Richard J. Sherman from Emeritus Supply Chain Council on ‘Keeping SCOR in Your Supply Chain’ &...
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Transcript of Richard J. Sherman from Emeritus Supply Chain Council on ‘Keeping SCOR in Your Supply Chain’ &...
Keeping SCOR in Your Supply Chain
Rich Sherman, Director of North America Supply Chain Council www.supply‐chain.org
Agenda
• Who is the Supply Chain Council? • The Role Of The SCOR Model In Optimizing Supply Chain Performance
• A Case Example • Conclusion
2 AMR 2009 ‐ SCC & SCOR Executive Overview
Who is the Supply Chain Council?
SCC: An independent, non‐profit global association
• Formed in 1996 to create and evolve an open industry process reference model of the supply chain for the benefit of helping companies rapidly and dramatically improve supply chain operations
• SCC has established the supply chain world’s most widely accepted framework – the SCOR® process reference model – for evaluating and comparing supply chain activities and their performance
– SCOR is an open industry process standard containing over 200 process elements, 550 metrics, and 500 best practices including risk and environmental management and HR skills requirements for each process
– It lets companies quickly determine and compare the performance of supply chain and related operations within their company or against other companies and can be used as an unbiased foundation for value based outsourcing relationships (e.g., DoD PBL standard)
• SCC continually advances its tools and educates members about how companies are capitalizing on those tools
– With membership open to all interested organizations
SCC ‐ ISM/NAPM April 2010
Global Scope With Over 800 Member Organizations
Also developing chapters in India and the Middle East
0% 10% 20% 30% 40% 50%
Non-Profit/Academic
Consultant
Enabling Technology
End User
SME
Government
Member Affiliation
Member Distribution Geographic
China
Australia/New Zealand
South Africa Latin America
Southeast Asia
Japan
Europe
North America
Industry Membership Scope
SCC Membership Accelerates a Company’s Use of–and Benefits
From–SCOR And Related Models Reference models, benchmarking, tools research and help from SCOR experts
Chapters, events, workgroups, and forums to share SCOR and supply chain knowledge and experience
Training, certification, professional and career development and volunteer opportunities
THE ROLE OF THE SCOR MODEL IN OPTIMIZING SUPPLY CHAIN
PERFORMANCE
8 AMR 2009 ‐ SCC & SCOR Executive Overview
What is SCOR®?
9
Customer processes Su
pplie
r pr
oces
ses
Supply Chain
Customer processes Su
pplie
r pr
oces
ses
Supply Chain
Process, arrow indicates material flow direction Process, no material flow Information flow
Deliver Make Source
Return Return
Plan
• SCOR is a supply chain process reference model containing over 200 process elements, 550 metrics, and 500 best practices including risk and environmental management
• Organized around the five primary management processes of Plan, Source, Make, Deliver and Return
• Developed by the industry for use as an industry open standard ‐ Any interested organization can participate in its continual development
9 AMR 2009 ‐ SCC & SCOR Executive Overview
Supply Chain Council Extended Frameworks – DCOR and CCOR
AMR 2009 ‐ SCC & SCOR Executive Overview
Sup
plie
r pro
cess
es
Product Design DCOR™
Custom
er processes
Supply Chain SCOR™
Sales & Support CCOR™
Product Management
10
Technical Development Steering Committee Working Groups – Frameworks, Processes, Metrics, Sustainability, Risk, Skills, etc. Special Interest Groups – Industry, Methodologies, Best Practices, etc. Other Ongoing Research Projects
SCOR Processes – Five Levels of Decomposition
Level 1 Level 2 Level 3 Level 4 Level 5
Scope Configuration Activity Workflow Transactions
Differentiates Business
Differentiates Complexity
Names Tasks Sequences Steps Links Transactions
Defines Scope Differentiates Capabilities
Links, Metrics, Tasks and Practices
Job Details Details of Automation
Sets Strategy First Tier Diagnostics
Second Tier Diagnostics
Industry or Company Specific
Technology Specific
11 AMR 2009 ‐ SCC & SCOR Executive Overview
S1 Source
Stocked Product
Supply-Chain Source
S1.2 Receive Product
Standard SCOR definitions Company/Industry definitions
EDI XML
Supply Chain Balanced SCORcard
Standard Strategic (Level 1) Metrics
Attribute Metric (Strategic)
Reliability Perfect Order Fulfillment
Responsiveness Order Fulfillment Cycle Time
Agility Supply Chain Flexibility
Supply Chain Adaptability†
Cost Supply Chain Management Cost
Cost of Goods Sold
Assets Cash‐to‐Cash Cycle Time
Return on Supply Chain Fixed Assets
Return on Working Capital
12 AMR 2009 ‐ SCC & SCOR Executive Overview
† upside and downside adaptability metrics
Cu
stom
er
Inte
rnal
SCORmark Benchmarking – Diagnoses the Areas Most in Need of Improvement
Best Practices
Best practice: "A current, structured, proven and repeatable method for making a positive impact on desired operational results."
• Current Must not be emerging and can not be antiquated
• Structured Has clearly stated Goal, Scope, Process, and Procedure
• Proven Success has been demonstrated in a working environment and can be linked to key metrics
• Repeatable The practice has been proven in multiple environments.
P1 Plan Supply Chain
Metrics Cash-to-Cash Cycle Time
Cost to Plan SC Order Fulfillment Cycle Time Plan Cycle Time Return on SC Fixed Assets
Return on Working Capital
Best Practices Capability to run What-if simulations Change in Demand signal instantaneously “reconfigures” Production and Supply Plans
CPFR On-line visibility of demand Re-balancing on full-stream supply and demand Supply/Demand Processes are fully integrated S&OP Tools support balanced decision making
VMI
The SCOR® model – a cross‐industry open standard
• The five integrated processes provide a boundary‐free view of the true end‐to‐end Extended Supply Chain
• Supports Outsourcing Analysis and Performance Based Logistics/Outsourcing
AMR 2009 ‐ SCC & SCOR Executive Overview
Supplier
Plan
Customer Customer’s Customer Suppliers’
Supplier
Make Deliver Source Make Deliver Make Source Deliver Source Deliver
Internal or External Internal or External
Your Company
Source
Return Return Return Return Return Return Return Return
16
SCOR Case Example
17 AMR 2009 ‐ SCC & SCOR Executive Overview
18 SCOR 8.0 PBL
Define Business Scope
Electronics Supplier
Refrigerant Supplier
OEM Supplier
Motor Supplier
Retail Warehouse
Commercial Warehouse
Commercial Customer
Retail Customer
Basic Unit Plant
Controls Plant
Suppliers ComfyCo Customer
Scoping identifies all parties involved in program
19 SCOR 8 0 PBL
Create a Geo Map of ComfyCo (US)
Customer Entities
Major Level 2 processes
Basic Flow Indication
Basic Geographic
Context
ComfyCo Entities Major
Suppliers
OEM Supplier ( D 1 )
Refrigerant Supplier
( D 1 )
Electronics Supplier
( D 1 )
Motor Supplier ( D 1 )
Basic Units ( P 1 , P 2 , P 3 , S 1 ,
M 1 , M 2 )
Controls Plant ( P 3 , S 1 , M 1 )
Retail Distribution ( P 4 , D 1 )
Commercial Distribution ( P 4 , D 2 )
Retail Customers
( S 1 )
Commercial Customer
( S 2 )
20 SCOR 8.0 PBL
Develop a SCOR Thread Diagram
Level 2 Processes
Basic Process Flow
Key Entities
Planning Notation
Business Context
21 SCOR 8.0 PBL
Captured SCOR Level‐3 Model
Fact
ory
Dis
trib
utio
n
M 2 . 1
Schedule Production Activities
M 2 . 2
Issue Sourced / In - Process
Product
M 2 . 3
Produce and Test
M 2 . 4
Package
M 2 . 5
Stage Finished Product
M 2 . 6
Release Finished
Product to Deliver
D 2 . 1
Process Inquiry & Quote
D 2 . 2
Receive , Configure , Enter and
Validate Order
D 2 . 3
Reserve Resources &
Determine Delivery Date
D 2 . 4
Consolidate Orders
D 2 . 8
Receive Product from
Source or Make
D 2 . 6
Route Shipments
D 2 . 5
Build Loads
D 2 . 9
Pick Product
D 2 . 10
Pack Product
D 2 . 11
Load Product & Generate Shipping
Documentation
D 2 . 12
Ship Product
D 2 . 13
Receive & Verify Product by Customer
D 2 . 14
Install Product
D 2 . 15
Invoice
D 2 . 7
Select Carriers & Rate
Shipments
S 1 . 4
Transfer Product
22 SCOR 8.0 PBL
Benchmark to Identify Process Parity, Advantage, or Superiority
Attribute Metric (level 1) Company Parity Adv Superior Parity Gap
Req Gap
Reliability Perfect Order Fulfillment 98% 92% 96% 98% -6%
Responsiveness Order Fulfillment Cycle Time 14 days 8 days 6 days 4 days 6 days 8 days
Flexibility Ups. Supply Chain Flexibility 62 days 80 days 62 days 40 days -18 days
Cost Supply Chain Mgmt Cost 10.1% 10.8% 10.4% 10.2% -0.7%
Assets Cash-to-Cash Cycle Time 22 days 45 days 30 days 20 days -23 days
Scoping Identifies one or more targeted metrics for improvement
Parity Median of Statistical Sample
Advantage Midpoint of Parity and Superior
Superior 90th percentile of population
Potential Outsource Opportunity
24 SCOR 8.0 PBL
SCOR/PBL Project – Baseline
• The SCOR perspective of “supplier’s supplier” through “customer’s customer” is measured by the degree of integration – Internal Integration – External Integration – Enterprise Optimization
• Performance Based Logistics (PBL) maturity is measured in the same way – Partnerships between suppliers and customers – Managed by metrics, enabled by processes and innovation
• The SCOR model provides a toolkit to design and implement, manage, and measure PBL processes throughout the life cycle of the relationship.
The Member Journey
1 Learning 2 Piloting 3 Deploying 4 Integrating 5 Renewing
• Begins with introduction to the disciplines of SCOR
• Progresses through initial pilot applications of SCOR to individual supply chains
• Wide scale deployment of SCOR discipline follows early successes
• Final integration of SCOR with all Quality Management techniques and organizations
• Resulting in endless renewal of the knowledge framework in the company from Council and intra‐company experience
Closing Thoughts
Rich Sherman, Director of North America Supply Chain Council www.supply‐chain.org
Change
What Happened?
Pair‐a‐dime Shift!
Rules Are Rules
• The Good news: It was a normal day in Sharon Springs, Kansas, when a Union Pacific crew boarded a loaded coal train for the long trek to Salinas, Kansas.
• The Bad news: A few miles into the trip, a wheel bearing became overheated and melted, letting a metal support drop down and grind on the rail, creating white hot molten metal droppings spewing down to the rail.
Rules Are Rules
• The Good news: A very alert crew noticed smoke about halfway back in the train and immediately stopped the train in compliance with the rules.
• The Bad news: The train stopped with the hot wheel over a wooden bridge with creosote soaked ties and trusses.
Rules are Rules
• In defense of the crew, according to Sixgun Jr., the crew tried to explain to their Supervisors the situation; but, they were instructed not to “move the damn train”!
Rules Are Rules – Houston, We Have a Problem!
Rules Are Rules – Houston, The Problem is Escalating!
RULES ARE RULES – When you have a Problem‐ Don't let common sense get in the way of a good disaster!!!
Thank You and Safe Travel!
www.supply-chain.org
Rich Sherman, Director of North America Email: [email protected]
Direct: +1 512-266-9041 Mobile: +1 512-294-6558