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Scott Stephens President Business Forerunners, Inc. Chief Technology Officer Supply Chain Council www.supply-chain.org
Introduction
This presentation describes preliminary concepts in managing the advancement of the state of the art of business operations by the Supply Chain Council
While SCOR development activities are relatively mature, the Council is working to develop a consensus philosophy in the management of an integrated business reference framework This presentation should be considered a working paper
The Integrated Business Framework (DCOR SCOR CCOR) Common Process Structure Common Metrics Common Implementation Methodology Component Model Linkage Design Advantages Common Tools
Supply Chain Supply Chain Plan Plan Source Make Deliver Source Make Deliver Return Return
Relate Relate
Amend Amend
Assist Assist
CCOR
Customer Customer Plan Plan Relate Relate Sell Sell Assist Assist Supply Chain Supply Chain Plan Plan Source Source Make Make Return Return
Design Design Plan Plan Research Research Design Design Amend Amend Integrate Integrate
Price Price
SCOR
Deliver Deliver
CCOR
DCOR/SCOR and CCOR Built with Common Objectives and a Common Structure
Objective - The performance of key processes must link directly to financial objectives. Objective The primary purpose of the framework and the component models is to achieve business advantage through implementation. Structure - Measurements must be hierarchical to support cross-enterprise optimization while supporting the management of specific improvement activities. Structure - For measurement purposes, there must be clear boundaries between activities and organizations. Structure - Measurement must be tied to the activities they are designed to monitor. Structure - Processes must be hierarchical to allow cross-enterprise analysis and cross-industry generalization, while allowing organizations to describe the particular nuances in their businesses. Structure - Best practice must be linked to the processes that they support and the measurements which are used to determine the success of their implementation. Structure - Inputs and outputs describe the transactions between processes, documenting the origin and destinations of material, information, and finances. Inputs and outputs provide the mechanism for integrating and de-coupling the models within the framework.
Business Process Reengineering Capture the as-is Capture the as-is state of aaprocess state of the and derive process and derive the desired to-be desired to-be future state future state
Benchmarking
Characterize the Characterize management the management practices and practices and software solutions software in bestthat resultsolutions that result in-class in bestin-class performance performance
SCOR Boundaries
SCOR Spans: Order entry through paid invoice Physical material transactions, financials, information flow Market interactions From the understanding of aggregate demand to the fulfillment of each order Returns SCOR Considers but does not include process descriptions and measurement for related activities including: Sales and Marketing Research and Development / Product Design QA It
Deliver Return
Source Return
Make
Deliver Return
Source Return
Make
Deliver Return
Source Return
Make
Deliver Return
Source Return
Suppliers Supplier
Supplier
Internal or External
Your Company
Customer
Internal or External
Customers Customer
SCOR Model
Building Block Approach Processes Best Practice Metrics Technology
Suppliers
Source
S1 Source Stocked Products S2 Source MTO Products
Make
M1 Make-to-Stock Make- to-
Deliver
D1 Deliver Stocked Products
Return Source
Return Deliver
Enable
Customers
Cost
Assets Best Practices Electronic Commerce (customer visibility of stock availability, use of hand-held terminals for direct order entry, confirmation, credit approval), On-line stock check and reservation of inventory Enable real-time visibility into backlog, order status, shipments, scheduled material receipts, customer credit history, and current inventory positions Continuous Replenishment Programs; Vendor Managed Inventory, Telemetry to automatically communicate replenishment of chemicals Remote (sales, customers) order entry capability Automatic Multi-level Credit Checking: Dollar Limits; Days Sales Outstanding; Margin Testing Value Pricing based on Cost to Serve; EDLP; Cost Plus Pricing Inputs (Customer) Customer Order (Customer) Deliver Contract Terms (Customer) Customer Replenish Signal Outputs
Order cost / type of order Order Entry and Maintenance Costs as % of (S+M+D) cost Return on Supply Chain Assets Features EDI applications and integrated order management
None Identified
Integrated demand/deployment planning to customer location driven by POS; Customer movement data
Activity Based Costing; Integrated Order Management by Customer by Line Item Plan Source Make Deliver Return
Plan
Source
Make
Deliver
Return
SCOR Graphics
Routing Guide (carrier) Rated Carrier Data (Carrier) (P2) Supply Plans (Customer) Customer (P3) Production Order Plans (Customer) Deliver (P4) Deliver Plans Contract Terms (S) (M) (D) Inventory (Customer) Customer (M) Scheduled Replenish Signal Output (Customer) Inquiry
D1.6
D1.4
Route Shipments
Consolidate Orders
D1.8
From Make or Source
D1.9
D1.10
D1.15 Invoice
Receive Product
Pick Product
Pack Product
(D) Inventory
Payment
Performance Attribute Definition The performance of the supply chain in delivering: the correct product, to the correct place, at the correct time, in the correct condition and packaging, in the correct quantity, with the correct documentation, to the correct customer. The speed at which a supply chain provides products to the customer. The agility of a supply chain in responding to marketplace changes to gain or maintain competitive advantage. The costs associated with operating the supply chain. The effectiveness of an organization in managing assets to support demand satisfaction. This includes the management of all assets: fixed and working capital.
Upside Supply Chain Adaptability Downside Supply Chain Adaptability Supply Chain Management Cost
Cost of Goods Sold
Perfect Order Fulfillment Order Fulfillment Lead times Supply Chain Response Time Production Flexibility Total SCM Management Cost
$30M Revenue $30M Revenue Key enabler to cost and asset improvements
Responsiveness Flexibility
INTERNAL
Cost
Warranty Cost
NA
NA
NA
NA
NA
NA NA $7 M Capital Charge NA
Assets
SCOR/DCOR/CCOR Implementation
SCOR Implementations (Practitioner) Vary in scope and objective Green Field Establishing a new supply chain Distribution analysis Implementing distribution strategy Planning Improving planning processes Supply Chain Failure Analysis Change Management / COTS-Consultant Selection Information Technology SCOR Implementation (Academia) Curriculum Research Projects SCOR Implementation (Consultants) SCOR Implementation (Government)
Manufacturing
Warehouse (S1, S2, M1, D1) (SR1,,DR1)
Customer
Customer
(S1) (SR1,SR3) Warehouse (S1, D1) (SR1,DR1,DR3) Other Suppliers (D1) Latin American Suppliers (D1) Warehouse (S1, D1) (SR1, DR3)
(S1) (SR1,SR3
Customer
Customer
(S1) (SR1,SR3)
(S1) (SR1,SR3)
SR3
DR3
SR3
RM Suppliers
ALPHA
Distributors
Decomposing Metrics
Cycle Time Perfect Order Fulfillment
Schedule Achievement
Perfect Order Fulfillment On Time On Time In Full Docs Damage Perfect Order Fulfillment D1 S1
Delivery Performance European European RM Supplier RM Supplier Key Other Key Other RM RM Suppliers Suppliers
In Full Docs
S2
M2
D2 S2
S1
M1
D1
RM Suppliers
ALPHA
Consumer Consumer
Performance Measurement
Cycle Time
Perfect Order Fulfillment Order Perfect Fulfillment Perfect Order Actual 90% On TimeFulfillment On Time Actual - 85% In Full In Full Docs Docs Damage Perfect Order Fulfillment
European European RM Supplier RM Supplier Key Other Key Other RM RM Suppliers Suppliers
S2
M2
D2 S2
S1
M1
D1 S1
RM RM Suppliers Suppliers
ALPHA
Component Models (DCOR/SCOR/CCOR) Linked by Inputs / Outputs, Best Practice, and Metrics
Supply Chain Supply Chain Plan Plan Source Make Deliver Source Make Deliver Return Return
BOM, Recipe, Specification
Relate Relate
Sell Sell
Price Price
Amend Amend
Assist Assist
Product
Design Philosophy
Tight Bundle
Component Models work together to support analysis, measurement, and improvement of the end-to-end product life cycle Models used together will better support analysis and measurement of complex activities
Time to Market Time to Volume
Loose Integration
Component Models are separable so organizations can use individual Models of interest without the others Component Models can be separately improved based on advances in specific disciplines
DCOR
Version 1.0
SCOR Version 8.0 Best Practice Update Metrics Update ISA 95 Restructure dB Host SCOR Version 9.0 Best Practice Update Metrics Update Input/Output Update Risk Management Integration
2007
CCOR Version 1.0 Best Practice Update Metrics Update Input/Output Update Business Validation Integration
2008
Integrated Business Framework Version 1.0 Metrics Best Practice Inputs / Outputs
SCOR Version 10.0 Best Practice Update Metrics Update ISA 95 Restructure dB Host DCOR Version 3.0 Best Practice Update Metrics Update Input/Output Update Business Validation CCOR Version 2.0 Best Practice Update Metrics Update Input/Output Update Business Validation
Common Tools
www.supply-chain.org
info@supply-chain.org