reengineering, benchmarking, best practices and organizational design in a cross-functional framework› Standard processes; Plan, Source, Make, Deliver, Return› Standard metrics: Perfect Order Fulfillment, Cash-to-
Cash Cycle Time, Cost of Goods Sold,..› Standard practices: EDI, CPFR, S&OP, Cross-Training, ..› Standard job skills: Lean, Accounting, Solicitation, ..
• Pre-defined relationships between metrics, processes, practices and skills
4
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 5
A Process Framework
• Combining 4 techniques into a single integrated approach
Business Process Re-engineering
Performance Benchmarking
Best Practices Analysis
Organizational Design
Capture the ‘as-is’ business activity and design the future ‘to-be’ state
Quantify relative performance of similar supply chains and establish internal targets
Identify the practices and software solutions that result in significantly better performance
Assess skills and performance needs and align staff and staffing needs to internal targets
Process Reference FrameworkProcesses Performance
(metrics)Practices People
(skills)
5
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 6
About SCOR: Supply Chain
• Viewing a company as processes (domains)C
ustomer processesSu
pplie
r pro
cess
es
Product/Portfolio Management
Supply ChainSCOR ®
Product DesignDCOR™
Sales & SupportCCOR™
Custom
er processesSupp
lier p
roce
sses
Product/PortfolioManagement
Supply ChainSCOR ®
Product & Process Design
DCOR™
Sales &SupportCCOR™
6
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 7
Describing a supply chain…
7
…is sometimes like describing an elephant with a blindfold.
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 8
What is a supply chain?
• Let’s consider a lemonade stand example.› What do you need to do to setup a lemonade stand?
8
Source DeliverMake
Plan
Return Return
SCOR® defines supply chain as:“ The processes that plan and execute the acquisition of materials, transformation of materials in sellable products, delivery and return of products and services in supportof customer orders ”
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 9
What is a supply chain?
• Let’s consider a lemonade stand example.› What do you need to do to setup a lemonade stand?
9
Incorporation
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 10ABC| 10
The Make Process: MTS vs. MTO
Quick Workshop
1. Order Cycle Time2. Product Variety
3. Unit Cost4. Inventory Investment
5. Critical Weakness (จุดอ่อน / จุดตาย)
6. Importance of Upstream vs. Downstream Partners
7. Management Tools for Successful Implementation
8. Others…
MTS MTO
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 11
Traditional Internal Supply Chain View11
Purchasing
• Lowest purchase price
• Inventory buffers
Production
• High utilization
• Long runs – minimize changeovers
• Low unit costs
• Safety stocks
Distribution
• Full truckload quantities
• Best shipping rate
• Safety stocks
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 12
Conflicts in Traditional Supply Systems
Marketing Operations FinanceTraditional Objective
Satisfycustomers and increase revenue
Reduce manufacturing costs
Increase profit and cash flow while reduce investment
Customer serviceProduction efficiencyInventory investment
12
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 13
Supply Chain: The Value Chain View
Develop Products and Services
Manage Procurement
Produce Products
Manage Distribution
Perform Marketing and Sales
13
Manage Customer Orders and Reserve Logistics
Manage Finance
Manage Human Resource
• The value chain consists of the value-adding processes that enable a company to take its products from conception to market
• The internal supply chain is a subset of the value chain• Support processes are important but are not considered value chain
processes
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 14
14
Roles of (Internal) Supply Chain Management
Supply Chain Management is a vital coordinatingfunction. It balances the conflicting objectives ofmarketing, production, and finance by managing the flowof materials from raw materials to finished goods.
SCM makes the best use of resources to provide thedesired level of customer service.
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 15
Supply Chain
• SCOR defines supply chain as:“ The processes that plan and execute the acquisition of materials, transformation of materials in sellable products, delivery and return of products and services in supportof customer orders ”
Whether from Cow to Cone, Crude to Car or from Rock to Ring, SCOR is not limited by organizational boundaries
SCOR can be applied to supply chains in any industry and to any organization in the chain
Supplier CustomerSuppliers’Supplier
Source
Internal or ExternalYour Organization
ReturnDeliver MakeSource
Return
PlanDeliver
ReturnSourceReturn
MakeSourceReturn
PlanDeliver
Return
DeliverMake
Plan
Return ReturnCustomers’Customer
Internal or External
15
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 16
End-to-End Supply Chain
Customer’s CustomerCustomerMy OrganizationSupplierSupplier’s Supplier
Sub assemblies Manufacturer Retailer ConsumerComponents
SourceDeliverSourceDeliverMakeSourceDeliverMakeSourceDeliverMakeSource
Process, arrow indicates material flow direction
16
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 19
Supply Chain Processes
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 20
SCOR Processes
Process, arrow indicates material flow direction
Process, no material flow
Information, goods, financial flow
Custom
er processesSupp
lier p
roce
sses
Supply ChainC
ustomer processesSu
pplie
r pro
cess
esSupply Chain
DeliverMakeSource
ReturnReturn
Plan
20
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 21
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, Practices
Job Details Details of Automation
Framework Language
Framework Language
Framework Language
Industry Language
Technology Specific Language
EDIXML
SCOR Process Hierarchy
sS1 Source Stocked
Product
sSSource
sS1.2Receive Product
Standard SCOR definitions Industry/company definitions
21
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 22
Organization focused Activity focused
Organizational Hierarchy
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, Practices
Job Details Details of Automation
CxO (COO, CIO)EVPSVP
SVPVP
VPDirectorLine Manager
ManagerTeam Lead
Team Lead IndividualsProgrammer
EDIXML
sS1 Source Stocked
Product
sSSource
sS1.2Receive Product
22
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 23
SCOR Process Codification
• SCOR processes have unique identifiers:1. Lower case s followed by capitalized letter are level-1 processes:
sP, sS, sM, sD and sR (5 in total)2. Lower case s plus capitalized letter plus a number are level-2:
sP1, sS2, sM3, sD2, sD4 (15 in total)Two groups of exceptions for level-2:
- Enable: sEP, sES, sEM, sED and sER (5 in total) and- Return: sSR1, sDR1, sSR2, sDR2, sSR3, sDR3 (6 in total)
3. Lower case s plus capitalized letter plus a number, a period and a number are level-3 processes:sP1.1, sP1.2, sS2.1, sM1.5, sD3.12 (111 processes in total)Two groups of exceptions for level-3:
- Enable: sEP.1, sES.3, sEM.4, sED.8, sER.1 (47 in total)- Return: sSR1.1, sDR1.3, sSR2.2, sDR2.4, sSR3.5, sDR3.1 (27 in total)
• sX = level-1, sXn = level-2, sXn.m = level-3• SCOR processes always start with a silent* lower case s.
23
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 24
Reading SCOR process tables
process name
process definition
outputs
process ID
metrics
best practices
inputs
24
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 25
Reading the SCOR graphics
process steps
process ID
inputs outputs
SCOR graphics should be considered as example process configurations
Different supply chains and practices may require different sequences and/ or workflow
25
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 26
Execution Processes
› Processes: Source, Make and Deliver› Objective: value-add, revenue generating
Custom
er processesSupp
lier p
roce
sses
Supply ChainC
ustomer processesSu
pplie
r pro
cess
esSupply Chain
DeliverMakeSource
ReturnReturn
Plan
26
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 27
Different capabilities, different characteristics
Stocked Product (sS1, sM1, sD1)• Replenishment, inventory/plan driven• Standard Materials• High fill-rate, inventory risk
Make-to-Order (sS2, sM2, sD2)• Customer order driven/tracing• Allows configurable materials• Longer lead times, lower inventory risk
Engineer-to-Order (sS3, sM3, sD3)• Customer requirements driven/tracing• Sourcing New Materials• Longest long lead-times, low fill rates,
lowest inventory risk, expensive process
D1R1 I1sM1sS1 sD1
I2
R1
D2R2 sD2
sS1
sM2sS2
I3
R1
D3R3
R1
R2
sD3
R1
sM3sS3
sS1
sS2
Level-2 Process Differentiation 27
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 28
• Customization Postponement “a business strategy to delay customization and/or finalization of a product or service until the last possible moment.”
sS1 sM2 sD2
Plan driven, not yet customized Order driven, customization
sS1
sM1
Level-2 Example Scenarios 28
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 29
Level-2 Example Scenarios
• Special Order Products in Retail “our catalog products are not kept as stocked items; if a customer wants to buy one of these we will place a purchase order on the manufacturer”
sS2 sS2 sD2
Central warehouse Retail store
sD2
purchase order
29
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 30
Source (Process ID: sS)
• Objectives of this process:› The ordering, delivery, receipt and transfer of raw material
items, subassemblies, product, packaging and/or services.• Key processes comprehended:
› Schedule product deliveries› Receive, inspect, and store materials› Issue material to Make or Deliver processes› Supplier/Vendor Agreements› Vendor certification and feedback, sourcing quality› Manage Raw Materials inventories› Freight, import/export documentation
• Hint: Receiving processes? Probably Source in SCOR
30
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 31
Source Level-2 Processes
• Source Stocked Product (Process ID: sS1)› The ordering and receiving (replenishment) of standard
products, components and services from existing contracts, based on material requirement plans.
• Source Make-to-Order Products (Process ID: sS2)› The ordering and receiving of standard or configurable
products, components and services for a unique and identifiable customer order (traceability).
• Source Engineer-to-Order Products (Process ID: sS3)› The vendor selection, ordering and receiving of products or
services that are designed, built or sourced based on the requirements or specifications of a identifiable customer order or contract.
31
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 32
Stocked Product (sS1) Make-to-Order (sS2) Engineer-to-Order (sS3)
sS1.1 Schedule Product Deliveries
sS2.1 Schedule Product Deliveries
sS3.1 Identify Sources of Supply
sS3.2 Select Final Supplier(s) and Negotiate
sS3.3 Schedule Product Deliveries
sS1.2 Receive Product sS2.2 Receive Product sS3.4 Receive Product
sS1.3 Verify Product sS2.3 Verify Product sS3.5 Verify Product
sS1.4 Transfer Product sS2.4 Transfer Product sS3.6 Transfer Product
sS1.5 Authorize Supplier Payment
sS2.5 Authorize Supplier Payment
sS3.7 Authorize Supplier Payment
Source Level-3 Processes 32
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 33
sS2.2ReceiveProduct
sS2.4TransferProduct
sS2.5Authorize Supplier Payment
sS2.1Schedule Product
Deliveries
sS2.2ReceiveProduct
sS2.3Verify
Product
sS2.4TransferProduct
sS2.5Authorize Supplier Payment
sS2.1Schedule Product
Deliveries
sS2.2ReceiveProduct
sS2.3Verify
Product
sS2.4TransferProduct
sS2.5Authorize Supplier Payment
sS2.1Schedule Product
Deliveries
Question: Source Process Flows
• Which of the following flows is/are correct?
33
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 35
Make (Process ID: sM)
• Objectives of this process:› The conversion process of adding value to products through
mixing, separating, forming, machining, and chemical processes, repair, refurbishment and/or decomposition.
• Key Processes Comprehended:› Schedule production, request and receive material from
Source and/or Make processes› Manufacture, assemble/disassemble and test product,
package, hold/release product› Managing product quality and engineering changes› Managing facilities and equipment, production status
workflow and capacity management› Manage Work-In-Process (WIP) inventories
• Hint: Item number change? Probably Make in SCOR
35
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 36
Make Level-2 Processes
• Make-to-Stock (Process ID: sM1)› The making of standard products and services. Planning
processes determine what, how much and when to make in order to replenish inventory.
• Make-to-Order (Process ID: sM2)› The making of standard or configurable products and services
for identifiable customer orders. Customer orders determine what, how much and when to make. Customer orders can be traced throughout the Make process.
• Engineer-to-Order (Process ID: sM3)› The making of specialized products or services that are fully or
partially designed and made based on the unique requirements and specifications of a identifiable customer order or contract. Customer orders and specifications can be traced throughout the Make process.
36
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 37
Make-to-Stock (sM1) Make-to-Order (sM2) Engineer-to-Order (sM3)
sM1.1 Schedule Production Activities
sM2.1 Schedule Production Activities
sM3.1 Finalize Production Engineering
sM3.2 Schedule Production Activities
sM1.2 Issue Material sM2.2 Issue Sourced/In-Process Product
sM3.3 Issue Sourced/In-Process Product
sM1.3 Produce and Test sM2.3 Produce and Test sM3.4 Produce and Test
sM1.4 Package sM2.4 Package sM3.5 Package
sM1.5 Stage Product sM2.5 Stage Finished Product
sM3.6 Stage Finished Product
sM1.6 Release Product to Deliver
sM2.6 Release Finished Product to Deliver
sM3.7 Release Product to Deliver
sM1.7 Waste Disposal sM2.7 Waste Disposal sM3.8 Waste Disposal
Make Level-3 Processes 37
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 38
sM1.2Issue
Product
sM1.3Produceand Test
sM1.5Stage
Product
sM1.6Release
Product to Deliver
sM1.1Schedule
Production Activities
sM1.2Issue
Product
sM1.3Produceand Test
sM1.5Stage
Product
sM1.1Schedule
Production Activities
sM1.2Issue
Product
sM1.3Produceand Test
sM1.5Stage
Product
sM1.6Release
Product to Deliver
Question: Make Process Flows
• Which of the following flows is/are correct?
38
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 40
Deliver (Process ID: sD)
• Objectives of this process:› Perform customer-facing order management, shipping and
order fulfillment activities including outbound logistics.• Key processes comprehended:
› Product, service and price quotations › Order entry and maintenance› Order consolidation, picking, packing, labeling and shipping› Finished goods storage› Import/export documentation› Customer delivery and installation› Logistics and Freight Management› Manage Finished Goods inventories
• Hint: Order taking or Shipping? Probably Deliver in SCOR
40
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 41
Deliver Level-2 Processes
• Deliver Stocked Product (Process ID: sD1)› The order management and delivery of standard products (and
services) that are replenished based on actual and/or anticipated orders (forecast).
• Deliver Make-to-Order Product (Process ID: sD2)› The delivery of standard or configurable products and services that
are obtained (Source or Make) for an identifiable customer order.
• Deliver Engineer-to-Order Product (Process ID: sD3)› The delivery of specialized products and services that have been
fully or partially designed in negotiation and based on requirements from a customer order and customer provided specifications
• Deliver Retail Product (Process ID: sD4)› Simplified model for delivery of stocked goods in a retail store
41
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 42
Deliver Level-3 Processes (1/3)
Stocked Products (sD1) Make-to-Order (sD2) Engineer-to-Order (sD3)
sD1.1 Process Inquiry & Quote
sD2.1 Process Inquiry & Quote sD3.1 Obtain & Respond to RFP/RFQ¹
sD1.2 Receive, Enter & Validate Order
sD2.2 Receive, Configure, Enter & Validate Order
sD3.2 Negotiate & Receive Contract
sD1.3 Reserve Inventory & Determine Delivery Date
sD2.3 Reserve Inventory & Determine Delivery Date
sD3.3 Enter Order, Commit Resources & Launch Program
sD1.4 Consolidate Orders sD2.4 Consolidate Orders sD3.4 Schedule Installation
sD1.5 Build Loads sD2.5 Build Loads sD3.5 Build Loads
sD1.6 Route Shipments sD2.6 Route Shipments sD3.6 Route Shipments
sD1.7 Select Carriers & Rate Shipments
sD2.7 Select Carriers & Rate Shipments
sD3.7 Select Carriers & Rate Shipments
¹ RFP = Request for Proposal, RFQ = Request for Quote› Order management processes (sDx.1 – sDx.7)
42
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 43
Deliver Process Elements (2/3)
Stocked Products (sD1) Make-to-Order (sD2) Engineer-to-Order (sD3)
sD1.8 Receive Product from Source or Make
sD2.8 Receive Product from Source or Make
sD3.8 Receive Product from Source or Make
sD1.9 Pick Product sD2.9 Pick Product sD3.9 Pick Product
sD1.10 Pack Product sD2.10 Pack Product sD3.10 Pack Product
sD1.11 Load Product & Create Documentation
sD2.11 Load Product & Create Documentation
sD3.11 Load Product & Create Documentation
sD1.12 Ship Product sD2.12 Ship Product sD3.12 Ship Product
sD1.13 Receive & Verify Product by Customer
sD2.13 Receive & Verify Product by Customer
sD3.13 Receive & Verify Product by Customer
sD1.14 Install Product sD2.14 Install Product sD3.14 Install Product
sD1.15 Invoice sD2.15 Invoice sD3.15 Invoice
› Material handling/shipping processes (sDx.8 – sDx.14)
43
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 44
Deliver Process Elements (3/3)
• ‘The Retail supply chain model does not match up to the Manufacturing supply chain model, therefore processes are quite different’ or
• Alternative view:› sD4.1 = sS1.1› sD4.2 = sS1.2› sD4.3 = sS1.4› sD4.4 = sD1.8› sD4.5 = sD1.9› sD4.6 = sD1.2› sD4.7 = sD1.13 and sD1.14
Retail Products (sD4)
sD4.1 Generate Stocking Schedule
sD4.2 Receive Product at Store
sD4.3 Pick Product from Backroom
sD4.4 Stock Shelf
sD4.5 Fill Shopping Cart
sD4.6 Checkout
sD4.7 Deliver and/or Install
44
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 45
Question: Deliver Process Flows
• Which direction does the order flow? And materials?
sD1.7Select Carrier
& Rate Shipment
sD1.3Reserve Inv. &
Determine Delivery Date
sD1.2Receive, Enter &
Validate Order
sD1.1Process Inquiry &
Quote
sD1.8Receive
Product from Source/Make
sD1.9Pick Product
sD1.10Pack Product
sD1.15Invoice
sD1.12Ship Product
sD1.11Load &
Generate Documents
45
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 48
Control processes: Plan, Enable
• Plan and Enable processes prepare the supply-chain to ensure smooth execution
• Planning processes balance the need for resources, materials, capacity, etc. with the availability of these resources. This includes prioritization if needed.
• Enable processes address 9-10 control aspects for the supply chain. They monitor compliance,deliver information from other processareas and highlight dependencies on these other process areas. They also support maintenance of relationshipswith suppliers.
48
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 49
Planning Processes
› Processes: Plan› Objective: Drive/coordinate execution processes
Custom
er processesSupp
lier p
roce
sses
Supply ChainC
ustomer processesSu
pplie
r pro
cess
esSupply Chain
DeliverMakeSource
ReturnReturn
Plan
49
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 50
Plan (Process ID: sP)
• Objectives of this process:› The process of determining capacity, materials, staffing and
resource needed to achieve supply chain targets and the identification of corrective actions to address shortages in supply or demand.
• Key Processes Comprehended:› Supply chain revenue planning/forecasting› Materials requirement planning› Factory, repair, maintenance facilities capacity planning› Distribution requirements planning› Manage planning parameters
• Hint: Forecasting, S&OP, MRP? Probably Plan in SCOR
50
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 51
Plan Level-2 Processes (1/2)
• Plan Supply Chain (Process ID: sP1)› Planning overall supply chain targets. Plan Supply Chain drives
and coordinates sP2, sP3, sP4 and sP5 plans (Compare to “Revenue plan”, or “Budget” in certain industries) – see also sEP.10
• Plan Source (Process ID: sP2)› Planning of material ordering and receiving activities. Plan Source
calculates which materials need to be available when to support the production plan (P3) and/or the delivery plan (P4). (Compare to “Materials Requirements Plan”)
• Plan Make (Process ID: sP3)› Planning of production and/or MRO activities. Plan Make ensures
the production resources (capacity) are in place as needed and may generate production orders. (Compare to “Production Plan” or “Master Production Schedule”)
51
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 52
Plan Level-2 Processes (2/2)
• Plan Deliver (Process ID: sP4)› Planning of order management, material handling and
transportation activities. Plan Deliver ensures resources are in place as needed and may generate or recalculate shipping dates based on material availability. (Compare to “Shipment Plan”, “Load Planning”)
• Plan Return (Process ID: sP5)› Planning of the reverse logistics shipping and material handling
capacity. Note: This does not include the maintenance, repair or overhaul activity planning as those are Make processes and therefore include in Plan Make.
52
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 53
Plan Level-3 Processes (1/2)
Plan Supply Chain (sP1) Plan Source (sP2) Plan Make (sP3)
sP1.1 Gather Supply Chain Requirements
sP2.1 Gather Materials Requirements
sP3.1 Gather Production Requirements
sP1.2 Gather Supply Chain Resources
sP2.2 Gather Material Resources
sP3.2 Gather Production Resources
sP1.3 Balance Supply Chain Resources with Requirements
sP2.3 Balance Material Resources with Requirements
sP3.3 Balance Production Resources with Requirements
sP1.4 Establish & Communicate Supply Chain Plans
sP2.4 Establish Sourcing Plans
sP3.4 Establish Production Plans
53
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 54
Plan Level-3 Processes (2/2)
Plan Deliver (sP4) Plan Return (sP5)
sP4.1 Gather Delivery Requirements
sP5.1 Gather Return Requirements
sP4.2 Gather Delivery Resources
sP5.2 Gather Return Resources
sP4.3 Balance Delivery Resources with Requirements
sP5.3 Balance Return Resources with Requirements
sP4.4 Establish Delivery Plans sP5.4 Establish & Communicate Return Plans
54
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 55
Plan Processes Similarity
sP1.1Gather
Supply ChainRequirements
sP1.2Gather
Supply Chain Resources
sP1.3Balance
Resources w/Requirements
sP1.4Establish
Supply Chain Plans
Supply chain plansPlanning BOMsDelivery plansOrders (sD2 and sD3)Return requirements
Production schedulesInventory availabilityWIP inventorySourcing plans Maintenance plans
Revenue plans
Capacity gaps
Plan Supply Chain (sP1) example shown
• All planning processes operate 4 basic steps:1. Gathering requirements2. Gathering resources3. Balancing resources with requirements4. Establishing and communicating the plan
55
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 56
Plan Make
Plan Source
Plan Supply ChainPlan Supply Chain
sP1.1
sP1.2
sP1.3 sP1.4
sP1.1
sP1.2
sP1.3 sP1.4
sP2.1
sP2.2
sP2.3 sP2.4
sP3.1
sP3.2
sP3.3 sP3.4 21
to sP3.2
end full cycle begin next cycle
An Integrated Planning Process
• Integrated planning is an iterative process (best practice):1. The output of Plan Supply Chain is the input for Plan Source, Plan
Make, Plan Deliver and Plan Return2. The output of Plan Source, Plan Make, Plan Deliver and Plan Return
are inputs for Plan Supply Chain; The output of one cycle is the input for the next cycle
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© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 58
Enable Processes
Customer processesSu
pplie
r pr
oces
ses
Supply Chain
› Processes: Enable Plan, Enable Source, Enable Make,Enable Deliver and Enable Return
Custom
er processesSupp
lier p
roce
sses
Supply ChainC
ustomer processesSu
pplie
r pro
cess
esSupply Chain
DeliverMakeSource
ReturnReturn
Plan
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© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 59
Enable Processes
• Objective of these processes: › The Enable processes are five groups of processes under Plan,
Source, Make, Deliver and Return with 3 distinct types of objectives:
- Manage process performance- Manage process control data- Manage process relationships
• Key processes comprehended: › Managing business rules and monitoring adherence› Measuring supply chain performance and determine corrective
action› Managing risk and environmental impact› Managing the supply chain network and facilities
• Hint: Equipment or plant maintenance? Probably Enable
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© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 60
Enable Level-2 Processes
• Enable Plan (Process ID: sEP)› Performance, data and relationship management processes for all
types of planning processes: Plan Supply Chain, Plan Source, Plan Make, Plan Deliver and Plan Return. Examples: maintain planning cycles, monitor planning accuracy, manage supply chain risks.
• Enable Source (Process ID: sES)› Performance, data and relationship management processes for all
receiving activities and supplier related processes. Examples: Monitor supplier performance, maintain what is sourced where.
• Enable Make (Process ID: sEM)› Enable management processes for manufacturing, repair and
overhaul type processes. Examples: BOM maintenance, preventive equipment maintenance, monitoring capacity utilization/shortage.
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© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 61
Enable Level-2 Processes
• Enable Deliver (Process ID: sED)› Performance, data and relationship management processes for all
order management, warehouse and distribution activities and forwarder related processes. Examples: Monitor order management and forwarder performance, maintain a distribution network, managing risk.
• Enable Return (Process ID: sER)› Enable management processes for all types of reverse logistics
processes: MRO returns, defective product returns and excess inventory returns. Examples: Maintain return approval rules, Maintain issue tracking software, maintain a return distribution network.
61
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 64
Reverse Processes
› Processes: Return (Source Return, Deliver Return)› Objective: reverse material flows
Custom
er processesSupp
lier p
roce
sses
Supply ChainC
ustomer processesSu
pplie
r pro
cess
esSupply Chain
DeliverMakeSource
ReturnReturn
Plan
64
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 65
Return (Process ID: sR)
• Objective of this process:› Moving material from customer back through supply chain
to address defects in product, ordering, or manufacturing, or to perform upkeep activities.
• Key Processes Comprehended› Identification of the need to return a product or asset› Requesting and issuing return authorization › Inspection and disposition decision-making› Transfer/Disposition of product or asset› Managing return transportation capacity› Managing returned material inventories
• Hint: Reverse material flow? Probably Return in SCOR
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© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 66
Return Level-2 Processes
• Return Defective Products (Process IDs: sSR1 and sDR1)› The return of products because the product is defective, the wrong
product was ordered or shipped. The product or order is not (working) according to specifications.
• Return Maintenance, Repair & Overhaul (IDs: sSR2 & sDR2)› The return of products (assets) to perform preventative maintenance,
(end-of-life) overhaul or repairs due to breakage/aging with use. The product is inspected and updated due to normal wear and tear.
• Return Excess Products (Process IDs: sSR3 and sDR3)› The return of excess inventories and inventories of product. The product
is new and in original packaging. Examples are end-of-life excess inventory, re-distribution of decentralized inventory.
• sSR = Source Return (return to source), • sDR = Deliver Return (return delivered goods)
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© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 67
• Positioning Source Return and Deliver Return› Consider the flow of goods, the positions of Source and Deliver
› Now, notice the positions of Source Return and Deliver Return
Supplier CustomerMy Company
Deliver Return
Source Return
Source Return
Deliver Return
CustomerMy Company
Deliver Source SourceDeliver
Supplier
Return Configurations 67
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 68
Return Level-3 Processes (1/2)
Defective Products (sSR1) MRO Return (sSR2) Excess Products (sSR3)
sSR1.1 Identify Defective Product Condition
sSR2.1 Identify MRO Product Condition
sSR3.1 Identify Excess Product Condition
sSR1.2 Disposition Defective Product
sSR2.2 Disposition MRO Product
sSR3.2 Disposition Excess Product
sSR1.3 Request Defective Product Return Authorization
sSR2.3 Request MRO Return Authorization
sSR3.3 Request Excess Product Return Authorization
sSR1.4 Schedule Defective Product Shipment
sSR2.4 Schedule MRO Shipment
sSR3.4 Schedule Excess Product Shipment
sSR1.5 Return (Ship) Defective Product
sSR2.5 Return (Ship) MRO Product
sSR3.5 Return (Ship) Excess Product
› Decide what to do with the goods (‘disposition’) and return goods if applicable (sSRx.1 – sSRx.5)
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© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 69
Defective Products (sDR1) MRO Return (sDR2) Excess Products (sDR3)
sDR1.1 Authorize Defective Product Return
sDR2.1 Authorize MRO Product Return
sDR3.1 Authorize Excess Product Return
sDR1.2 Schedule Defective Product Receipt
sDR2.2 Schedule MRO Product Receipt
sDR3.2 Schedule Excess Product Receipt
sDR1.3 Receive & Verify Defective Product
sDR2.3 Receive & Verify MRO Product
sDR3.3 Receive & Verify Excess Product
sDR1.4 Transfer Defective Product
sDR2.4 Transfer MRO Product sDR3.4 Transfer Excess Product
Return Level-3 Processes (2/2)
› Evaluate return requests and receive returned goods
69
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 71
Process Modeling Using SCOR
Drivers for modeling (Why do you model?)• Business opportunities:
› Strategy Development› Merger, Acquisition or Divestiture (companies, supply chains)› Process optimization and Re-engineering› Standardization, Streamlining and Management alignment› New business start-up (company and supply chain start-ups)› Benchmarking› Process Outsourcing
• Technology services:› Software implementation (ERP, PLM, QC)› Workflow & Service Oriented Architecture
71
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 72
Process Modeling Using SCOR
• SCOR recognizes 4 types of models. Each model serves a different purpose:
› Business Scope Diagram: Document the scope of a project or organization. Communicate the boundaries
› Geographic Map (Geo Map): Describe material flows in a geographic context; Highlight node¹ complexity or redundancy
› Thread Diagram: Material and information flow diagram, focused on level-2 process connectivity; Describe process strategy, complexity or redundancy
› Workflow Model: Material, Information, and workflow diagram at level- 3 (or beyond); Highlight information, people and system interactions and issues
• When models are developed in listed sequence (‘top-down’), each model builds on the previous model and requires limited incremental information¹) A node is a logical or geographic entity in a supply chain. E.g: Warehouse, Factory, Store
72
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 73
Supplier My Organization CustomerSupplier My Organization Customer
Supplier My Organization Customer
Creating a Scope Diagram
Steps to create a Business Scope Diagram1. Create or open the business scope diagram template2. Identify and enter the customers of your project or
organization3. Identify and enter the key nodes within your project
or organization4. Identify and enter the suppliers of your project or
organization5. Optionally link the nodes to reflect material and/or
information flows (using different color/stroke)
Flash Inc.
Battery ltd.
CompsFactory DC Retail Inc.
mp3 HQ
234
Flash Inc.
Battery ltd.
CompsFactory DC Retail Inc.
mp3 HQ55
1
73
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 74
Suppliers mp3, Inc. Customers
Service Providers
The Result: Scope Diagram
Flash Inc.
Battery ltd.
Components
Factory
Warehouse
Retail, Inc.
mp3 HQ
74
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 75
Retail, IncsS1, sP2
b
France
Spain
UKGermany
2
China
India
Creating a Geographic Map
Steps to create the Geographic Map:1. Create geographic context (a.k.a. the map)2. Draw and name your customers on the map
a. Identify the level-2 processes b. List the level-2 processes in the customer node
3. Starting with your customers, repeat for each node:a. Identify all supplying nodesb. Draw and name these supplying nodesc. Identify the level-2 processesd. List the level-2 processes in each nodee. Draw the material flows (connecting arrows)
Repeat until you have included all your suppliers1
MP3 FactorysS1, sM1, sD1
3
b¹d¹
Drive SuppliersD1, sP1, sP4
b²d²
e²
e¹
75
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 76
Drive SuppliersD1, sP1, sP4Battery Supplier
sD1, sP1, sP4
Retail, IncsS1, sP2
MP3 FactorysP3, sS1, sM1, sD1
HQsP1, sP2, sD2, sS2
Result: The Geographic Map
Question: No flow from HQ; Why?
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© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 77
Creating a Thread Diagram
77
Suppliers My Organization Customers
1Steps to create a SCOR Thread Diagram1. Create or open the thread diagram template2. Repeat these steps for every relevant node on the
geographic map:a. Create a column (node) in the appropriate classb. Create process representations for each nodec. Link the processes in the column (node) to
represent the material flowsd. Link the processes to the previous node’s Repeat until all relevant nodes have bee created
3. Optionally add information flows (using different color/stroke)
a
2 b c
d
3
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© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 78
Result: The Thread Diagram
Suppliers mp3 Incorporated Customers
Battery Supplier Drive Supplier mp3 Inc
factorymp3 Inc HQ mp3 Inc warehouse Retail, Inc
sD1
D1
sS2
sP1
sP2sP3sP2sP4
sS1 sM1 sD1
sS1 sD1
sS1
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© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 79
Modeling with SCOR
Steps to establish SCOR process models (workflows)1. Obtain generic descriptions (this is what people describe)2. Map these generic descriptions to SCOR process IDs (normalize)3. Create swimming lanes to reflect organizational boundaries4. Create workflow with these SCOR processes5. Add description to workflows to reflect inputs/outputs of the processes6. Optionally add other relevant information
1. Orders are faxed in and entered in OMS2. Every night the orders are scheduled3. The orders are released to the factory
based on the delivery date offset4. Factory creates and schedules factory
work orders in SFCS
1
sD2.2 Receive, Enter, Validate OrdersD2.3 Reserve Inventory & Determine
Delivery Date
sM2.1 Schedule Production Activities
2
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© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 80
Modeling with SCOR
faxfaxfax
sD2.2 sD2.3
sM2.1
OMS OMS
W.O.
S.O.
SFCS
My
Com
pany
Cus
tom
erTh
e Fa
ctor
y
4
sM2.2
S.O.
SFCS
3
Steps to establish SCOR process models 1. Obtain generic descriptions 2. Map these generic descriptions to SCOR process
IDs (normalize)3. Create swimming lanes to reflect organizational
boundaries4. Create workflow with these SCOR processes5. Add description to workflows to reflect inputs and
outputs of the processes6. Optionally add other relevant information
5
6
80
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 81
sD1.3Reserve Inv.
Calculate Date
Result: The Workflow Diagramm
p3 H
Q(C
uper
tino)
mp3
Fac
tory
(S
henz
hen)
Ret
ail,
inc.
(Am
ster
dam
)
sD2.2Receive, Enter, Validate Order
sD2.3Reserve Inv.
Calculate Date
sS1.1Schedule Prod.
Deliveries
Customer P.O. Delivery Commit
sS2.1Schedule Prod.
Deliveries
sD1.2Receive, Enter, Validate Order
Inter-Company P.O.
C.O. = Customer Order, Inv. = Inventory, P.O. = Purchase Order, Prod. = Product
C.O. C.O.
81
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 82
Collecting Process Information
not in SCOR
organization
activity
business rules
technology
measurements
inputs outputs
people
metrics
best practices
geography
platform
interfaceskills
• Process is defined by more than just activity
82
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 83
Collecting Process Information
Staple-Yourself-To-An-Order • Proven technique to obtain generic language process descriptions: • Follow the logical flow of an order through the process.
› Each level-1 process has an order (except Plan): Customer order for Deliver, Production order for Make, Purchase order for Source and Return Authorization for Return.
› For each order start with the process of order creation and follow the order and document each activity until the order is completed/closed.
› Similarly follow the steps of the planning cycles you encounter.• Finally cover any process you have missed so far; • Use your SCOR list of processes as a check-list.
› Hint: To obtain generic descriptions for an end-to-end supply chain: Start with Plan, then Deliver, Make, Source.
› Consider virtual (conference room) staple-yourself-to-an-order
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© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 84
Collecting Process Information
• The purpose of capturing process is to understand it and remove, adjust or repair it where needed
• Recognize process characteristics:• 'Measurements': It takes 30 minutes to build…• 'Business rule': The plan is updated weekly…• 'People': This is handled by Joanna on Thursdays …• 'Business rule': This is done to provide .. with .. data..• 'Inputs' or 'triggers': When we receive the document..• 'Outputs': We send them the document..• 'Technology': We print the document from the .. system..• 'Business rules': We need two copies of the form ..
• Verify hearsay statements, to eliminate perception
84
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 85
Supply Chain Performance
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 86
Supply Chain Performance
• Definitions:› Performance Attribute: a characteristic to describe a
strategy. Performance attributes serve as classification formetrics and formulate strategic direction
› Key Performance Indicator (KPI): a metric to measure the overall performance or state-of-affairs. SCOR level-1 metrics are considered KPIs
› Metric: a standard for measurement› Measurement: an observation that reduces
the amount of uncertainty about the value ofa quantity
• SCOR metrics = Diagnostic metrics› Monitor and diagnose overall supply chain health› Diagnostic relationships (hierarchy) allows gap analysis
86
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 87
Attribute Strategy
Reliability (RL)
Consistently getting the orders right, product meets quality requirements
Responsiveness (RS)
The consistent speed of providing products/services to customers
Agility (AG)
The ability to respond to changes in the market (external influences)
Cost (CO)
The cost associated with managing and operating the supply chain
Assets (AM)
The effectiveness in managing the supply chain’s assets in support of fulfillment
Cus
tom
erIn
tern
alSCOR Performance Attributes
Question: What is/are the most important attributes to achieve your supply chain strategy?
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© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 88
Attribute Level-1 Level-2 Level-3 Level-4Strategy Overall Health Diagnostic Root cause Transactional
Set scope, priority, and strategic direction
Measures ability to execute strategy
Explains why strategy is not achieved
Identifies root causes of strategy gaps
Measures (IT) transactional performance
Framework Language
Framework Language
Framework Language
Framework Language
Technology Specific Language
SCOR Performance Hierarchy
RL.1.1Perfect Order
Fulfillment
RLReliability
RL.2.4Perfect
Condition
Standard SCOR metrics
RL.3.19Orders Received
Defect Free
Standard SCORattribute
Technologydriven metrics
Transactions Processed Error Free
88
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 89
SCOR Performance Codification
• SCOR metrics have unique identifiers:1. Two capitals are performance attributes: RL, RS, AG, CO and AM (5)2. Two capitals, a period, the number one (1) and a number are KPIs or
strategic (level-1) metrics: RL.1.1, RS.1.1, AG.1.1, CO.1.1, CO.1.2, AM.1.3 (11 in total)
3. Two capitals, a period, the number two (2) and a number are diagnostic level-2 metrics: RL.2.1, RS.2.1, AG.2.1, CO.2.1, CO.2.2, AM.2.7 (45 in total)
4. Two capitals, a period, the number three (3) and a number are diagnostic level-3 metrics: RL.3.1, RS.3.1, AG.3.1, CO.3.149, CO.3.151, AM.3.44 (>500)
• XX = performance attribute, • XX.1.n = level-1 metric, XX.2.n = level-2 metric, and so on
89
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 90
Attribute Strategic metric
Reliability RL.1.1 Perfect Order Fulfillment
Responsiveness RS.1.1 Order Fulfillment Cycle Time
Agility AG.1.1 Upside Supply Chain Flexibility
AG.1.2 Supply Chain Upside Adaptability
AG.1.3 Supply Chain Downside Adaptability
AG.1.4 Overall Value at Risk (VaR)
Cost CO.1.1 Supply Chain Management Cost
CO.1.2 Cost of Goods Sold
Assets AM.1.1 Cash-to-Cash Cycle Time
AM.1.2 Return on Supply Chain Fixed Assets
AM.1.3 Return on Working Capital
› Measuring strategy: KPIs are strategic (level-1) metrics
Cus
tom
erIn
tern
alSCOR Level-1 Metrics (KPIs) 90
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 91
Metric: RL.1.1 Perfect Order Fulfillment
Definition: The percentage of orders delivered on-time, in full. Components of perfect include all items and quantities on-time, using the customer’s definition of on-time, complete documentation and in the right condition
Calculation: [Total Perfect Orders] / [Total Number of Orders] * 100%Diagnostic Metrics:(examples)
• RL.2.1 % Orders Delivered in Full• RL.2.4 Perfect Condition• RL.3.19 % Orders Received Defect Free• RL.3.24 % Orders Received Damage Free
Notes: An order is perfect only if ALL L2/L3 metrics are perfect; An order must be: on-time AND in-full AND right condition AND right documentation
Strategic Reliability Metric 91
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 92
Metric: RS.1.1 Order Fulfillment Cycle TimeDefinition: The average actual cycle time consistently achieved to fulfill
customer orders. The actual cycle time starts with the receipt of the order and ends with the customer acceptance of the delivery. The unit of measure is days.
Calculation: [Sum Actual Cycle Times For All Orders Delivered] / [Total Number Of Orders Delivered]
Diagnostic Metrics:(examples)
• RS.2.2 Make Cycle Time• RS.2.3 Deliver Cycle Time• RS.3.96 Pick Product Cycle Time
Notes: Order Fulfillment Cycle Time may include dwell time and idle time. Dwell time is days the order was placed in advance by the customer. Idle time is the time the order is waiting because of inefficiencies of the supply chain.
Strategic Responsiveness Metric 92
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 93
Strategic Agility Metrics
Metric: AG.1.1 Upside Supply Chain FlexibilityDefinition: The number of days required to achieve an unplanned
sustainable 20% increase in quantities delivered. Seasonality is not considered unplanned/unforeseen. The unit of measureis calendar days.
Calculation: The larger of the number of days required to achieve sustainable increase for Source, Make and Deliver
Diagnostic Metrics:
• AG.2.1 Upside Source Flexibility• AG.2.2 Upside Make Flexibility• AG.2.3 Upside Deliver Flexibility
Notes: This metric may have more than one Source, Make and Deliver Flexibility component depending on the complexity of the supply chain.
93
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 94
Metric: AG.1.2 Supply Chain Upside Adaptability/AG.1.3 Supply Chain Downside Adaptability
Definition: The sustainable reduction and increase or decrease in product quantities that can be achieved in 30 days (without back-orders, cost penalties or excess inventory). Adaptability is expressed as a percentage of current run-rate.
Calculation: Upside: Percentage sustainable increaseDownside: Percentage sustainable reduction
Diagnostic Metrics:
• AG.2.1 Upside Source Adaptability• AG.2.12 Downside Make Adaptability• AG.3.47 Direct Labor Availability
Notes: This metric may have more than one Source, Make and Deliver Adaptability component depending on the complexity of the supply chain.
Strategic Agility Metrics 94
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 95
Strategic Agility Metrics
Metric: AG.1.4 Overall Value at RiskDefinition: The sum of the probability of risk events times the monetary
impact of the events which can impact any core supply chain functions (e.g. Plan, Source, Make, Deliver and Return) or key dependencies.
Calculation: Sum (Probability of a risk event x Monetary impact of the occurrence of the event)
Diagnostic Metrics:
• AG.2.15 Value at Risk (Source)• AG.2.18 Value at Risk (Deliver)• AG.2.19 Value at Risk (Return)
Notes: Risk/Agility not a perfect match: Agility focuses on ability to respond to unplanned influences. Value at risk calculates the total expose to certain types of unplanned events.
95
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 96
Metric: CO.1.1 Total Supply Chain Management Cost (TSCMC)Definition: All direct and indirect expenses associated with the operation
of supply chain business processes across the supply chain. Traditionally Total Supply Chain Management Cost is measured as a percentage of revenue.
Calculation: [Cost to Plan] + [Cost to Source] + [Cost to Deliver] + [Cost to Return]
Diagnostic Metrics:
• CO.2.1 Cost to Plan• CO.2.2 Cost to Source• CO.2.3 Cost to Deliver• CO.2.4 Cost to Return
Notes: The Cost to Make is captured in Cost of Goods Sold (COGS), however there is some risk for overlap between COGS and Supply Chain Management Cost.
Strategic Cost Metrics 96
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 97
Metric: CO.1.2 Cost of Goods Sold (COGS)Definition: The cost associated with buying raw materials and producing
finished goods. This cost includes direct costs (labor, materials) and overhead.Overhead is interpreted between companies.
Calculation: Direct Material + Direct Labor + Overhead
Diagnostic Metrics:
• CO.3.140 Direct Labor Cost• CO.3.141 Direct Material Cost
Notes: Overhead may contain elements of TSCMC that have been allocated to the COGS related processes. Do not double count!
Strategic Cost Metrics
Cost toPlan
Cost toSource
Cost to Make
Cost toDeliver
Cost toReturn
Total Supply Chain Management Cost (TCSMC) ComponentCost of Goods Sold component
97
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 98
Metric: AM.1.1 Cash-to-Cash Cycle Time
Definition: The time it takes for cash invested in materials to flow back into the company after finished goods have been delivered to customers. The unit of measure for Cash-to-Cash Cycle Time is calendar days
Calculation: [Inventory Days of Supply] + [Days Sales Outstanding] –[Days Payable Outstanding]
Diagnostic Metrics:
• AM.2.1 Days Sales Outstanding (DSO)• AM.2.2 Inventory Days of Supply (IDOS)• AM.2.3 Days Payable Outstanding (DPO)
Notes: For services, this is the time between paying the resources assigned to a service and receiving payment for the service delivery.
Strategic Asset Metrics 98
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 99
Metric: AM.1.2 Return on Supply Chain Fixed Assets
Definition: The return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used to Plan, Source, Make, Deliver and Return. Examples of fixed assets include land, buildings, machinery, trucks
Calculation: ([Supply Chain Revenue] – [COGS] – [Supply Chain Management Costs]) / [Supply Chain Fixed Assets]
Diagnostic Metrics:
• AM.3.11 Deliver Fixed Assets Value• AM.3.18 Make Fixed Assets Value• AM.3.20 Plan Fixed Asset Value• AM.3.27 Source Fixed Assets Value
Notes: Supply Chain Revenue is the operating revenue generated from a supply chain. This does not include non-operating revenue, such as investments, sale of assets, etc..
Strategic Asset Metrics 99
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 100
Metric: AM.1.3 Return on Working Capital
Definition: Return on working capital assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, revenue, cost of goods sold and total supply chain management costs.
Calculation: ([Supply Chain Revenue] – [COGS] – [Total Supply Chain Management Costs]) / [Working Capital]
Diagnostic Metrics:
• AM.2.6 Payables Outstanding• AM.2.7 Sales Outstanding• AM.2.8 Inventory
Notes: Supply Chain Revenue is the operating revenue generated from a supply chain. This does not include non-operating revenue, such as investments, sale of assets, etc..
Strategic Asset Metrics 100
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 102
Performance Measurement Using SCOR
Drivers (Why do you measure?)• Managing a Business:
› Set realistic targets (benchmarking)› Understanding the condition or health of your supply chain› Identify and correct problems before they ‘occur’:
- Address issues before the customer experiences problems- Address issues before they hurt the bottom line (e.g. inventory)
› Mitigate risk• Managing a Project:
› Set realistic targets (benchmarking)› Monitor the ongoing business external to your project› Root cause analysis› Monitor improvement driven by change
102
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 103
Performance Measurement Using SCOR
Definitions• Scorecard: A visual display of the most important information
needed to achieve one or more objectives, consolidated and arranged in a single view
• Balanced Scorecard: A scorecard providing metrics related to four organizational strategies: financial, customer satisfaction, internal process excellence/efficiency, and employee learning and growth
• SCORcard: A scorecard providing metrics related to the five SCOR supply chain strategies: reliability, responsiveness, Agility, cost and assets
• Benchmarking: Comparing an organization’s performance, products, practices, and/or services with those of other organizations that operate in the same or comparable industry
103
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 104
SCORcards
SCORcard metric requirements:• Measurable and quantifiable
Avoid 'feel good' metrics like supplier satisfaction or customer satisfaction, unless they are an aggregation of well-defined detail metrics. Framework-based metrics simplify the selection process.
• Linkage to responsibilityAvoid metrics that have no impact on performance reviews (supplier or employee), ensure the metric is linked to the (right) process owner at the right level.
• Ensure metric is well-definedMultiple interpretations of a metric may lead to 'workarounds' and negation of the effort. SCOR metrics are pre-defined; limiting the discussion on metric definitions.
104
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 105
Creating a SCORcard™
Steps to create a SCORcard• Understand the supply chain (develop the scope diagram,
geographic map and thread diagram to fully comprehend the configuration of the supply chain
• Select metrics • Interpret metrics definition (determine how to calculate the
values based on your contracts and service level agreements)• Document where/how to collect the data• Document how to calculate and aggregate the metrics• Pilot the SCORcard; test the calculations with subset of orders
or transactions• Automate the SCORcard; simplify the process of collecting data
and calculating metric values• Organize periodic SCORcard review sessions
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Metrics Interpretation
Understand the purpose of each metric• Customer facing metrics should be measured as close to the
customer experience as possible. › The moment of order submission instead of order entry › Delivered performance instead of shipping performance› Received quality instead of produced or shipped quality
• Measure what makes sense: Don’t have data? Approximate the missing component until you will be able to obtain the data
• Trend data is more important then a single measurement• It is not about how you think it should be measured, ask your
customer what is important to him/her
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Metrics Data
• Each company will need to develop instructions or a tool to source the data for the SCOR metrics
• There are two types of data:› Recorded data; obtain from transactional systems such
as ERP (Enterprise Resource Planning), WMS (Warehouse Management System), financial systems, etc. For example: compare time-stamps in these systems to calculate cycle times.
› Observed data; obtain through interviews, error logs, audits and/or time-studies. For example the observed percentage of orders requiring additional customer setup in a system, percentage of manual repackaging events on the shipping dock.
• There is no easy button
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Attribute Strategic metric (level-1) Actual
Reliability Perfect Order Fulfillment 54%
Responsiveness Order Fulfillment Cycle Time 6 days
Agility Supply Chain Flexibility 24 days
Cost Total Supply Chain Management Cost 10.6%
Cost of Goods Sold 87%
Assets Cash-to-Cash Cycle Time 4 days
Example SCORcard
• Select 1 or 2 metrics that represent the best way to measure a strategy• Focus on a few metrics at a time, but don't lose sight of the others• New teams: choose dozens of metrics; mature Teams: 1-2 KPIs
• Questions: How many metrics does your company measure?Are listed performances: leading, good, mean or poor?
Cust
omer
Inte
rnal
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Benchmarking
• Definitions› Benchmarking: Comparing an organization’s performance with
those of other organizations that operate in the same or comparable industry
› Parity: Being equal in performance; No real advantage over others› Advantage: Being in a favorable position; In a stronger position
than parity, but not yet achieving Superior performance› Superior: Being of high rank or quality; Leaders not outlier
• Usage› Establish Realistic Goals. Know where you are relative to others
(competitors or peers), and state where you're going. › Monitor Performance. Track relative progress you and others (your
competitors or peers) make.
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Benchmark Requirements
Compare like for like • Use standard metrics
A numerical comparison of the performance of two companies in the same industry may not have value when the metric is different.
• Measure the same process/business modelAvoid comparing the performance of a make-to-stock process to an engineer-to-order process. The purpose of these processes is different, measure them accordingly.
• Understand the DemographicsMake sure you understand the other organizations in thebenchmark. Regional differences, and differences inproduct, or services may influence results.
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Exercise: Benchmark (1/3)
› Step 1, Interpret the definitions, find the data sourcesand calculate metrics for each company
DSO IDOS DPO C2CCompany 1
Company 2
Company 3
Company 4
Company 5
Company 6
Company 7
DSO = Days Sales Outstanding, DPO = Days Payables Outstanding, IDOS = Inventory Days of Supply, C2C = Cash to Cash Cycle time
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Exercise: Benchmark (2/3)
› Step 2, Copy and sort (for each metric) the results from the previous slide
DSO IDOS DPO C2C
Best
Median
Worst
Superior
Parity
1
2
DSO = Days Sales Outstanding, DPO = Days Payables Outstanding, IDOS = Inventory Days of Supply, C2C = Cash to Cash Cycle time
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Exercise: Benchmark (3/3)
› Step 3, Copy the results from the previous table and calculate Advantage
Actual Parity Advantage Superior
Days Sales Outstanding
Inventory Days of Supply
Days Payables Outstanding
Cash-to-Cash Cycle Time
12 3
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Exercise: Results & Analysis
› Compare company ‘GG’ actuals with desired Advantage› Discuss which metric to improve to achieve Advantage
Actual Parity Advantage Superior
Days Sales Outstanding 41 60 50 41
Inventory Days of Supply 67 45 25 4
Days Payables Outstanding 26 42 98 154
Cash-to-Cash Cycle Time 83 48 12 -25
Desired improvement: 71 days
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Supply Chain Practices
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 118
Practices: Definitions
Definitions:• 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.Importance• Internalize SCOR by adding best practices for your industry• Alternatives to the way you do business• Equalize the competitive landscape
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Level-1 Level-2 Level-3 Level-4 Level-5
Supply chain Major process Some activities Transactional Infrastructure
• Many processes
• Multiple nodes• May extend
beyond company boundaries
• One or few Level-2 processes
• One or few Level-3 processes
• (Automation of) business transactions
• One specific activity. E.g. how to operate equipment used
• Infrastructural level of automation
• Activity details. E.g. System settings of equipment used
ERPSystem
CollaborativePlanning
EDI EngineeringCatalogues
Initiate & ReceiveEDI Catalogue
CatalogTransactions
Practices Hierarchy
Note: No formal hierarchy exists in SCOR practices. This diagram illustrates the span of practices; similar to span of processes and metrics.
Standard SCOR practices Industry/company practices
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Types of Practices
• Leading practice: Few have it, proprietary restrictions may exist, not proven in many industries, changing the competitive landscape, major improvement in one or more performance attributes/metrics.
• Best practice: Widely accepted, (significant) improvement over common practices, applicable to majority of industries, plus ‘current, structured, proven and repeatable’.
• Common practice: Generally accepted as minimum standard, baseline of acceptable performance, clearly defined, accepted in all industries (few to no exceptions).
• Outdated practice: No longer accepted, widely identified as insufficient, compliance issues, lagging results.
• A practice should match several of the listed characteristics to qualify as a practice of that type.
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How to determine fit?• Assign each best practice a pin• Determine risk, investment• Determine return• Push the pin in the resulting
quadrant• Some pins may not make the
table at all: Not appropriate for your supply chain, business or industry
Best Practice Selection
• Are all best practices equally important for you?› SCOR contains over 200 practices today - do you need all?› Implement a best practice IF it makes sense for your specific
processes, business, or industry.
Low Effort/Risk High Effort/Risk
quickwins
Sponsorissue
nice to have consider carefully
Low
Retu
rnHi
gh R
etur
n
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Benchmarking Best Practices
• Definitions› Benchmarking: Comparing an organization’s performance, products,
practices, and/or services with those of other organizations that operate in the same or comparable industry
› Best practices benchmarking: Comparing the occurrence and maturity of best practices in an organization’s processes with those of other organizations
› Implementation Maturity: The quality or level of implementation of a practice within a supply chain
• Base-lines› In-company benchmarking; benchmarking supply chains within the
same company› Industry benchmarking; benchmarking same industry/competitors› SCOR benchmarking; companies in multiple industries using SCOR
as the base-line
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Example Practices Benchmark
• Example: In-company benchmark› Through interviews and questionnaires information was
collected for 5 similar supply chains within one company. The questions included:
› Is this best practice relevant for your business?› If answered yes; in what stage of implementation is it?
• Mature; In place across all relevant products and services• In process; Deploying it; Not in place across all relevant
products/services yet. • Planned; Have budget/plans/people in place to implement this
practice. No relevant products/services are currently supported by this best practice
• Unplanned; Not recognized as important and/or no budget/resources allocated yet.
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Example Practices Benchmark
• Benchmarking results for a benchmark of 5 supply chains (baseline = SCOR)
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Best Practices and Technology
• Many Best Practices involve technology› ERP = Enterprise Resource Planning› EDI = Electronic Data Interchange › Barcode / RFID› Advanced Planning and Optimization
• Don’t overlook non-technology practices› Training Programs (Example: cross-training)› Collaborative Planning (Can be done without complex
systems)› Joint Service Agreements› Supplier Development Programs› Certification Programs
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Supply Chain People
© 2011 Supply Chain Council. ALL RIGHTS RESERVED. | SCOR Framework | Slide 129
People: Standards for Skills
Typical SCOR projects involve • Performance (targets) changes• Process changes• Organizational changes = Organization Design
Organization design involves the definition of roles, processes, and formal reporting relationships in an organization• Strategic Organization Design – organizational units,
reporting structure – span of control• Operational Organization Design – detailed roles and
processes – SCOR
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People: Definitions
• Skill: Capacity to deliver pre-determined results with minimal input of time and energy
• Experience: The knowledge or skill acquired by observation or active participation
• Aptitude: A natural, acquired, learned or developed ability to perform a certain kind of work at a certain level.
• Training: A particular skill or type of behavior learned through instruction over a period of time
• Competency level: The state or quality of being qualified, having the ability, to perform a specific role.
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Competency Levels
• The state or quality of being qualified, having the ability, to perform a specific role. Level CharacteristicsExpert Intuitive understanding of the situation and zooms in on the central
aspects. Experts understand what is possible and applies experience patterns in new situations
Proficient Sees the situation as a whole and acts from personal conviction. Proficients can prioritize importance based on situational aspects.
Competent Goal oriented. Understands activities and can determine priorities to reach goals.
Beginner Limited "situational perception", all aspects of work treated separately with equal importance.
Novice New to the field or activity. A Novice needs standard/written procedures or step-by-step detailed instructions. No ability to make judgments based on situation.
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Competency Levels
• The state or quality of being qualified, having the ability, to perform a specific role.
Novice Beginner Competent Proficient Expert
Instructions Written Familiar Familiar Familiar Familiar
Orientation Task Task Goal Goal Goal
Decision making Analytical Analytical Analytical Intuitive Intuitive
Problem recognition Measuring Measuring Measuring Measuring Intuitive
In SCOR terms, focus on: Processes Practices Metrics Projects Domains
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Experience
Aptitude
Training
Defining Skills
Process
Performance(metric)
People(skill)
Practice(best
practice)
• Each Skill is defined by it’s description
• And by association to: Experiences, Training and Aptitudes
• Experiences, training and aptitudes are not directly connected to any other framework element
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People: Codification
Codification: HX.yyyy• H : Human resource or people aspect• X : People aspect where Skill (S), Experience (E),
Aptitude (A) or Training (T)• .yyyy : Differentiating numeric ID.
Notes: • Numbering does not indicate priority, sequence or size.• No level information in numbering• No classification of skills
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