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1
Supply Chain Excellence
SCOR “Certification”:
Results from the Field
March 31, 2004
Copyright 2004 SCE Limited and The AIT Group
2
Session Discussion Points
Your Lean – Six Sigma – SCOR Integration Number The Concept of Certification Pilot Project Examples
Supply Chain Scope and Resource Support SCOR Metrics and Defect Analysis Material Flow Opportunity Analysis Transactional Productivity – Application Value Capture Project List
Ways to Get Involved Supply Chain Council SIG – Lean, Six Sigma, and SCOR
Convergence
Copyright 2004 SCE Limited and The AIT Group
3
Lean – Six Sigma – SCOR Integration Number An integration number
attempts to define the level of implementation experience an organization has for each of the three methods
Using a sliding scale from 0 to 9, describe your company’s implementation experience with each method 1 – No Experience 3 – Education Completed 5 – Pilot Project(s) Completed 7 – First Year of Full Scale
Implementation Completed 9 – Have Sustained Multiple
Years of Full Scale Implementation
Examples of integration numbers when the SCOR “Certification” process started 3 – 3 – 5
Lean 3 Six Sigma 3 SCOR 5
7 – 9 – 1 1 – 1 – 5 1 – 1 – 1
Copyright 2004 SCE Limited and The AIT Group
4
The Concept of Certification Training attempts to build the
knowledge and skill level of an individual to be able achieve an acceptable level of performance (on defined tasks) which ultimately helps his/her organization achieve its goals
Certification is an official recognition by the organization that the individual can perform at an acceptable level
The basic process of training involves four steps Tell – Instructor lead Lecture Show – Instructor lead examples Practice – Instructor facilitated
guided practice Do – Trainee lead independent
practice with instructor facilitated review and evaluation
The basic process of certification involves three steps Completed Project Demonstrated Results “Board” Certification
There are some very familiar training – certification models APICS – CPIM and CPFIM Six Sigma – Black Belt and Master
Black Belt
Copyright 2004 SCE Limited and The AIT Group
5
SCOR – Lean – Six Sigma Synergy The SCOR Framework drives
project portfolio and selection The Lean and Six Sigma
approaches drive implementation – execution
Lean and Six Sigma analytical tools supplement the SCOR Analysis
Lean and Six Sigma have greater impact as the overarching Program – SCOR is a tool that takes a subordinate role
Six Sigma project portfolios needed some refreshing
Conclusion SCOR Certification could be
modeled after Black Belt Certification
Need to Develop the Path
Copyright 2004 SCE Limited and The AIT Group
6
Phase 0
Planning
Phase 1
PerformanceBaseline
Phase 2
Material FlowOpportunity
Analysis
Phase 3
Work &Information Flow
OpportunityAnalysis
Phase 4
Project PortfolioImplementation
Planning
Black BeltTraining Wave
Candidate Black Belt Projects
Green BeltTraining Wave
Candidate Green Belt Projects
Black BeltTraining Wave
Green BeltTraining Wave
Candidate Green Belt Projects
Candidate Black Belt Projects
ProEx™ Approach to SCOR Certification
Copyright 2004 SCE Limited and The AIT Group
7
Initial “Pilot” Projects
Twelve companies were founding companies of the SCOR/Six Sigma/Lean Convergence SIG
These companies generated 8 “pilot” projects in the past twelve months where the basic 5 steps were applied
What did they do?
ProEx™ Phase0 – Supply Chain Scope
and Resource Support
1 – SCOR Metrics and Defect Analysis
2 – Material Flow Opportunity Analysis
3 – Transactional Productivity – Application Value Capture
4 – Project List
Copyright 2004 SCE Limited and The AIT Group
8
Supply Chain Scope and Resource Support Teaching Point – key points to
assemble a Supply Chain Definition matrix… Customer/channel groups
define the columns – double clicking gets you to a customer ship to address
Products/businesses define the rows – double clicking gets you to an item number
Put an X where products are sold to customers
The Data behind each X includes revenue, inventory, unit volume, and gross margin
US Retail Markets
US Distributor Markets
US Direct-to-Consumer Markets
US OEM - Key Accounts
US Government
US Home Delivery
International
Food Products X X X X X
Technology Products X X X
Durable Products X X
Geography - Customer or Market Channel
Pro
du
ct
Supply Chain Definition Matrix
Copyright 2004 SCE Limited and The AIT Group
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Supply Chain Scope and Resource Support
US Retail Markets
US Distributor Markets
US Direct-to-Consumer Markets
US OEM - Key Accounts
US Government
US Home Delivery
International
Food Products X X X X X
Technology Products X X X
Durable Products X X
Geography - Customer or Market Channel
Pro
du
ct
Supply Chain Definition Matrix
Create a supply chain definition matrix for your company Which Xs or fraction of Xs will be the focus of your pilot?
Copyright 2004 SCE Limited and The AIT Group
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Supply Chain Scope and Resource Support
Project Resources Project Leader FT
Master Black Belt Black Belt Functional Leader
Design Team PT – FT Green Belts Black Belts Functional Leaders -
Analysts
Project Resources Executive Sponsor PT Steering Team PT
Executive Leaders Project Leader Executive Sponsor
Copyright 2004 SCE Limited and The AIT Group
11
SCOR Metrics and Defect Analysis SCOR Metrics are the only
cross industry standard measures for supply chain processes… Identify the SCOR Level
One Measures considered in scope for the pilot
Develop a data collection plan Definition Sampling Plan Appropriate Segmentation Defect Analysis
SCOR Metrics On Time and In Full to
Customer Commit – Request Perfect Order Fulfillment Order Fulfillment Lead Time Supply Chain Responsiveness COGS Total Supply Chain
Management Costs Cash-to-Cash Cycle Time Inventory Days of Supply Asset Turns Gross Margin Operating Margin Net Operating Margin Return on Assets
Copyright 2004 SCE Limited and The AIT Group
12
SCOR Metrics and Defect Analysis
Order Fulfillment Lead Time Customer Authorization to Order Entry Complete Order Entry Complete to Start Manufacture Start Manufacture to Manufacturing Ship Manufacturing Ship to Order Received at Warehouse Order Received at Warehouse to Order Shipped to
Customer Order Shipped to Customer to Customer Receipt of Order Order Received at Customer to Installation Complete
Copyright 2004 SCE Limited and The AIT Group
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SCOR Metrics and Defect Analysis
Days Frequency Cumulative %0 128 .85%1 798 6.13%2 1332 14.95%3 1567 25.32%4 1526 35.42%5 1842 47.62%6 1917 60.31%7 1861 72.63%8 1140 80.17%9 550 83.81%
10 514 87.22%11 335 89.43%12 273 91.24%13 310 93.29%14 192 94.57%15 120 95.36%
OFLT Customer Authorization to Shipment
Mean 6.616311399Standard Error 0.043617208Median 6Mode 6Standard Deviation 5.360836942Sample Variance 28.73857272Kurtosis 18.44894773Skewness 3.316870203Range 77Minimum 0Maximum 77Sum 99946Count 15106Largest(1) 77Smallest(1) 0Confidence Level(95.0%) 0.085494971
Copyright 2004 SCE Limited and The AIT Group
14
Material Flow Opportunity Analysis Key deliverables for this phase
AS IS Geographic Map and Thread Diagram
Disconnect Analysis TO BE Geographic Map
and Thread Diagram Opportunity Analysis
Other material flow analytical techniques Spaghetti Diagram Value Stream Map Network Analysis
Disconnect and Opportunity Analysis Brainstorm individual
disconnects by metric Use an affinity diagram to
group like disconnects Develop problem Statements
for each group Conduct root cause analysis
for each group using fishbone diagrams
Quantify the value of eliminating the problem
Categorize ease of implementation and size of opportunity using Effort – Impact Diagram
Copyright 2004 SCE Limited and The AIT Group
15
Material Flow Opportunity Analysis Disconnect and Opportunity
Analysis Statistics Average 16 disconnects per
person Average 26 problem
statements per project Range of operating income
improvement value is from 1.0% to 3.5% to sales
2 Quick Hit projects identified for Green Belt or Black Assignment
Top 5 Problems Data Integrity Poor Poor Equipment Utilization
Run Time Unplanned Down Time Planned Down Time
Ineffective Sales and Operations Planning
Disconnect Scheduling, Tactical Planning, and Sales and Operations Planning
Long Manufacturing Lead Times
Copyright 2004 SCE Limited and The AIT Group
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Transactional Productivity – Application Value Capture
S1.1 S1.2 S1.3 S1.4 S1.5 AssumptionsVolume
PO 3655 All Purchase Orders 2002Receipts 12560 3.4 Lines per Receipt
QA Record 12560 1 QA Record per LineTransfers (Lines) 12560 1 Transfer per Line
Invoices 12560 1 Invoice per ReceiptEvent Time 49 4 5 18 6Elapsed Time 4510 10 1440 10080 10080Yield 71.0% 97.0% 92.1% 42.4% 46.3%
People Minutes w/ Yield 252246 51793.8 68186.8 533208 162765People Minutes w/o Yield 179095 50240 62800 226080 75360
124800 Minutes = 1 Person @ 1 Year
Copyright 2004 SCE Limited and The AIT Group
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Transactional Productivity – Application Value Capture
Event TimeElapsed
Time Yield Event TimeElapsed
Time Yield Event TimeElapsed
Time Yield
Mean 19 2543 84% 41 4843 96% 122 6720 94%50% Percentile 5 3000 90% 60 120 95% 180 5760 94%70% Percentile 4.2 1848 90% 37.6 76 95% 110 4032 95%90% Percentile 3.4 696 90% 15.2 32 96% 40 2304 96%
Source Stocked Product - S1 Level Three Comparison
S1.3
Verify Product
Initiate QA Record to Release Product for Use
S1.2
Receive Product
Physical Arrival to Complete Receipt Transaction
Schedule Product Deliveries
S1.1
Create Signal to PO Receipt at Supplier
Copyright 2004 SCE Limited and The AIT Group
18
The SCOR Business Blue Print
DR2.1 -Authorize
MRO ProductReturn
DR2.2 -Schedule
MRO ReturnReceipt
DR2.3 -Receive MRO
Product
DR2.4 -Transfer MRO
Product
Customer
D1.1 -ProcessInquiry &Quote
D1.2 -Receive,Enter &ValidateOrder
D1.3 -Reserve
Inventory &Determine
Delivery Date
D1.4 -Consolidate
Orders
D1.5 - Plan &Build Loads
D1.6 - RouteShipments
D1.7 - SelectCarriers &
RateShipments
D1.8 -Receive
Product atWarehouse
D1.9 - PickProduct
D1.10 - LoadVehicle, Generate
ShippingDocumentation,
Verify Credit & ShipProduct
P3 - PlanMake
P4 - PlanDeliver
P5 - PlanReturn
Copyright 2004 SCE Limited and The AIT Group
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Project List
Description Cost Yr1 Benefit
Yr2 Benefit
Yr3 Benefit
Savings ROI
1 Poor Planning 2,200 3,956 6,330 15,825 26,111 11.9 2 Supply Management 150 690 1,102 2,757 4,549 30.3 3 Reactive Logistics Planning
and Execution 250 598 956 2,390 3,944 15.8
4 Disparate Systems 6,500 311 498 1,246 2,055 .3 5 Poor Data Integrity 1 533 853 2,134 3,520 3520 6 Hit-or-Miss Product Life Cycle
Management 500 1,110 1,776 4,440 7,326 14.7
7 Undisciplined Order Management
250 587 939 2,349 3,875 15.5
8 No Formal Return Management
1,200 9,500 15,200 13,300 38,000 31.6
Copyright 2004 SCE Limited and The AIT Group
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Effort – Impact
Ease Of Implementation EASY TOUGH
1 8
B I G
P A Y
O F F
6
2
5 7 3
4
B u s i n e s s I m p a c t
S M A L L
P A Y
O F F
Copyright 2004 SCE Limited and The AIT Group
21
Implementation Approach Software Implementation
Detailed Design Configuration Test Go-Live
Six Sigma Define Measure Analyze Improve Control
Lean Manufacturing Workplace Organization – 5S Flow Production – Value
Stream Map Company Culture Continuous Improvement Visual Controls Empowered Teams
Class A Processes Strategic Planning People Team Total Quality and Continuous
Improvement New Product Development Planning and Control
Copyright 2004 SCE Limited and The AIT Group
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More Information The Supply Chain Council – SCOR Advisor Program The Supply Chain Council SIG Lean, Six Sigma, and SCOR Convergence –
www.supply-chain.org Leadership Forum Case Studies Education Materials Projects are underway
The AIT Group – www.theaitgroup.com – Developers of the ProEx™ approach to SCOR Certification
www.scorwizard.com – SCOR Project Managers Toolkit www.scelimited.com – the SCOR users resource center Supply Chain Excellence: A Handbook for Dramatic Improvement Using the
SCOR Model Peter Bolstorff – peterbolstorff@scelimited.com
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