NGalazzo Using SCOR Model in a Real Collaborative Sourcing Scenario[1]
Transcript of NGalazzo Using SCOR Model in a Real Collaborative Sourcing Scenario[1]
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creating essentials
Using SCOR model
in a real CollaborativeSourcing Scenario
VIB-ABCAL-PICS
Supply Chain Award 2006
Nando GalazzoVP Procurement - Borealis
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SCOR Borealis Degussa Supply Chain Improvements SCOR Borealis-Degussa
Adding value in Procurement:
Twist suppliers
to the last drop ...
... Lopez was wrong !
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SustainedValue Creation
and Dialogue...
... are a lot more fun
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Content
The strategic framework
The players The vision
Tools & Methodology
Partnership excellence
Supply Chain Reference Model (SCOR)
The Opportunity
The Degussa-Borealis business case
Whats different ? Conclusions
A New Dynamic
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Presenting the Players
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SCOR Borealis Degussa Supply Chain Improvements SCOR Borealis-Degussa
Borealis Degussa
5 B sales 11.7 B sales
Olefins and Polyolefins( PE/PP) Specialty Chemicals
EU/Global Global
Supplier Relationship Management Solutions to Customer program
Degussa seen as strategic supplierin 12 supply chains
Borealis seen as key customerfor 5 business units
Value Creation Through Innovation
Responsible-RespectExceed-Nimblicity
Research & Innovation are keyelements in our sustainable
development growth strategy
Profile
Products
Reach
Strategic
Fit
ValuesFit
ExecutionFit
SCOR + SRM + Proc Excell. SCOR + CRM + M&S Academy
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Creating a new collaborative vision
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Competitive advantage
low
low
high
high
Innovationintensity
Strategic framework: Sustainable value creation through collaboration
TheMagic
Quadrant
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Innovate & differentiate
Create visibility onextended SC Opportunities
Extract value
Goals & objectives:
... and share
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Presenting the Approach
Tools and Methodology
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SCOR Borealis Degussa Supply Chain Improvements SCOR Borealis-Degussa
Partner Relationship Management
Supply Chain Programs Innovative Product Developments Total Cost Reduction Programs
SCOR:
Common Methodology
Common Language
Common Metrics
Procurement Excellence:
Value Creation
Low Cost Sourcing
Operational ExcellenceCollaborative
Sourcing
Procurement
excellence
PartnerRelationshipManagement
SCOR
A integrated three-prong approach
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Why SCOR:If we had mapped processes the classical way:
SCORSCOR start small & scale fast
Easy mapping
Quick opportunities identification
Commonly used methodology & language
+ =- Where is the burningplatform ?
- Where to start ?
- How to start ?
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The Supply Chain Council (SCC) has developed and endorsed thThe Supply Chain Council (SCC) has developed and endorsed thee
Supply Chain Operations ReferenceSupply Chain Operations Reference--model (SCOR)model (SCOR)as the crossas the cross--industry standard for supply chain managementindustry standard for supply chain management
The SCC is an independent, notThe SCC is an independent, not--forfor--profit, global corporation withprofit, global corporation with
membership open to all companies and organizations interestemembership open to all companies and organizations interested ind inapplying and advancing in stateapplying and advancing in state--ofof--thethe-- art supply chainart supply chain
management systems and practices.management systems and practices.
Over 1000 Company MembersOver 1000 Company Members
CrossCross--industry representationindustry representation Chapters in Australia/New Zealand, Brazil, Europe, Japan, NortChapters in Australia/New Zealand, Brazil, Europe, Japan, Northh
America, Southern Africa, and South East Asia with petitionsAmerica, Southern Africa, and South East Asia with petitions forfor
additional chapters pending.additional chapters pending.
wwwwww..supplysupply--chainchain..orgorg
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SCOR: A Reference Model for a Supply Chain:5 core processes:
SOURCE MAKE DELIVER
PLAN
RETURNRETURNRETURN
Degussa&
otherBorealis
Suppliers
Degussa
& OtherBorealis
Customer
Common Building Block Approach
Processes Metrics
Best Practices Technology
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#
Level
Schematic Comments
1
2
3
4
Configuration
Level
(ProcessCategories)
ProcessElement Level(DecomposeProcesses)
Plan
DeliverMakeSource
A companys supply chain can be configured-to-order at Level 2 from approximately30 core processcategories.
Companies implement their operations strategy
through their unique supply chain configuration.
Companies fine tune their Operations Strategy at
Level 3
Level 3 defines a companys ability to competesuccessfully in its chosen markets and consists of: Process element definitions Process element information inputs and outputs
Process performance metrics Best practices, where applicable
System capabilities required to support bestpractices
ImplementationLevel
(DecomposeProcess
Elements)
Companies implement specific supply chain
management practices at this level
Level 4 defines practices to achieve competitiveadvantage and to adapt to changing business
conditions
SupplyChainOperationsReferencem
odel
Top Level
(Process Types)
Level 1 defines the scope and content for the SupplyChain Operations Reference model
Here basis of competition performance targets are set
Notin
Scope
Description
Balance Production Resources withProduction Requirements
Establish DetailedProduction Plans
Identify, Prioritize, and Aggregate
Production Requirements
Identify, Assess, and AggregateProduction Resources
P3.1
P3.3 P3.4
P3.2
SCOR Contains 3 Levels of Detail
ReturnReturn
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Supply chain improvementsBorealis DegussaUsing SCOR across enterprises
Case Study
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Initial project scope & complexity
3 continents, 8 countries
23 production sites
30 shipping points
27 receiving points
1600 deliveries/year
50,000 Tons shipped
7 major supply chains
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Common & Simple methodology used
Analyze and map common SC
Prioritize and select a Pilot
Do & Implement Pilot
Scale to other areas
Share the benefits
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Project milestones: Fast & Furious
AnalyzeTO BEDesign
Implementation& Improvement
Implementation& Improvement
Analyze Production, SC-
Structure and Processesfor Borealis and Degussa
supply chains Measure current
performance foridentified product (high
level) Identification of
Measurements of
Improvements
Detailed Analysis Level 3
Configuration TO-BE Detailed Improvements
TO BEValidation
Kick Off
Implement & Communicate
changes in : Organization,Processes and Performance
Management Systems
SCOR Concept
Methodology Project
Approach Define Scope
Agree AS IS
Select the BU to focus onwith further process
decomposition
Presentrecommendations
Define low level KPIs& targets
Define tasks &
responsibilities Map changes and define
change process
Agree detailed design
Train & Coach theorganization
Realize & sustain the benefits
0 1 2 3
Mgt. Team MeetingFeb 7th
Mgt. Team Meeting
September 29th
Visioning workshop
Develop common set of
KPIs
July 05 Sept 05 Feb 06
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Roadmap to improvements
1. Detailed Level 3 Analysis
2. Discussion Production and
deliver strategy
3. Quantitative analysis oftransportation costs
5. Judgment of benefits andimplementation effort 4. Visioning workshop
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Impact/ Benefits
low
low
high
high
Solution portfolio
EaseofImplementation
SCReconfiguration
medium
medium
SCReconfiguration
Direct shipment
Transport LoadOptimization
Portfolio & Strategic
DevelopmentVMI
Lead Time reduction
Forecasting Process
Supply chain deliveryperformance
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Shared Supply Chain metrics (template)
Overview Metrics Shared SCOR Level 1 Metrics
Actual
"As-is"
2005
Actual
"As-is"
Q1 2006
Actual
"As-is"
Q2 2006
"To-be"
(progress)
"To-be"
(success)Competition
Median
Process
Industry
Best in class
Process
Industry
(02/05)
Delivery Performance (Requested Del.
date)
65% 66% 69% 85% 90% 90% 95%
Forecast accuracy
55% 58% 58% 70% 80% n.c n.c
Order Fulfillment Lead Time (days)
SOURCE (peroxides - MTF) 15 15 15 10 8 n.c
SC Avg 2005 Inventory qty (Tons) -
Peroxides450 440 435 405 360 n.c n.c
SC Avg 2005 Consumption qty
(Tons/Month) - Peroxides product mix220 220 215 250 260 n.c n.c
SC Inv days of supply (days) -
Peroxides62 61 62 49 42 51 [days] 40 [days]
IN
TE
R
NA
L
Cash Cycle
Degussa - Borealis Supply Chain SCOR-Card (Level 1 & 2)
E
XT
E
R
N
A
L
Responsiveness
Supply ChainReliability
* Data only for illustration purpose
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Total identified SC savings & origin
Deliver Source
100 %
Source
Return Return
Deliver
Return Return
DeliverMake Source Make
Plan Borealis
Degussa
Plan
Make Make
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Savings breakdown
4231074Cash cycle
274050Responsiveness
169040295Supply chain reliability
SC value scaled
up to otherbusiness line (K)
Investment cost
(estimated K)Pilot
SC Value for
improvement (K)Pilot
Overview Metrics
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Change management issues in a collaborative scenario
Typical barriers:
Shared vision feedingmutual need & interest
Understanding aboutbusiness concepts &opportunities
Trust & opennessbetween partners whilebuilding reliable supplychain operations
Change managementsolutions:
Collaborativeworkshops
Common definitions(Reference model)
Commonly selected
& shared metrics
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Time for conclusion
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Enhancing partner collaboration is key
SCOR
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Conclusions
PROCESS
SCOR toolkit applied to the extended SC
SRM & CRM PRMTOOLS
GOALS
Create & Share value through SC collaboration
A total of 2387 K savings identified
Business growth (new prod. devpt.) estimated at 3800 K
Foster partnership
Collaborative sourcing
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Competitive advantage
low
low
high
high
In
novation
intensity
Strategic framework: Landing to The Magic Quadrant
TheMagic
Quadrant
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Key take away message
Procurement is a viable source of value creation
Innovation, entrepreneurial spirit and creativity arekey attributes for procurement
The journey is not always long & difficult
Using simple tools & simple methodology boostproject management