SCOR Framework Introducing all elements of the Supply

SCOR Framework Introducing all elements of the Supply Chain reference model: Standard processes, metrics and best practices 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 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 Copyright © Supply Chain Council, 2008. All rights reserved 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® Copyright © Supply Chain Council, 2008. All rights reserved 3

Supply-Chain Product Design DCOR™ Sales & Support CCOR™ Customer processes Supplier processes Product/Portfolio Management Supply Chain SCOR ® Copyright © Supply Chain Council, 2008. All rights reserved 4

Supply-Chain Plan Source Make Return Deliver Customer processes Supplier processes Supply Chain Return Process, arrow indicates material flow direction Process, no material flow Copyright © Supply Chain Council, 2008. All rights reserved Information flow 5

SCOR: A Process Framework • 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 Copyright © Supply Chain Council, 2008. All rights reserved 6

Combines Best Techniques Business Process Re-Engineering Capture the ‘As-is’ business activity structure and derive the future ‘To-be’ state • Benchmarking Quantify the operational performance of similar companies and establish internal targets based on ‘best in class’ results Best Practices Analysis Characterize the management practices and software solutions that result in superior performance 3 techniques become 1 integrated approach Copyright © Supply Chain Council, 2008. All rights reserved Process Reference Framework 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 7

End-to-End Supply Chain Plan Delive r Retur Sourc e Retur n n Suppliers’ Supplier Make Delive r Retur n Supplier Source Make Return Deliver Return Your Company Internal or External Plan Sourc e Retur Make Delive r Retur n n Customer Internal or External Sourc e Retur n Customers’ Customer SCOR reference model • Whether from Cow to Cone or from Rock to Ring SCOR is not limited by organizational boundaries Copyright © Supply Chain Council, 2008. All rights reserved 8

End-to-End Supply Chain Components Source Make Deliver Supplier’s Supplier Sub assemblies Source Make Deliver Supplier Manufacturer Source Make Deliver MP 3 Company Retailer Source Deliver Customer Consumer Source Customer’s Customer Process, arrow indicates material flow direction Copyright © Supply Chain Council, 2008. All rights reserved 9

SCOR Hierarchy Level 1 Level 2 Level 3 Level 4 Level 5 Scope Configuration Activity Workflow Transactions S Source S 1 Source Stocked Product S 1. 2 Receive Product Differentiates Business Differentiates Complexity Names Tasks Sequences Steps Links Transactions Defines Scope Differentiates Capabilities Links, Metrics, Tasks and Practices Job Details of Automation Framework Language Industry or Company Language Technology Specific Language Standard SCOR practices Copyright © Supply Chain Council, 2008. All rights reserved Company/Industry definitions 10

Organizational Hierarchy Level 1 Level 2 Level 3 Level 4 Level 5 Scope Configuration Activity Workflow Transactions S Source S 1 Source Stocked Product S 1. 2 Receive Product Differentiates Business Differentiates Complexity Names Tasks Sequences Steps Links Transactions Defines Scope Differentiates Capabilities Links, Metrics, Tasks and Practices Job Details of Automation Cx. O (COO, CIO) EVP SVP VP VP Director Line Manager Team Lead Individuals Programmer Organization focused Copyright © Supply Chain Council, 2008. All rights reserved EDI XML Activity focused 11

SCOR Process Codification • 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: P 1, S 2, M 3, D 2, D 4 (15 in total) Two groups of exceptions for level 2: • • Enable: EP, ES, EM, ED and ER (5 in total) and Return: SR 1, DR 1, SR 2, DR 2, SR 3, DR 3 (6 in total) 3. A capital plus a number, a period and a number are level 3 processes: P 1. 1, P 1. 2, S 2. 1, M 1. 5, D 3. 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: SR 1. 1, DR 1. 3, SR 2. 2, DR 2. 4, SR 3. 5, DR 3. 1 (27 in total) X = level 1, Xn = level 2, Xn. m = level 3 Copyright © Supply Chain Council, 2008. All rights reserved 12

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: Copyright © Supply Chain Council, 2008. All rights reserved 750 g 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 13

Execution Processes Plan Source Make Return Deliver Customer processes Supplier processes Supply Chain Return • Processes: Source, Make and Deliver • Objective: value-add, revenue generating Copyright © Supply Chain Council, 2008. All rights reserved 14

Capability Models Level: Different capabilities Stocked Product (S 1, M 1, D 1) • Inventory Driven (Plan) • Standard Material Orders • High Fill-rate, short turnaround Make-to-Order (S 2, M 2, D 2) • Customer Order Driven • Configurable Materials • Longer turn-around times Engineer-to-Order (S 3, M 3, D 3) • Customer Requirements Driven • Sourcing New Materials • Longest long lead-times, low fill rates R 1 S 1 D 1 M 1 I 1 D 1 R 2 S 2 D 2 M 2 I 2 D 3 M 3 I 3 D 3 R 1 S 1 R 3 S 3 R 2 R 1 S 1 Copyright © Supply Chain Council, 2008. All rights reserved 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 Copyright © Supply Chain Council, 2008. All rights reserved 16

Source Configurations • Configurations: • Source Stocked Product (Process ID: S 1) • The ordering and receiving of existing products, components and services from existing contracts, based on requirement plans. • Source Make-to-Order (Process ID: S 2) • The ordering and receiving of existing products, components and services for a unique and identified customer order. • Source Engineer-to-Order (Process ID: S 3) • 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. Copyright © Supply Chain Council, 2008. All rights reserved 17

Source Process Elements Stocked Product (S 1) Make-to-Order (S 2) Engineer-to-Order (S 3) S 3. 1 Identify Sources of Supply S 3. 2 Select Final Supplier(s) and Negotiate S 1. 1 Schedule Product Deliveries S 2. 1 Schedule Product Deliveries S 3. 3 Schedule Product Deliveries S 1. 2 Receive Product S 2. 2 Receive Product S 3. 4 Receive Product S 1. 3 Verify Product S 2. 3 Verify Product S 3. 5 Verify Product S 1. 4 Transfer Product S 2. 4 Transfer Product S 3. 6 Transfer Product S 2. 5 S 3. 7 S 1. 5 Authorize Supplier Payment Copyright © Supply Chain Council, 2008. All rights reserved Authorize Supplier Payment 18

Make (Process ID: M) • 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 Copyright © Supply Chain Council, 2008. All rights reserved 21

Make Configurations • Make-to-Stock (Process ID: M 1) • The making of standard products and services. Planning (Plan) processes determine what, how much and when to make. • Make-to-Order (Process ID: M 2) • 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: M 3) • 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. Copyright © Supply Chain Council, 2008. All rights reserved 22

Make Process Elements Make-to-Stock (M 1) Make-to-Order (M 2) Engineer-to-Order (M 3) M 3. 1 Finalize Production Engineering M 1. 1 Schedule Production Activities M 2. 1 Schedule Production Activities M 3. 2 Schedule Production Activities M 1. 2 Issue Material M 2. 2 Issue Sourced/In. Process Product M 3. 3 Issue Sourced/In-Process Product M 1. 3 Produce and Test M 2. 3 Produce and Test M 3. 4 Produce and Test M 1. 4 Package M 2. 4 Package M 3. 5 Package M 1. 5 Stage Product M 2. 5 Stage Finished Product M 3. 6 Stage Finished Product M 1. 6 Release Product to Deliver M 2. 6 Release Finished Product to Deliver M 3. 7 Release Product to Deliver M 1. 7 Waste Disposal M 2. 7 Waste Disposal M 3. 8 Waste Disposal Copyright © Supply Chain Council, 2008. All rights reserved 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 Copyright © Supply Chain Council, 2008. All rights reserved 25

Deliver Configurations • Deliver Stocked Product (Process ID: D 1) • 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: D 2) • 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: D 3) • 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: D 4) • The delivery of standards goods in a retail store Copyright © Supply Chain Council, 2008. All rights reserved 26

Deliver Process Elements (1/3) Stocked Products (D 1) Make-to-Order (D 2) Engineer-to-Order (D 3) D 1. 1 Process Inquiry & Quote D 2. 1 Process Inquiry & Quote D 3. 1 Obtain & Respond to RFP/RFQ¹ D 1. 2 Receive, Enter & Validate Order Receive, Configure, Enter & Validate Order D 3. 2 Negotiate & Receive Contract D 1. 3 Reserve Inventory & D 2. 3 Determine Delivery Date Reserve Inventory & D 3. 3 Determine Delivery Date Enter Order, Commit Resources & Launch Program D 1. 4 Consolidate Orders D 2. 4 Consolidate Orders D 3. 4 Schedule Installation D 1. 5 Build Loads D 2. 5 Build Loads D 3. 5 Build Loads D 1. 6 Route Shipments D 2. 6 Route Shipments D 3. 6 Route Shipments D 1. 7 Select Carriers & Rate Shipments D 2. 7 Select Carriers & Rate Shipments D 3. 7 Select Carriers & Rate Shipments D 2. 2 ¹ RFP = Request for Proposal, RFQ = Request for Quote Copyright © Supply Chain Council, 2008. All rights reserved 27

Deliver Process Elements (2/3) Stocked Products (D 1) Make-to-Order (D 2) Engineer-to-Order (D 3) D 1. 8 Receive Product from Source or Make D 2. 8 Receive Product from Source or Make D 3. 8 Receive Product from Source or Make D 1. 9 Pick Product D 2. 9 Pick Product D 3. 9 Pick Product D 1. 10 Pack Product D 2. 10 Pack Product D 3. 10 Pack Product D 1. 11 Load Product & Create Documentation D 2. 11 Load Product & Create Documentation D 3. 11 Load Product & Create Documentation D 1. 12 Ship Product D 2. 12 Ship Product D 3. 12 Ship Product D 1. 13 Receive & Verify Product by Customer D 1. 13 Receive & Verify Product D 1. 13 Receive & Verify by Customer Product by Customer D 1. 14 Install Product D 2. 14 Install Product D 3. 14 Install Product D 1. 15 Invoice D 2. 15 Invoice D 3. 15 Invoice Copyright © Supply Chain Council, 2008. All rights reserved 28

Deliver Process Elements (3/3) Retail Products (D 4) D 4. 1 Generate Stocking Schedule D 4. 2 Receive Product at Store D 4. 3 Pick Product from Backroom D 4. 4 Stock Shelf D 4. 5 Fill Shopping Cart D 4. 6 Checkout D 4. 7 Deliver and/or Install • The Retail supply chain model does not match up to the Manufacturing supply chain model, therefore processes are quite different Copyright © Supply Chain Council, 2008. All rights reserved 29

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. Copyright © Supply Chain Council, 2008. All rights reserved 30

Planning Processes Plan Source Make Return Deliver Customer processes Supplier processes Supply Chain Return • Processes: Plan • Objective: Drive/coordinate execution processes Copyright © Supply Chain Council, 2008. All rights reserved 31

Plan (Process ID: P) • 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 Copyright © Supply Chain Council, 2008. All rights reserved 32

Plan Configurations (1/2) • Plan Supply Chain (Process ID: P 1) • Planning overall supply chain targets. Plan Supply Chain drives and coordinates P 2, P 3, P 4 and P 5 plans (Compare to “Revenue plan”, or “Budget” in certain industries) • Plan Source (Process ID: P 2) • Planning of material ordering and receiving activities. Plan Source calculates which materials need to be available when to support the production plan (P 3) and/or the delivery plan (P 4). (Compare to “Materials Requirements Plan”) • Plan Make (Process ID: P 3) • 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”) Copyright © Supply Chain Council, 2008. All rights reserved 33

Plan Configurations (2/2) • Plan Deliver (Process ID: P 4) • 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: P 5) • 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. Copyright © Supply Chain Council, 2008. All rights reserved 34

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 1 P 3. 3 P 1. 1 P 1. 2 Plan Make P 1. 4 Plan Supply Chain P 2. 3 P 1. 4 Plan Supply Chain P 2. 4 to P 3. 2 Plan Source end full cycle Copyright © Supply Chain Council, 2008. All rights reserved P 1. 3 P 1. 2 P 2. 1 P 2. 2 2 P 1. 1 P 3. 2 P 1. 3 P 3. 4 begin next cycle 35

Enable Processes Plan Source Make Return Deliver Customer processes Supplier processes Supply Chain Return • Processes: Enable Plan, Enable Source, Enable Make, Enable Deliver and Enable Return Copyright © Supply Chain Council, 2008. All rights reserved 36

Enable Processes • 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 Copyright © Supply Chain Council, 2008. All rights reserved 37

Enable Categories • 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. Copyright © Supply Chain Council, 2008. All rights reserved 38

Enable Categories • 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. Copyright © Supply Chain Council, 2008. All rights reserved 39

Reverse Processes Plan Source Make Return Deliver Customer processes Supplier processes Supply Chain Return • Processes: Return (Source Return, Deliver Return) • Objective: reverse material flows Copyright © Supply Chain Council, 2008. All rights reserved 40

Return (Process ID: R) • 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 Copyright © Supply Chain Council, 2008. All rights reserved 41

Return Configurations • Return Defective Products (Process IDs: SR 1 and DR 1) • The return of products because the product is defective, the wrong product was ordered or shipped. • Return Maintenance, Repair & Overhaul (IDs: SR 2 and DR 2) • 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 SR 3 and DR 3) • 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 Copyright © Supply Chain Council, 2008. All rights reserved 42

Return Configurations • Positioning Source Return and Deliver Return • Consider the flow of goods; Notice the positions of Source and Deliver Supplier Deliver My Company Source Deliver Customer Source • Now, notice the positions of Source Return and Deliver Return Supplier Deliver Return My Company Source Return Copyright © Supply Chain Council, 2008. All rights reserved Deliver Return Customer Source Return 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 Copyright © Supply Chain Council, 2008. All rights reserved 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 Copyright © Supply Chain Council, 2008. All rights reserved 45

Creating a Scope Diagram • 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: Material and information flow Information flow Copyright © Supply Chain Council, 2008. All rights reserved 46

Creating a Scope Diagram Supplier My Organization Customer Flash Inc. mp 3 HQ 1 My Organization 5 mp 3 HQ Customer 5 Battery ltd. Factory 4 Supplier Flash Inc. Battery ltd. Comps Steps to create a Business Scope Diagram 1. 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) DC 3 Retail Inc. 2 Copyright © Supply Chain Council, 2008. All rights reserved Factory Comps DC Retail Inc. 47

The Result: Scope Diagram Suppliers mp 3, Inc. Flash Inc. Battery ltd. Customers mp 3 HQ Factory Retail, Inc. Components Warehouse Service Providers Material and information flow Information flow Copyright © Supply Chain Council, 2008. All rights reserved 48

Modeling with SCOR 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 Copyright © Supply Chain Council, 2008. All rights reserved 49

Creating a Geographic Map 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 node 3. Starting with your customers, repeat for each node: a. Identify all supplying nodes b. Draw and name these supplying nodes c. Identify the level 2 processes d. List the level 2 processes in each node e. Draw the material flows (connecting arrows) Repeat until you have included all your suppliers 1 2 Retail, Inc S 1, P 2 UK Germany b² 3 Drive Supplier D 1, P 4 d² b China e² France India Spain b¹ Copyright © Supply Chain Council, 2008. All rights reserved e¹ MP 3 Factory S 1, M 1, D 1 d¹ 50

Result: The Geographic Map Retail, Inc S 1, P 2 Battery Supplier D 1, P 4 HQ P 1, P 2, D 2, S 2 Drive Supplier D 1, P 4 MP 3 Factory P 3, S 1, M 1, D 1 Question: No flow from HQ; Why? Copyright © Supply Chain Council, 2008. All rights reserved 51

Modeling with SCOR 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 1 2 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 D 2. 2 Receive, Enter, Validate Order D 2. 3 Reserve Inventory & Determine Delivery Date Copyright © Supply Chain Council, 2008. All rights reserved M 2. 1 Schedule Production Activities 52

Elements of a Business Process • Process is defined by more than just activity not in SCOR metrics business rules measurements inputs best practices activity people outputs technology geography skills interface organization Copyright © Supply Chain Council, 2008. All rights reserved platform 53

Obtaining Generic Descriptions • 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. Copyright © Supply Chain Council, 2008. All rights reserved 54

Obtaining Generic Descriptions • 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 Copyright © Supply Chain Council, 2008. All rights reserved 55

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 Copyright © Supply Chain Council, 2008. All rights reserved 56

Internal Customer Performance Attributes 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 Question: What is/are the most important attributes to achieve your supply chain strategy? Copyright © Supply Chain Council, 2008. All rights reserved 57

‘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 Copyright © Supply Chain Council, 2008. All rights reserved 58

SCOR Metrics Codification • 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. 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. 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 Copyright © Supply Chain Council, 2008. All rights reserved 59

KPIs; Strategic Metrics Customer • Measuring strategy: KPIs are strategic (level 1) metrics 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 Internal 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 Copyright © Supply Chain Council, 2008. All rights reserved 60

Strategic Reliability 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 ontime, 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) • • Notes: An order is perfect only if all L 2/L 3 metrics are perfect; An order must be: on-time AND in-full AND right condition AND right documentation 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 Copyright © Supply Chain Council, 2008. All rights reserved 61

Strategic Responsiveness 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) • • • 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. RS. 2. 2 Make Cycle Time RS. 2. 3 Deliver Cycle Time RS. 3. 96 Pick Product Cycle Time Copyright © Supply Chain Council, 2008. All rights reserved 62

Strategic Agility Metrics 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: • • • Notes: This metric may have more than one Source, Make and Deliver Flexibility component depending on the complexity of the supply chain. AG. 2. 1 Upside Source Flexibility AG. 2. 2 Upside Make Flexibility AG. 2. 3 Upside Deliver Flexibility Copyright © Supply Chain Council, 2008. All rights reserved 63

Strategic Asset Metrics 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: • • • Notes: For services, the time between paying the resources assigned to a service and receiving payment for the service delivery. AM. 2. 1 Days Sales Outstanding (DSO) AM. 2. 2 Inventory Days of Supply (IDOS) AM. 2. 3 Days Payable Outstanding (DPO) Copyright © Supply Chain Council, 2008. All rights reserved 64

Strategic Asset Metrics 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: • • Notes: Supply-Chain Revenue is the operating revenue generated from a supply chain. This does not include non-operating revenue, such as investments, etc. . 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 Copyright © Supply Chain Council, 2008. All rights reserved 65

Metrics and Analysis • 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 Copyright © Supply Chain Council, 2008. All rights reserved 66

Metrics Data • 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 timestudies. 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 Copyright © Supply Chain Council, 2008. All rights reserved 67

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 Copyright © Supply Chain Council, 2008. All rights reserved 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. Copyright © Supply Chain Council, 2008. All rights reserved 69

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 Copyright © Supply Chain Council, 2008. All rights reserved 70

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. Copyright © Supply Chain Council, 2008. All rights reserved 71

Benchmark Requirements • 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. Copyright © Supply Chain Council, 2008. All rights reserved 72

Best Practices • 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 Copyright © Supply Chain Council, 2008. All rights reserved 73

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. Copyright © Supply Chain Council, 2008. All rights reserved 74

www. supply-chain. org info@supply-chain. org 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.