this presentation is the exclusive property of the supply chain council. copyright © supply chain...

This presentation is the exclusive property of the Supply Chain Council. Copyright © Supply Chain Council. 2006. All rights reserved. The marks SCOR®, CCOR™, DCOR™ and SCOR Roadmap™ are the exclusive property of the Supply Chain Council.

SCOR Framework

Introducing all elements of

the Supply Chain reference

model: Standard processes,

metrics and best practices

2Copyright © Supply Chain Council, 2008. All rights reserved

SCOR Framework Workshop

• Understand the History and Context of SCOR

• Learn the Components of the SCOR Framework• Process Nomenclature

• Process Metrics

• Process Best Practices

• Understand how to model a Supply-Chain

with SCOR

• Understand how to characterize a Supply-

Chain with SCOR metrics

• Apply the SCOR framework using a

simplified SCOR Project Roadmap

2


Supply-Chain Council

• The SCC is an independent, not-for-profit, trade association

• Membership open to all companies and organizations

• Focus is on research, application and advancement and advancing

state-of-the-art supply chain management systems and practices

• Developer and endorser of the Supply Chain Operations Reference

(SCOR®) as a cross-industry standard for supply chain management

• Offers Training, Certification, Benchmarking, Research, Team

Development, Coaching, and Cross-standard Integration focused on

the SCOR® framework

• Founded in 1996

• Approaching 1000 Association Members

• Chapters in North America, Europe, Japan, South Africa, Latin

America, Australia/New Zealand, South East Asia and Greater

China, with developing Chapters India and Middle East

Driving value through the use of SCOR®Driving value through the use of SCOR®

3

4

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Product/Portfolio ManagementProduct/Portfolio Management

Supply Chain SCOR ®


Product Design DCOR™


Sales & Support CCOR™


Cu

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Product/Portfolio Management




Copyright © Supply Chain Council, 2008. All rights reserved

Supply-Chain

4


Supply-Chain

5

Customer processes

Customer processes

Supplier processes

Supplier processes

Supply ChainSupply Chain

Customer processes

Supplier processes

Supply Chain

Process, arrow indicates material flow direction

Process, no material flow Information flow

Deliver

DeliverMakeMakeSourc

eSource

Return

Return

Return

Return

PlanPlan


SCOR: A Process Framework

6

• Process frameworks deliver the well-known

concepts of business process reengineering,

benchmarking, and best practices into a cross-

functional framework• Standard processes: Plan, Source, Make, Deliver,

Return, Enable

• Standard metrics: Perfect Order Fulfillment, Cash-to-

Cash Cycle Time, Cost of Goods Sold, Order Fulfillment

Cycle Time, etcetera

• Standard practices: EDI, CPFR, Cross-Training, Sales &

Operations Planning, etcetera

• Pre-defined relationships between processes,

metrics and practices and inputs and outputs


Capture the ‘As-is’ business activity structure and derive the future ‘To-be’ state

Quantify the operational performance of similar companies and establish internal targets based on ‘best in class’ results

Characterize the management practices and software solutions that result in superior performance

Capture the ‘As-is’business activitystructure and derivethe future ‘To-be’ state

Quantify the operational performance of similar companies and establish internal targets based on ‘best in class’ results

Characterize the management practices and software solutions that result in superior performance

Business Process

Re-Engineering

Benchmarking Best Practices Analysis

Process Reference Framework

Combines Best Techniques

7

• 3 techniques become 1 integrated approach


End-to-End Supply Chain

8

Supplier CustomerSuppliers’Supplier

Source

Internal or External Internal or External

Your Company

Return

Deliver MakeSource

Return

Plan

Deliver

Return

Source

Return

MakeSource

Return

Plan

Deliver

Return

DeliverMake

Plan

Return Return

Customers’Customer

SCOR reference model

• Whether from Cow to Cone or from Rock to Ring SCOR is

not limited by organizational boundaries


End-to-End Supply Chain

9

Customer’s CustomerCustomerMP3 CompanySupplierSupplier’s Supplier

Sub assemblies Manufacturer Retailer ConsumerComponents

Source

SourceDeliverDeliverSourceSourceDeliv

er


e

Source

Deliver


e

Source

Deliver


e

Source

Process, arrow indicates material flow direction

10

Level 1 Level 2 Level 3 Level 4 Level 5

ScopeConfigurati

onActivity 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

Framework Language

Framework Language

Framework Language

Industry or Company Language

Technology Specific Language


SCOR Hierarchy

10

S1 Source Stocked Product

SSource

S1.2Receive Product

Standard SCOR practices Company/Industry definitions


Level 1 Level 2 Level 3 Level 4 Level 5

ScopeConfigurati

onActivity 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

CxO (COO, CIO)EVPSVP

SVPVP

VPDirectorLine Manager

ManagerTeam Lead

Team Lead IndividualsProgrammer

Organization focused Activity focused

Organizational Hierarchy

11

EDIXML

S1 Source Stocked Product

SSource

S1.2Receive Product


SCOR Process Codification

12

• SCOR processes have unique identifiers:

1.One capital only are level 1 processes: P, S, M, D and R (5 in

total)

2.A capital plus a number are level 2: P1, S2, M3, D2, D4 (15 in

total)

Two groups of exceptions for level 2:

• Enable: EP, ES, EM, ED and ER (5 in total) and

• Return: SR1, DR1, SR2, DR2, SR3, DR3 (6 in total)

3.A capital plus a number, a period and a number are level 3

processes:

P1.1, P1.2, S2.1, M1.5, D3.12 (111 processes in total)

Two groups of exceptions for level 3:

• Enable: EP.1, ES.3, EM.4, ED.8, ER.1 (47 in total)

• Return: SR1.1, DR1.3, SR2.2, DR2.4, SR3.5, DR3.1 (27 in

total)

• X = level 1, Xn = level 2, Xn.m = level 3

13

750g minced steak 1 onion (rings)

1 tsp Worcestershire sauce

4 sesame seed buns

2 tbsp mustard 10 shredded lettuce leaves

2 sliced tomatoes 2 sliced dill pickles

10 thin slices Swiss cheese

Salt and pepper


Exercises: The Dinner Party

• The supply chain used for the exercises is a

dinner party• You will host a party this weekend with 25-40 of your

dearest friends

• You will serve them burgers from your grill (barbecue)

• You are responsible for organizing the event,

ingredients, grill, tools and utensils and general

well-being of your guests

• We will be using “The Dinner Party” through the rest

of today to exercise different modeling

characteristics

• Ingredients of a burger:


Execution Processes

14

Customer processes

Customer processes

Supplier processes

Supplier processes


Customer processes

Supplier processes

Supply Chain

Deliver


eSource

Return

Return

Return

Return

PlanPlan

• Processes: Source, Make and Deliver• Objective: value-add, revenue generating


Level: Different capabilities

Stocked Product (S1, M1, D1)• Inventory Driven (Plan)• Standard Material Orders• High Fill-rate, short turnaround

Make-to-Order (S2, M2, D2)• Customer Order Driven• Configurable Materials• Longer turn-around times

Engineer-to-Order (S3, M3, D3)• Customer Requirements Driven• Sourcing New Materials• Longest long lead-times, low fill rates

D1R1 I1M1S1 D1

I2

R1

D2R2 D2

S1

M2S2

I3

R1

D3R3

R1

R2

D3

R1

M3S3

S1

S2

Capability Models

15


Source (Process ID: S)

• Objectives of this process:• The ordering, delivery, receipt and transfer of raw

material items, subassemblies, product and/or

services.

• Key processes comprehended:• Schedule product deliveries

• Receive, inspect, and hold 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

16


Source Configurations

• Configurations:

• Source Stocked Product (Process ID: S1)• The ordering and receiving of existing products,

components and services from existing contracts, based

on requirement plans.

• Source Make-to-Order (Process ID: S2)• The ordering and receiving of existing products,

components and services for a unique and identified

customer order.

• Source Engineer-to-Order (Process ID: S3)• The selection, ordering and receiving of specialized

products or services that are designed and/or built

based on the requirements or specifications of a

particular customer order or contract.

17


Stocked Product (S1) Make-to-Order (S2) Engineer-to-Order (S3)

S2.1 Schedule Product Deliveries

S3.1 Identify Sources of Supply

S3.2 Select Final Supplier(s) and Negotiate



S1.2 Receive Product S2.2 Receive Product S3.4 Receive Product

S1.3 Verify Product S2.3 Verify Product S3.5 Verify Product

S1.4 Transfer Product S2.4 Transfer Product S3.6 Transfer Product

S1.5 Authorize Supplier Payment



Source Process Elements

18


Make (Process ID: M)

21

• Objectives of this process:• The process of adding value to products through mixing,

separating, forming, machining, and chemical processes.

• 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: Itemnumber change? Probably Make in SCOR


Make Configurations

• Make-to-Stock (Process ID: M1)• The making of standard products and services. Planning

(Plan) processes determine what, how much and when to

make.

• Make-to-Order (Process ID: M2)• The making of standard or configurable products and

services for unique 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: M3)• The making of specialized products or services that

are fully or partially designed and made based on the

unique requirements and specifications of a particular

customer order or contract. Customer orders and

specifications can be traced throughout the Make

process.22


Make-to-Stock (M1) Make-to-Order (M2) Engineer-to-Order (M3)

M1.1 Schedule Production Activities


M3.1 Finalize Production Engineering


M1.2 Issue Material M2.2 Issue Sourced/In-Process Product

M3.3 Issue Sourced/In-Process Product

M1.3 Produce and Test M2.3 Produce and Test M3.4 Produce and Test

M1.4 Package M2.4 Package M3.5 Package

M1.5 Stage Product M2.5 Stage Finished Product

M3.6 Stage Finished Product

M1.6 Release Product to Deliver

M2.6 Release Finished Product to Deliver

M3.7 Release Product to Deliver

M1.7 Waste Disposal M2.7 Waste Disposal M3.8 Waste Disposal

Make Process Elements

23


Deliver (Process ID: D)

• Objectives of this process:• Perform customer-facing order management 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

• Import/export documentation

• Customer delivery and installation

• Logistics and Freight Management

• Manage Finished Goods inventories

• Hint: Order taking or Shipping? Probably Deliver

in SCOR


Deliver Configurations

26

• Deliver Stocked Product (Process ID: D1)• The delivery of standard products (and services) that are

maintained in a finished goods state prior to the receipt of

a customer order.

• Deliver Make-to-Order Product (Process ID: D2)• The delivery of standard or configurable products and

services that are obtained (Source or Make) for a customer

order.

• Deliver Engineer-to-Order Product (Process ID: D3)• 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: D4)• The delivery of standards goods in a retail store


Deliver Process Elements (1/3)

27

Stocked Products (D1)

Make-to-Order (D2) Engineer-to-Order (D3)

D1.1 Process Inquiry & Quote

D2.1 Process Inquiry & Quote

D3.1 Obtain & Respond to RFP/RFQ¹

D1.2 Receive, Enter & Validate Order

D2.2 Receive, Configure, Enter & Validate Order

D3.2 Negotiate & Receive Contract

D1.3 Reserve Inventory & Determine Delivery Date

D2.3 Reserve Inventory & Determine Delivery Date

D3.3 Enter Order, Commit Resources & Launch Program

D1.4 Consolidate Orders

D2.4 Consolidate Orders D3.4 Schedule Installation

D1.5 Build Loads D2.5 Build Loads D3.5 Build Loads

D1.6 Route Shipments D2.6 Route Shipments D3.6 Route Shipments

D1.7 Select Carriers & Rate Shipments



¹ RFP = Request for Proposal, RFQ = Request for Quote



28

Stocked Products (D1)

Make-to-Order (D2) Engineer-to-Order (D3)

D1.8 Receive Product from Source or Make



D1.9 Pick Product D2.9 Pick Product D3.9 Pick Product

D1.10 Pack Product D2.10 Pack Product D3.10 Pack Product

D1.11 Load Product & Create Documentation



D1.12 Ship Product D2.12 Ship Product D3.12 Ship Product

D1.13 Receive & Verify Product by Customer



D1.14 Install Product D2.14 Install Product D3.14 Install Product

D1.15 Invoice D2.15 Invoice D3.15 Invoice



• The Retail supply chain

model does not match up to

the Manufacturing supply

chain model, therefore

processes are quite

different

29

Retail Products (D4)

D4.1 Generate Stocking Schedule

D4.2 Receive Product at Store

D4.3 Pick Product from Backroom

D4.4 Stock Shelf

D4.5 Fill Shopping Cart

D4.6 Checkout

D4.7 Deliver and/or Install


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 8 control aspects for

the supply chain. They monitor compliance,

deliver information from other process areas

and highlight dependencies

on these other process areas. They also

support maintenance of relationships

with suppliers.

30


Planning Processes

31

Customer processes

Customer processes

Supplier processes

Supplier processes


Customer processes

Supplier processes

Supply Chain

Deliver


eSource

Return

Return

Return

Return

PlanPlan

• Processes: Plan• Objective: Drive/coordinate execution processes


Plan (Process ID: P)

32

• Objectives of this process:• The process of determining requirements and corrective

actions to achieve supply chain objectives

• 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


Plan Configurations (1/2)

33

• Plan Supply Chain (Process ID: P1)• Planning overall supply chain targets. Plan Supply Chain

drives and coordinates P2, P3, P4 and P5 plans (Compare to

“Revenue plan”, or “Budget” in certain industries)

• Plan Source (Process ID: P2)• 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: P3)• 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”)


Plan Configurations (2/2)

34

• Plan Deliver (Process ID: P4)• 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: P5)• 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.

35

Plan Make

Plan Source

Plan Supply ChainPlan Supply Chain

P1.1

P1.2

P1.3 P1.4

P1.1

P1.2

P1.3 P1.4

P2.1

P2.2

P2.3 P2.4

P3.1

P3.2

P3.3 P3.4 2

1

to P3.2

end full cyclebegin next cycleCopyright © Supply Chain Council, 2008. All rights reserved

Plan Processes

• Planning is an iterative process:

1.The output of Plan Supply Chain is the input for Plan

Source, Plan Make, Plan Deliver and Plan Return

2.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

35


Enable Processes

36

Customer processes

Customer processes

Supplier processes

Supplier processes


Customer processes

Supplier processes

Supply Chain

Deliver


eSource

Return

Return

Return

Return

PlanPlan

• Processes:Enable Plan, Enable Source, Enable Make,Enable Deliver and Enable Return


Enable Processes

37

• Objective: The Enable processes are five groups of processes under Plan,

Source, Make , Deliver and Return with 3 distinct types of

objectives:

1.Manage process performance

2.Manage process control data

3.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


Enable Categories

38

• Enable Plan (Process ID: EP)• 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: ES)• 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: EM)• Enable management processes for manufacturing, repair and

overhaul type processes. Examples: BOM maintenance, preventive

equipment maintenance, monitoring capacity

utilization/shortage.


Enable Categories

39

• Enable Deliver (Process ID: ED)• 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: ER)• 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.


Reverse Processes

40

Customer processes

Customer processes

Supplier processes

Supplier processes


Customer processes

Supplier processes

Supply Chain

Deliver


eSource

Return

Return

Return

Return

PlanPlan

• Processes: Return (Source Return, Deliver Return)• Objective: reverse material flows


Return (Process ID: R)

41

• 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


Return Configurations

42

• Return Defective Products (Process IDs: SR1 and DR1)• The return of products because the product is defective, the

wrong product was ordered or shipped.

• Return Maintenance, Repair & Overhaul (IDs: SR2 and

DR2)• The return of products or assets to perform preventative

maintenance, (end-of-life) overhaul or repairs due to

breakage/aging with use

• Return Excess Products (Process IDs SR3 and DR3)• The return of excess inventories and inventories of product

which will be retired (end-of-life excess). The product is

new and in original packaging.

• SR = Source Return, DR = Deliver Return

• Positioning Source Return and Deliver Return• Consider the flow of goods; Notice 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

43


Modeling with SCOR

• Drivers for modeling: Why do you model

• Business opportunities:• Strategy Development

• Merger, Acquisition or Divestiture (Companies or 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 44


Different Model Types

• SCOR recognizes different types of models. Each

serving a different purpose:• Business Scope diagram: Set the scope for a project or

organization

• Geographic Map (a.k.a. Geo Map): Describes material flows in

a geographic context; Highlights node¹ complexity or

redundancy

• Thread Diagram: Material flow diagram, focused on level 2

process connectivity; Describes high level process complexity

or redundancy

• Workflow or Process Models: Information, material and work

flow diagram at level 3 (or beyond); Highlights information,

people and system interaction issues

¹) A node represents a logical or geographic entity in a supply chain.

Examples: Warehouse, Factory, Store

45

• Steps to create a Business Scope Diagram

1.Create or open the business scope diagram template

2.Identify customers of your organization or project and

enter these in the customers column in the scope

diagram.

3.Identify and enter the key nodes within your

organization or project. A node represents a logical or

geographic entity in the supply chain. Consider:

Warehouse, Factory, Store, HQ etc.

4.Identify and enter the suppliers of your organization

or project

5.Optionally link the nodes to reflect material and/or

information flows. Use a different color and/or stroke

differentiate material and information flows. Example:


Creating a Scope Diagram

46

Material and information flow

Information flow

Supplier My Organization CustomerSupplier My Organization Customer

Supplier My Organization Customer


Creating a Scope Diagram

47

Steps to create a Business Scope Diagram1.Create or open the business scope diagram template

2.Identify and enter the customers of your project or organization

3.Identify and enter the key nodes within your project or organization

4.Identify and enter the suppliers of your project or organization

5.Optionally link the nodes to reflect material and/or information flows (using different color/stroke)

Flash Inc.

Battery ltd.

Comps

Factory DC Retail Inc.

mp3 HQ

234

Flash Inc.

Battery ltd.

Comps

Factory DC Retail Inc.

mp3 HQ

55

1

Suppliers mp3, Inc. Customers

Service Providers


The Result: Scope Diagram

48

Flash Inc.

Battery ltd.

Components

Factory

Warehouse

Retail, Inc.

mp3 HQ

Material and information flow

Information flow


Modeling with SCOR

49

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 on your map

3. Beginning with your customers, repeat this for every node on

the map:

a. Identify all supplying nodes (where does material come

from)

b. Draw and name these supplying nodes on the map

c. Identify the level 2 processes

d. list these in the node on your map

e. Draw the material flows (arrows connecting the nodes)

Repeat until you have included all your suppliers/nodes

50

Retail, Inc

S1, P2 b

France

Spain

UKGermany

2

China

India


Creating a Geographic Map

50

Steps to create the Geographic Map:1.Create geographic context (a.k.a. the map)2.Draw and name your customers on the mapa.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 Factory

S1, M1, D1

3

b¹

d¹

Drive Supplier

D1, P1, P4b²

d²

e²

e¹

51

Drive Supplier

D1, P1, P4Battery Supplier

D1, P1, P4

Retail, Inc

S1, P2

MP3 Factory

P3, S1, M1, D1

HQ

P1, P2, D2, S2


Result: The Geographic Map

51

Question: No flow from HQ; Why?


Modeling with SCOR

52

1.Orders are faxed in and entered in OMS

2.Every night the orders are scheduled

3.The orders are released to the factory based on the delivery date offset

4.Factory creates and schedules factory work orders in SFCS

1

D2.2 Receive, Enter, Validate OrderD2.3 Reserve Inventory & Determine

Delivery Date


2

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 boundaries

4. Create workflow with these SCOR processes

5. Add description to workflows to reflect inputs/outputs of the

processes

6. Optionally add other relevant information


Elements of a Business Process

53

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


Obtaining Generic Descriptions

54

• 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.


Obtaining Generic Descriptions

55

• 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


SCOR Metrics

• Definitions:• Performance Attribute: a characteristic to describe a

strategy. Performance attributes serve as

classification for KPIs and metrics

• Key Performance Indicator (KPI): a metric that is

representative to measure the overall performance or

state-of-affairs

• Metric: a standard for measurement

• Measurement: an observation that reduces the

• amount of uncertainty about the value of a quantity

• SCOR metrics: Diagnostic metrics• Linked to business objectives

• Highlight the gap in performance

• Change over time is more valuable than a single sample

56

57

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


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Question:

What is/are the most important attributes to achieve your supply chain strategy?


‘Levels’ in Metrics

• Level 1: Strategic metrics a.k.a. Key Performance

Indicators• Measure overall supply chain performance; health of the supply chain

• Set the scope and objectives for a supply chain, project or

organization

• Translate a business problem or strategy into something measurable

• Establish the priority or priorities for organization

• Level 2: Diagnostic metrics• Measure a part of the supply chain and/or a part of the strategic

metric

• Provide direction to where problems originate

• Caution: Level 2 metrics do not by definition add up to a level 1

metric

• Beyond level 1 and 2: all metrics are called level 3• SCOR does not specify levels for metrics that are not level 1 or 2

• These metrics serve as further diagnostic tools

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SCOR Metrics Codification

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• 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

strategic (a.k.a. level 1) metrics:

RL.1.1, RS.1.1, AG.1.1, CO.1.1, CO.1.2, AM.1.3 (10 in

total)

3.Two capitals, a period the number two (2) and a number are

diagnostic (a.k.a. level 2) metrics:

RL.2.1, RS.2.1, AG.2.1, CO.2.1, CO.2.2, AM.2.7 (36 in total)

4.Two capitals, a period the number three (3) and a number are

diagnostic (or 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, XX.2.n = level 2, and so on

• Measuring strategy: KPIs are strategic (level

1) metrics

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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

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


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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]

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

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Metric: RS.1.1 Order Fulfillment Cycle Time

Definition:

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 includes dwell time. Dwell time is the time no value add activities are performed on the order or product, imposed by customer requirements.


Strategic Responsiveness Metric

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Strategic Agility Metrics

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Metric: AG.1.1 Upside Supply Chain Flexibility

Definition:

The number of days required to achieve an unplanned sustainable 20% increase in quantities delivered. Seasonality is not considered unplanned/unforeseen. The unit of measure for flexibility is 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.


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, the time between paying the resources assigned to a service and receiving payment for the service delivery.

Strategic Asset Metrics

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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, etc..

Strategic Asset Metrics

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Metrics and Analysis

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• Levels in metrics help root cause performance issues• Strategic metrics (level 1) can be diagnosed by investigating

the level 2 metrics.

• Different types of relationships exist between a metric (the

‘parent’) and it’s diagnostic metrics (the ‘children’):

1.The parent is the sum of it’s children (e.g. time and cost)

2.The children are multiplied to calculate the parent (e.g.

yield)

3.The relationship is undefined (but can be statistically

observed)

• Diagnostic metrics don’t necessarily add up to their parents:

Order Fulfillment Cycle Time IS NOT the sum of Deliver Cycle

Time + Make Cycle Time + Source Cycle Time for most supply

chains


Metrics Data

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• Each company will need to develop a tool or

instructions where 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


Scorecards and SCORcards

• 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, internal process, and employee learning and

growth

• SCORcard: A scorecard providing metrics related to

five supply chain strategies: reliability,

responsiveness, Agility, cost and assets

• Importance• Communicate supply chain priorities

• Monitor all strategic areas, not just the top

priority 68


SCORcard Metrics Selection

• 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 responsibility

Avoid 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-defined

Multiple interpretations of a metric may lead to 'work-

arounds' and negation of the effort. SCOR metrics are

pre-defined; limiting the discussion on metric

definitions.

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Metrics Selection

• Interpreting the definitions• 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

• Tip: It is not about how you think it should be

measured, ask your customer what is important to him/her

• And: Internal focused metrics also have a customer

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Benchmarking

• 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

• Parity: Being equal in performance; No real advantage

over others

• Advantage: Being in a favorable position; In a stronger

position than

• Superior: Being of high rank or quality; Leading

• Usage• Establish Goals. Know where you are relative to others

(competitors or peers), and express where you're going.

• Monitor Performance. Track relative progress you and

others (your competitors or peers) make.

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Benchmark Requirements

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• Compare like for like • Using standard metrics

A numerical comparison of the performance of two

companies in the same industry may not have value when

the metric is different.

• Measuring the same process/business model

Avoid 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.

• Demographics

Make sure you understand the other organizations in the

benchmark. Regional differences, and differences in

product, or services may influence results.


Best Practices

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• 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• Alternatives to the way you do business

• Equalize the competitive landscape


Types of Practices

• Best practices are Current, structured,

proven and repeatable methods for making a

positive impact on desired operational

results.

• Leading practices are innovations adopted by

single companies or industries which provide

dramatically improved performance in a

process, but because of proprietary

restrictions, or novelty, are not widely

known or adopted.

• Worst practices or Poor practices: Practices

that are known to produce negative impacts

on operational results.74

This presentation is the exclusive property of the Supply Chain Council. Copyright © Supply Chain Council. 2006. All rights reserved. The marks SCOR®, CCOR™, DCOR™ and SCOR Roadmap™ are the exclusive property of the Supply Chain Council.

www.supply-chain.org

[email protected]

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