Supply Chain
Operations Reference-model
(SCOR-model)
Asst.Prof.Dr.Wanchai RattanawongUniversity of Thai Chamber of Commerce
Supply Chain Operations Reference
(SCOR) Model and Performance
Measurement
Why focus on business process
What is SCM ,What is SCOR?
SCOR Model Best Practice & Case Study
SCOR overview Scope and value of the SCOR Model
the SCOR Business Processes and Improvement
How to apply Performance Management & benefit
SCOR processes at tactical & execution levels
ITL-SCBC& SCOR 2011
Challenges facing Petrochemicals Industry
Supply Chains
1. The Chemical Industry is facing exciting times,
requiring higher degrees of excellence in planning,
coordination and execution skills than ever before.
•Cost
•Quality
•Delivery
Introduction SCM in Petrochemicals Industry
Operations Management UTCC Page 4
suppliers distributors retailers/customersmanufacturers
MATERIALS MANAGEMENT/ SUPPLY MANAGEMENT
PHYSICAL DISTRIBUTION/ CHANNEL MANAGEMENT
source consumers/end users
Markets/customers
Physical
Distribution
Demand Management
กลยทุธท์างธรุกิจของพนัธมิตรหรอืหุ้นส่วนทางการค้าในโซ่อปุทานท่ีร่วมมือกนั สร้างพนัธกิจในการท างานรว่มกนัอย่างใกล้ชิดเพ่ือสร้างคณุค่าให้แก่ลกูค้ามากขึน้ โดยใช้วิทยาการการจดัการแบบสมยัใหม่ และการใช้เทคโนโลยีประยกุตใ์ห้เหมาะสม เพ่ือเอื้อต่อการเพ่ิมประสิทธิภาพและประสิทธิผล เพ่ือลดต้นทุน ค่าใช้จ่ายและเวลาให้ต า่ท่ีสดุเท่าท่ีจะเป็นไปได้ในโซ่อปุทาน
Supply Chain Defined
ManufacturingPlanning &
Control
2. On one hand competitive pressures in traditional markets are increasing.
19/07/63 6
3. Customers expect higher levels of service and at the same time lower prices.
4. This demands streamlined processes, elimination of
waste & a need for excellence in all aspects of supply
chain operations.
5 PRINCIPLES OF
STREAMLINE PROCESS
1. Specify value :
Specify value from the standpoint of the
end customer by product family.
2. Identify the value stream :
Identify all the steps in the value stream
for each product family, eliminating whenever
possible those steps that do not create value
or identify all the steps along the process
chain.
Pa
ge
11
suppliers distributors retailers/customersmanufacturers
MATERIALS MANAGEMENT/ SUPPLY MANAGEMENT
PHYSICAL DISTRIBUTION/ CHANNEL MANAGEMENT
source consumers/end users
Markets/customers
Physical
Distribution
Demand Management
กลยทุธท์างธรุกิจของพนัธมิตรหรอืหุ้นส่วนทางการค้าในโซ่อปุทานท่ีร่วมมือกนั สร้างพนัธกิจในการท างานรว่มกนัอย่างใกล้ชิดเพ่ือสร้างคณุค่าให้แก่ลกูค้ามากขึน้ โดยใช้วิทยาการการจดัการแบบสมยัใหม่ และการใช้เทคโนโลยีประยกุตใ์ห้เหมาะสม เพ่ือเอื้อต่อการเพ่ิมประสิทธิภาพและประสิทธิผล เพ่ือลดต้นทุน ค่าใช้จ่ายและเวลาให้ต า่ท่ีสดุเท่าท่ีจะเป็นไปได้ในโซ่อปุทาน
Supply Chain Defined
ManufacturingPlanning &
Control
3. Create flow :
Make the value-creating steps occur in
tight sequence so the product will flow
smoothly toward the customer.
4. Let the customer pull product
through the value stream:
Make only what the customer has
ordered.
5 PRINCIPLES OF
STREAMLINE PROCESS
19/07/63 13
5. Seek perfection :
As value is specified, value streams are
identified, wasted steps are removed, and flow
and pull are introduced, begin the process again
and continue it until a state of perfection is
reached in which perfect value is created with no
waste.
5 PRINCIPLES OF
STREAMLINE PROCESS
Over Productionผลติเกนิความจ าเป็น
Inventoryสนิคา้คงคลงั
Excess Processingขัน้ตอนการผลติมากเกนิจ าเป็น
Motionการเคลื่อนไหว
Waitingการรอคอย
Defectของเสีย
Transportationการขนยา้ย
5. At the same time manufacturers are developing
production facilities in Thailand creating new logistics
challenges for raw materials and finished products, both locally as well as for export markets.
SCOR model is tool for
performance measurement and process control.
Superior Supply Chain Management (SCM)
has long been a source of competitive advantage
Source: PRTM/The Performance Measurement Group
% o
f R
evenue
Best-in-class Companies’ Outperform Their Median Competitors with a 50% Cost Advantage
19SCC & SCOR HRdergi Conference 2010
5.40% 5.30% 5.50%
4.20%4.80%
3.40% 3.50% 3.60%
9.20%
12.30%
10.70%10.00%
10.70%
9.10%
6.60%7.40%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
Best-in-Class
Median
© Copyright 1998 Supply-Chain Council
3651MV—SCOR Overview 20
Cash-to-Cash Cycle Time
CalendarDays
2517
46
25
45
30
106
70
127
59
88 89
0
20
40
60
80
100
120
140
Computers Industrial Telecom Chemicals Packaged
Goods
Overall
Best-in-Class '97
Average '97
Source: PRTM’s 1997 Integrated Supply-Chain Benchmarking Study
Definition: Cash-to-cash cycle time is calculated as inventory days of supply + days sales outstanding - average payment period for materials
Why is supply-chain management so important?Leading companies have cash available 2 – 3 months faster
Leading companies have a 40% – 65% advantage in cash-to-cash cycle time
over average companies
21SCC & SCOR HRdergi Conference 2010
SCM is Paramount in Times of Economic Uncertainty
• In 2007, US business logistics costs rose to an all
time high of $1.4 trillion (10.1% of US nominal Gross
Domestic Product ) 3
• Supply-chain generally accounts for between 60%
and 90% of all company costs1
• A 2% improvement in process efficiency for supply-
chain processes has 3000% - 5000% the impact of a
2% improvement in efficiency for… IT… HR…
Finance1… Sales…
1 Exclusive of Financial Services companies
2 Source: Hoovers 2006 Financial Data, Supply-Chain Council 2006
SCM Benchmark data on SCM cost for discrete & process industries
3 CSCMP 19th Annual State of the Logistics Industry
Focused initiatives in Supply Chain Management can result in 30-35% cost reductions, liberation of working capital, and revenue increases of 3-5%!
Fortune-10
Company Supply-
Chain Cost as % of
Total Costs 2
GM 94%
Ford 93%
Conoco 90%
Wal-Mart 90%
Chevron 88%
IBM 77%
Exxon 75%
GE 63%
Citi1 0%
AIG1 0%
SCM Improvement Creates Shareholder Value
•Improve customer service and
response
•Optimize inventory flow,
utilization & productivity
• Best-in-class customer
relationships
• Differentiated service
capabilities
• Best-in-class strategic
supplier partnerships
• Leverage of outsourcing of
business processes
• Unique supply chain models
The Supply Chain Impacts . . .
& Shareholder Value
ImproveCapital
Efficiency
Increase
Profit
Increase
Shareholder Value
All Financial Metrics . . .
Liberate Working Capital
Reduce
Fixed Capital
IncreaseRevenue and
Margin
Optimize
Cost Model
Effective Supply Chain Management can increase a Return on Capital Employed by 30% and More!
22SCC & SCOR HRdergi Conference 2010
THE ROLE OF THE SCOR
MODEL IN OPTIMIZING SUPPLY
CHAIN PERFORMANCE
ITL-SCBC& SCOR 2011
What is a Supply Chain
What is a Supply Chain
Su
pp
lie
r p
ro
ce
sse
s
Product Design
DCOR™
Cu
sto
mer
pro
ce
ss
es
Supply Chain SCOR™
Sales & Support
CCOR™
Product Management
25
What is SCOR?
26
Custo
mer p
roce
ssesS
upplie
r pro
cess
es Supply Chain
Cu
stom
er p
roce
ssesS
up
pli
er
pro
cess
es
Supply Chain
Process, arrow indicates material flow direction
Process, no material flow Information flow
DeliverMakeSource
ReturnReturn
Plan
• SCOR is a supply chain process
reference model containing over
200 process elements, 550
metrics, and 500 best
practices including risk and
environmental management
• Organized around the five
primary management
processes of plan, Source,
Make, Deliver and Return
• Developed by the industry for
use as an industry open
standard - Any interested
organization can participate in
its continual development
26
SCC & SCOR HRdergi Conference 2010
1. Superior Customer Service
Effective supply chain management is all about
delivering the right product in the right quantity
and in the right condition with the right
documentation to the right place at the right time
at the right price. If only it were as simple as it
sounds.
The SCOR model provides a framework for measuring and understanding current supply chain
conditions and performance and creates a foundation for improvement. It can help supply chain
managers evaluate cost/ performance tradeoffs, develop strategies for meeting new customer expectations, and respond to domestic and global market growth.
SCOR Helps Solve the Top 5 Supply Chain Challenges
2. Cost Control
Supply chain operating costs are under pressure
from rising freight prices, global customers,
technology upgrades, rising labor rates, expanding
healthcare costs, new regulatory demands, and
rising commodity prices. To control such costs
there are thousands of potential metrics that
supply chain organizations can and do measure.
Managers need to zero in on the critical few that
drive total supply chain costs within their
organizations.SCOR metrics provide the basis for an organization to measure how successful it is in achieving its
desired objectives. SCOR metrics are designed to be used in conjunction with supply chain
performance attributes, making it easier to compare different supply chains and different supply chainstrategies.
3. Planning And Risk Management
Supply chains must periodically be assessed and
redesigned in response to market changes,
including new product launches, global sourcing,
new acquisitions, credit availability, the need to
protect intellectual property, and the ability to
maintain asset and shipment security. In addition,
supply chain risks must be identified and
quantified.
Organizations in all sectors—commercial, military, and NGOs—have found that using SCOR as a
planning and risk management foundation leads to faster implementation, more comprehensive
identification of potential risks, and easier coordination with customers, suppliers, and other
stakeholders. SCOR helps users establish rules and strategies, assign responsibilities, coordinateresponses, and monitor current conditions.
4. Supplier/Partner Relationship Management
Different organizations, even different departments
within the same organization, can have different
methods for measuring and communicating
performance expectations and results. Trust begins
when managers let go of internal biases and make
a conscious choice to follow mutually agreed upon
standards in order to better understand current performance and opportunities for improvement.
5. Talent
As experienced supply chain managers retire—and
organizations scale up to meet growing demand in
developing markets—talent acquisition, training,
and development are becoming increasingly
important. Supply chain leaders need a thorough
understanding of the key competencies required for
supply chain management roles, specific job
qualifications, methods for developing future talent
and leaders, and the ability to efficiently sourcespecific skills.
SCOR Benefits Companies
SCOR can be used to describe supply chains that are
very simple or very complex using a common set of
definitions and enabling a common understanding
It helps companies:
•Form an integrated measured strategy which
translates overall business objectives clearly and
comprehensively to all operational business entities
•Create a common balanced scorecard by which
customers can measure their performance and by
which SCC members can measure suppliers’
performance33ITL-SCBC& SCOR 2011
• Compare the performance of supply chain and related
operations within their company or against other companies
• Determine what processes to improve and by how much
to improve them either eliminating waste, or by improving
process reliability
• Guide the consolidation of internal supply chains
(which results in significant cost reductions from eliminating
duplicative assets)
• Create standard processes and common information
systems across business units (which generates major cost
savings, cycle-time and quality improvements)
SCOR Benefits Companies
Supplier
Plan
CustomerCustomer’s
CustomerSuppliers’
Supplier
MakeDeliverSource Make DeliverMakeSourceDeliver SourceDeliver
Internal or External Internal or External
Your Company
Source
SCOR is structured around five distinct
management processes
SCOR Model
Return Return ReturnReturn Return Return
Return Return
Building Block Approach
Processes Metrics
Best Practice Technology
ITL-SCBC& SCOR 2011
SCOR Process Model
The SCOR model is built by a process reference
models
The process reference model integrates the
business process reengineering, benchmarking,
and process measurement into a cross-functional
framework.
Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results
Benchmarking
Characterize the management practices and software solutions that result in “best-in-class” performance
Best Practices Analysis
Process Reference Model
Capture the “as-is” state of a process and derive the desired “to-be” future state
Capture the “as-is” state of a process and derive the desired “to-be” future state
Business Process Reengineering
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 “best-in-class” performance
Benchmarking
The SCOR Reference Process
SCOR Benchmarking - Presentation38
What is Benchmarking
• Qualitative Benchmarking
– Comparing best practices among organizations
– Maturity Assessments
• Quantitative Benchmarking
– Comparing levels of measured performance
– Assessment of Performance Gaps
• Competitive Benchmarking
– Quantitative Benchmarking between companies
– Identifies superior relative performance
39 SCOR Benchmarking - Presentation
7 Steps of a Benchmarking Program
• Supply Chain Definition
• Supply Chain Prioritization
• Supply Chain Strategy
• Selecting Metrics
• Sourcing Data
• Creating a Balanced SCORcard™
• Performing Benchmark
40 SCOR Benchmarking - Presentation
Supply-Chain Definition
• Supply Chains are the Totality of processes spanning
operations from supplier to end-customer, focused on
material, work and information flow
• We use a tool called the Supply Chain Definition
Matrix to define the supply-chains within an
enterprise
• The Supply Chain Definition (i/o Matrix) Matrix helps
determine the number and size of supply chains
• Columns: Customers (Output)
• Rows: Products (Input)
• The intersection of each column and row – if the goods
or services flow to the customer – is a supply chain41
• The columns in the matrix are focused on demand e.g. channels or segments or customers – start with making a list of customer groups, level by level.
• Ask your Sales or Marketing functions for customer segmentation information
• Where you have one customer base with different fulfillment models create two customer segments one for each model
• In general you can go to any level of detail you want but be sensible.
Examples:
Level 1 Level 2 Level 3
Europe, Asia, US Major Accounts Same-Day Shipping
Commercial, Retail Grouped Accounts Bulk Shipping
Eastern, Western
Region
One-Time Buyer MOQ 1 Ordering
Column Definition
• The rows in the matrix are focused on supply e.g. business
lines or products or locations or suppliers – start by making a
list of products, level by level
• Ask product divisions for product hierarchy data
• If you have the same product that may be build two different
create two different products.
• In general you can go to any level of detail you want but be
sensible.
Examples:
Level 1 Level 2 Level 3
Business Divisions Product Lines Product Families
Fulfillment Models Supplier Groups Parts
Planning Models Warehouses
Row Definition
Group 1 Group 2
Customer A Customer B Customer C Customer D
Group 1 Group 2
Customer A Customer B Customer C Customer D
Business 1Product 1
Product 2
Business 2Product 3
Product 4
• We now place the customer list as column headings repeating
until finished
• And then the products list as row headings repeating until
finished
• For each product that flows to a customer, we put an “X” in
the cell
• It’s that simple.
The Matrix
X
X
X
X
X
X
X
• Columns are Retail/Commercial, and sub-segmented
• Rows are the Major Product Lines
Your Company
Supply-Chain Definition
Matrix
Customer/Market/Channels
Retail Commercial
Big BoxInternet Direct
Mom & Pop
StoresBuilding
Major Account
Distrib
Lin
es
of
Bu
sin
ess
-P
rod
uct
Fam
ilie
s
Air
Co
nd
itio
ne
rs
Big Airco x x xSmall Airco x x x
Custom Industrial x xStandard Industrial x x
Example: Air Conditioning Company
Supply-ChainStrategy Matrix
Big AircoSmall Airco
Comm’l
Exte
rnal
Reliability S
Responsiveness A
Flexibility A
Inte
rnal
Cost P
Assets P
• Each unique combination of ratings defines Your Supply Chain Strategy for the channel
• Think of the rating as a desired state, NOT where you want to improve the most
Supply-Chain Strategy Matrix
46 SCOR Benchmarking - Presentation
S
A
A
P
P
The SCORcard
• We use a tool called the Supply Chain SCORcard™ to Identify performance characteristics of supply-chains.
• Each SCORcard™ is built from a subset of hundreds of SCOR metrics.
• For supply-chain benchmarking we generally use only Level 1, 2 and 3 metrics
• The SCOR Manual provides all necessary definitions
SCOR Benchmarking - Presentation47
A Metrics Architecture
Supply-ChainSCORcard
S/A/P Level-1 Metric Level-2 Metric Level-3 Metric Summary
Exte
rnal
Reliability S Perfect Order Fulfillment Perfect Order Fulfilment
Reliability% Orders Delivered in Full % Orders Delivered in Full
Reliability Delivery Item Accuracy Delivery Item Accuracy
Reliability Delivery Quantity Accuracy Delivery Quantity Accuracy
ReliabilityDelivery Performance to Commit Date
Delivery Performance to Commit Date
Reliability Date Achievement Date Achievement
Reliability Location Achievement Location Achievement
ReliabilityAccurate Documentation Accurate Documentation
ReliabilityShipping Documentation Accuracy
Shipping Documentation Accuracy
ReliabilityBilling Documentation Accuracy
Billing Documentation Accuracy
Reliability Perfect Condition Perfect Condition
Reliability% Orders Received Damage-Free
% Orders Received Damage-Free
SCOR Benchmarking - Presentation48
Metrics Selection
Supply-ChainSCORcard
S/A/P Level-1 Metric Level-2 Metric Level-3 Metric Summary
Exte
rnal
Responsiveness AOrder Fulfilment Cycle
Time
Order Fulfillment Cycle
Time
Responsiveness Source Cycle Time Source Cycle Time
Responsiveness Make Cycle Time Make Cycle Time
Responsiveness Deliver Cycle Time Deliver Cycle Time
Flexibility PUpside Supply-Chain
Flexibility
Upside Supplly-Chain
Flexibility
Inte
rnal
Cost PTotal Supply Chain
Management Cost
Total Supply Chain
Management Cost
Assets A Cash to Cash Cycle Time Cash to Cash Cycle Time
Assets Days Sales Outstanding Days Sales Outstanding
AssetsDays Payables
Outstanding
Days Payables
Outstanding
Assets Inventory Days of Supply Inventory Days of Supply
49 SCOR Benchmarking - Presentation
Planning Data Gathering: Sources
of Data
• Financial Data
– 10-K data, Company Annual Reports, Cost Center Reports
– Must be Verified by Financial Team (Controller)
• Non-Financial Data
– Customers
• Delivery Performance
• Total Cycle-Time Performance
– IT Systems
• Process-to-Process Transactions
• Planning System Parameters (Lead Times)
– Suppliers
– 3PL Providers
50 SCOR Benchmarking - Presentation
• Look at who owns the data
• Consider where the transactions may be
• Organize to alert data owners to gather data
• Collect and assess Data Quality
• Use SCOR Metrics Definition as a guide
Metric Process Owner Due Date Status
On-Time Delivery D1.16 Logistics 2/2/2008 Complete
Undamaged D1.17 3PL Provider 2/15/2008 50% Collected
Order Fulfillment
Cycle Time
D1.1 – D1.17 Deliver Team 2/22/2008 Not started
Etc…
Data Gathering Plan
51 SCOR Benchmarking - Presentation
• Based on average data averaged over many samples
• Comes from root transactions, not aggregates
• Six-Sigma team support a big help
The Create the SCORcard
52 SCOR Benchmarking - Presentation
Attribute SAP Metric (level 1) You Parity Adv Superior Gap
Reliability S Perfect Order Fulfillment 97%
Response A Order Fulfillment Cycle Time 14 days
Flexibility P Ups. Supply Chain Flexibility 62 days
Cost P Supply Chain Mgmt Cost 12.2%
Assets A Cash-to-Cash Cycle Time 35 days
SCORmark™
• Once the SCORcard is defined, and data for most metrics are
gathered
• Data are submitted electronically to the SCORmark™ system
• With days or weeks, an electronic report is returned with the
results of comparison against selected demographic groups
• The principal function of the Benchmark is to determine the
gap between actual performance and performance
corresponding to desired strategic positioning.
• The Benchmark is a component of Phase I and II of the SCOR
Implementation Roadmap
53 SCOR Benchmarking - Presentation
Interpreting the Data
• Used for choosing target performance
• Critical to understand Performance in a particular
Demographic
• Can be “internal” (competing against other supply chains in
same company)
• Aligns Strategy, Performance, and Performance Goals
SCOR Benchmarking - Presentation
Attribute SAP Metric (level 1) You Parity Adv Superior Gap
Reliability S Perfect Order Fulfillment 97% 92% 95% 98% 1%
Response A Order Fulfillment Cycle Time 14 days 8 days 6 days 4 days 8 Days
Flexibility P Ups. Supply Chain Flexibility 62 days 80 days 60 days 40 days 0
Cost P Supply Chain Mgmt Cost 12.2% 10.8% 10.4% 10.2% 1.4%
Assets A Cash-to-Cash Cycle Time 35 days 45 days 33 days 20 days 2 Days
54
• Provide a balanced horizontal
(cross-process) and vertical
(hierarchical) view
• Designed to be (re)configurable
• Used to represent many different
configurations of a similar process
• Aggregate a series of hierarchical
process models
Classic process decomposition models
are strictly hierarchical
Process decomposition models are developed to address one
specific configuration of process elements
Process Reference Models accommodate a
number of constructs
Process Element
Level
1
2
3
4
Process
Process Element
Task
Activities
Task
Activities
Contains:
A process reference model differs from
classic process decomposition models
The SCOR process reference model contains:
•Performance Metrics: Standard metrics to measure
process performance
•Processes: Standard descriptions of management
processes and a framework of process relationships
•Practices: Management practices that produce best-
in-class performance
•People: Training and skills requirements alignedwith processes, best practices, and metrics
What is a process reference model?
Why use a process reference model?
• A process reference model allows companies
to:– Communicate, using common terminology and standard descriptions of the
process elements
– Leverage metrics and benchmarking to determine performance goals, set priorities, and quantify the benefits of process changes
– Understand the best practices that yield the best performance
– Understand the overall SCM process and evaluate overall performance
– Identify the software tools best suited for their process requirements
• Once a business process has been “captured”
in a process reference model it can be:– Described unambiguously
– Communicated consistently
– (Re)designed to achieve competitive advantage
– Measured, managed, controlled, and refined to meet specific purposes
Supply Chain Operations
Reference-model : Scope
The boundaries of the model
SCOR boundaries (I) SCOR spans
–All customer interactions, from order entry
through paid invoice
–All physical material transactions, from your
supplier’s supplier to your customer’s customer,
including:
»Equipment, supplies, spare parts, bulk
product, software, etc.
–All market interactions, from the understanding
of aggregate demand to the fulfillment of each
order
SCOR boundaries (II)
SCOR does not include
• Sales administration processes
• Technology development processes
• Product and process design and development processes
• Post-delivery customer support operations including technical support processes
Links to processes not included within the model’sscope, such as product development, are noted in SCOR
Scope of SCOR ProcessesPLAN Demand/Supply Planning and Management
Balance resources and requirements and
establish/communicate plans for whole supply chain,
including Return, and the execution processes of
Source, Make, and Deliver
Management of business rules, supply chain
performance, data collection, inventory, capital assets,
transportation, planning configuration, and regulatory
requirements and compliance
Align the supply chain unit plan with the financial
plan.
ITL-SCBC& SCOR 2011
• Demand/supply planning
– Assess supply resources, aggregate and
prioritize demand requirements, plan
inventory, distribution requirements,
production, material, and rough-cut capacity
for all products and all channels
• Manage planning infrastructure
– Make/buy decisions, supply-chain
configuration, long-term capacity and resource
planning, business planning, product phase-
in/phase-out, manufacturing ramp-up, end-of-
life management, product-line management
SOURCE Source Stocked, Make-to-Order,
and Engineer-to-Order Product
Schedule deliveries, receive, verify, and transfer
product; and authorize supplier payments. Identify
and select supply sources when not predetermined, as
for engineer to order product.
Manage business rules, assess supplier performance,
and maintain data
Manage inventory, capital assets, incoming product,
supplier network, import/export requirements, andsupplier agreements
Scope of SCOR Processes
ITL-SCBC& SCOR 2011
• Sourcing/material acquisition
– Obtain, receive, inspect, hold, and issue
material
• Manage sourcing infrastructure
– Vendor certification and feedback, sourcing
quality, in-bound freight, component
engineering, vendor contracts, initiate
vendor payments
Scope of SCOR Processes
MAKE Make-to-Stock, Make-to-Order, and
Engineer-to-Order Production Execution
Schedule production activities, issue product, produce
and test, package, stage product, and release product
to deliver.
Finalize engineering for engineer-to-order product.
Manage rules, performance, data, in-process products
(WIP),equipment, facilities, transportation, productionnetwork, and regulatory compliance for production.
ITL-SCBC& SCOR 2011
Production execution
– Request and receive material, manufacture and test product, package, hold and/or release product
Manage make infrastructure
– Engineering changes, facilities and equipment, production status, production quality, shop scheduling/sequencing, short-term capacity
Scope of SCOR Processes
DELIVER Order, Warehouse,
Transportation and Installation Management
for Stock, Make-to-Order, and Engineer-to-
Order Product
All order mgmt steps from processing customer
inquires and quotes to routing shipments and
selecting carriers.
Warehouse mgmt from receiving and picking product
to load and ship product.
ITL-SCBC& SCOR 2011
Receive and verify product at customer site and install, if
necessary.
Invoicing customer.
Manage Deliver business rules, performance,
information, finished product inventories, capital assets,
transportation, product life cycle, and import/export compliance.
Scope of SCOR Processes
DELIVER
Order management– Enter and maintain orders, generate quotations,
configure product, create and maintain customerdatabase, manage allocations, maintain product/pricedatabase, manage accounts receivable, credits,collections and invoicing
Warehouse management– Pick, pack and configure products, create customer
specific packaging/labeling, consolidate orders, ship products
Transportation and installation management– Manage traffic, manage freight, manage product
import/export– Schedule installation activities, perform installation,
verify performance
Manage deliver infrastructure– Manage channel business rules, order rules, manage
deliver inventories, manage deliver quality
Scope of SCOR Processes
RETURN Return of Raw Materials and
Receipt of Returns of Finished Goods
All Return Defective Product steps from source
All Return Maintenance, Repair, and Overhaul
product steps from source
All Return Excess Product steps from source
Manage Return business rules, performance, data
collection, returns inventory, capital assets,
transportation, network configuration, regulatoryrequirements and compliance.
ITL-SCBC& SCOR 2011
Each basic supply chain is a “chain” of Source,
Make, and Deliver Execution processes
Source Make Deliver. . .
Customer & Supplier
A Supply Chain
Customer & SupplierCustomer & Supplier
Plan Plan PlanPlan
Each intersection of two execution processes (Source-Make-Deliver) is a “link” in the supply chain
Planning processes manage these customer-supplier links
SCOR Processes – Five Levels of
Decomposition
Level 1 Level 2 Level 3 Level 4 Level 5
Scope Configuration Activity Workflow Transactions
Differentiates
Business
Differentiates
Complexity
Names Tasks Sequences
Steps
Links
Transactions
Defines Scope Differentiates
Capabilities
Links,
Metrics, Tasks
and Practices
Job Details Details of
Automation
Sets Strategy First Tier
Diagnostics
Second Tier
Diagnostics
Industry or
Company
Specific
Technology
Specific
72
S1
Source
Stocked Product
Supply-Chain
SourceS1.2
Receive Product
Standard SCOR definitions Company/Industry definitions
EDI
XML
Material Flow
SCOR Level 1
Operations
Strategy
Analyze Basis
of
Competition
SCOR Level 2
Configure
supply chain
Align
Performance
Levels, Practices,
and Systems
Implement
supply chain
Processes and
Systems
SCOR Project Roadmap
•Competitive Performance Requirements
•Performance Metrics
•Supply Chain Scorecard
•Scorecard Gap Analysis
•Project Plan
•AS IS Geographic Map
•AS IS Thread Diagram
•Design Specifications
•TO BE Thread Diagram
•TO BE Geographic Map
Information
and Work Flow
•AS IS Level 2, 3, and 4 Maps
•Disconnects
•Design Specifications
•TO BE Level 2, 3, and 4 Maps
Develop,
Test, and Roll
Out
•Organization
•Technology
•Process
•People
SCOR Level 3
ITL-SCBC& SCOR 2011
SCOR contains three levels of process detail
#
Level
Schematic Comments
1
2
3
4
Configuration
Level
(Process
Categories)
Process
Element Level (Decompose
Processes)
Plan
DeliverMakeSource
A company’s supply chain can be “configured-to-
order” at Level 2 from approximately 19 core
“process categories.” Companies implement their
operations strategy through the configuration they
choose for their supply chain
Companies “fine tune” their Operations Strategy at Level 3
Level 3 defines a company’s ability to compete successfully in its chosen markets and consists of:
• Process element definitions
• Process element information inputs and outputs
• Process performance metrics
• Best practices, where applicable
• System capabilities required to support best practices
• Systems/tools by vendor
Implementation
Level (Decompose
Process
Elements)
Companies implement specific supply-chain management practices at this level
Level 4 defines practices to achieve competitive advantage and to adapt to changing business conditions
Su
pp
ly C
ha
in O
pe
rati
on
s R
efe
ren
ce
-mo
de
l
Top Level
(Process Types)
Level 1 defines the scope and content for the Supply
Chain Operations Reference-model
Here basis of competition performance targets are set
Not
in
Scope
Description
Balance Production Resources with
Production RequirementsEstablish Detailed
Production Plans
Identify, Prioritize, and Aggregate
Production Requirements
Identify, Assess, and Aggregate
Production Resources
P3.1
P3.3 P3.4
P3.2
ReturnReturn
Cu
sto
mers
Su
pp
liers
P1 Plan Supply ChainPlan
P2 Plan Source P3 Plan Make P4 Plan Deliver
Source Make Deliver
S1 Source Stocked Products M1 Make-to-Stock
M2 Make-to-Order
M3 Engineer-to-Order
D1 Deliver Stocked Products
D2 Deliver MTO Products
D3 Deliver ETO Products
S2 Source MTO Products
S3 Source ETO Products
Supply-Chain Operations Reference-model
Return
Source
P5 Plan Returns
Return
Deliver
Enable
D4 Deliver Retail Products
ITL-SCBC& SCOR 2011
SCOR Level 1
SCOR Level 1 Performance Categories and Attributes
Performance Category Performance Attribute
Reliability 1. Delivery performance
2. Fill rates
3. Perfect order fulfillment
Responsiveness 1. Order fulfillment lead times
Flexibility 1. Supply chain response times
2. Production flexibility
Cost 1. Supply chain management cost
2. Cost of goods sold
3. Value-added productivity
4. Warranty cost or returns processing cost
Assets 1. Cast-to-cash cycle time
2. Inventory days of supply
3. Asset turns
ITL-SCBC& SCOR 2011
Linking Supply Chain Performance
Attributes and Level 1 Metrics
ITL-SCBC& SCOR 2011
Performance Attribute Performance Attribute Definition Level 1 Metric
Supply Chain Reliability
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.
Perfect Order Fulfillment
Supply Chain
Responsiveness
The speed at which a supply chain
provides products to the customer.
Order Fulfillment Cycle
Time
Supply Chain Flexibility
The agility of a supply chain in
responding to marketplace changes to
gain or maintain competitive
advantage.
Upside Supply Chain
Flexibility
Upside Supply Chain
Adaptability
Downside Supply Chain
Adaptability
Supply Chain CostsThe costs associated with operating the
supply chain.
Supply Chain Management
Cost
Cost of Goods Sold
Supply Chain Asset
Management
The effectiveness of an organization in
managing assets to support demand
satisfaction. This includes the
management of all assets: fixed and
working capital.
Cash-to-Cash Cycle Time
Return on Supply Chain
Fixed Assets
SCOR Level 1Supply-Chain Management
MetricsAssetsDelivery
Performance/Quality
CostFlexibility &
Responsiveness
Delivery performance
Order fulfillment performance
• Fill rate (Make-to-stock)
• Order fulfillment lead time (ETO, MTO, CTO)
Perfect order fulfillment
Supply-chain response time
Production flexibility
Total supply-chain management cost
Value-added productivity
Warranty cost or returns processing cost
Cash-to-cash cycle time
Inventory days of supply
Asset turns
Customer-Facing Internal-Facing
SCOR Level 1 metrics characterize performance
from customer-facing and internal-facing
perspectives
1
Supply Chain Scorecard v. 3.0 Performance Versus Competitive Population
Overview
Metrics
SCOR Level 1 Actual Parity AdvantageSuperior
Delivery Perform-
ance to Commit Date
50% 85% 90% 95%
Fill Rates 63% 94% 96% 98%
EX
TE
RN
AL
Delivery
Performance/
Quality
Perfect Order
Fulfillment 0% 80% 85% 90%
Order Fulfillment
Lead times 7 days 7 days 5 days 3 days
Flexibility & ResponsivenessProduction Flexibility45 days 30 days 25 days 20 days
Total Logistics
Management Costs19% 13% 8% 3%
INT
ER
NA
L
CostWarranty Cost NA NA NA NA
Value Added
Employee Productivity$122K $156K $306K $460K
Inventory Days
of Supply 119 days 55 days 38 days 22 days
Assets
Cash-to-Cash
Cycle Time
196 days80 days 46 days 28 days
Net Asset Turns
(Working Capital)2.2 turns 8 turns 12 turns 19 turns
Analyze Basis of Competition
Supply Chain Scorecard - Representative
Supply Chain Scorecard & Gap Analysis
NEW Product Line - Representative of All Scorecards
Supply Chain SCORcard v. 7.0 Performance Versus Competitive Population
Overview Metrics SCOR Level 1 Metrics Actual Parity Advantage Superior Value from Improvements
EX
TE
RN
AL
Perfect Order
Fulfillment 80% 85% 90%
Order Fulfillment
Cycle Time 7 days 5 days 3 days
Flexibility
Responsiveness
Upside Supply
Chain Adaptability
Total SCM
Management Cost
19% 13% 8% 3%
INT
ER
NA
L Cost
Assets
Cash-to-Cash Cycle Time 196 days 80 days 46 days 28 days
Return on SC Fixed
Assets
Upside Supply
Chain Flexibility 82 days 55 days 13 days
Supply
Chain
Reliability
Downside Supply
Chain Adaptability
Cost of Good Sold
0% $30M Revenue
$30M Revenue
Key enabler to cost
and asset
improvements
$30M Indirect Cost
$7 M Capital Charge
35 days
97 days
0%
54%
N/A
50%
ITL-SCBC& SCOR 2011
SCOR Level 2 Process Type
At Level 2, each SCOR process can be
further described by process type
SCOR Level 2 Process
Process categories are defined by the relationship
between a SCOR process and a process type
Practitioners select appropriate process categories from the SCOR
configuration toolkit to represent their supply-chain configuration(s)
“SCOR Configuration Toolkit”
Process
Type
Planning
Execution
Enable
Process
Category
P1 P2 P3 P4
S1 – S3 M1 – M3 D1 – D4
EP ES EM ED
2
Scor Process
Plan Source Make Delivery Return
P5
SR1 –
SR4
DR1 –
DR3
SCOR Level 2 Process
At Level 2, SCOR provides a “toolkit” of 21
process categories
SCOR Level 2SCOR Level 2 Process Type and Categories
SCOR
Process
Type Characteristics Process Category
Planning Processes that align expected resources P1: Plan supply chain
to meet expected demand requirements. P2: Plan source
P3: Plan make
P4: Plan deliver
P5: Plan return
Execution Processes triggered by planned or actual S1: Source stocked product D1: Deliver stocked product
demand that changes the state of S2: Source MTO product D2: Deliver MTO product
material goods. These are source (S1-3), S3: Source ETO product D3: Deliver ETO product
make (M1-3), deliver (D1-3), and return M1: Make-to-stock R1: Return defective
product
(R1-3) processes. M2: Make-to-order R2: Return MRO product
M3: Engineer-to-order R3: Return excess product
Enable Processes that prepare, maintain, or EX1: Establish and manage rules
manage information or relationships on EX2: Assess performance
which planning and execution processes EX3: Manage data
rely. EX4: Manage inventory
EX5: Manage capital assets
EX6: Manage transportation
EX7: Manage supply chain configuration
EX8: Manage regulatory compliance
EX9: Process specific elements (align SC/financials,
supplier agreements
(Note: X = P,S,M,D,R)ITL-SCBC& SCOR 2011
For each “SCOR Process,” Level 2 “Process
Categories” represent supply-chain variations
Type SCOR
Process
Process Category Characteristics
Planning Plan Which execution process is being planned(Source, Make, Deliver, Supply Chain)?
Execution Source
Is the sourced part standard or custom?
Is the sourced part stocked by suppliers, or not?
Execution Make
Is the manufacturing process discrete or process-based?
What triggers the “Make” signal?
Execution Deliver
Is the product standard or custom?
Is the product stocked in finished goods, or not?
• SCOR process categories reflect distinctions in how
products are planned, sourced, made, and delivered
2
Definition of SCOR Level 2 Processes
Definition of SCOR Level 2 Processes
Definition of SCOR Level 2 Processes
Definition of SCOR Level 2 Processes
Definition of SCOR Level 2 Processes
Mapping the execution processes
S1
D1 S1
M2S2 D2
M1 D1 S1
S2
D1M1
European
RM Supplier
Key Other
RM
Suppliers
Alpha
Regional
Warehouses
S1
DR1 SR1
DR1 SR1 DR1 SR1
DR3 SR3
RM
Suppliers
DistributorsALPHA
DR3 SR3
S1
Americas
Distributors
SR1
SR3
ITL-SCBC& SCOR 2011
Mapping material flow
Latin American
Suppliers
(D1)
Warehouse
Other Suppliers(D1)
Manufacturing
European Supplier(S1)
(SR1,SR3)
Customer
Customer
Customer
Customer
(S1, D1)
(SR1,DR1,DR3)
(D2)
(DR1)
Warehouse
Warehouse
Warehouse
(S1, D1)
(SR1, DR3)
(S1, D1)
(SR1,DR1,DR3)
(S1, D1)
(SR1,DR1,DR3)
(S1)
(SR1,SR3)
(S1)
(SR1,SR3)
(S1)
(SR1,SR3)
(S1, S2, M1, D1)
(SR1,,DR1)
ITL-SCBC& SCOR 2011
Configure Supply Chain
Geographic Map - Sample
Identifying Plan Activities
Consumer
P2
P
4
P3
P
4
S1 D1 S1
P
2
P2
P
3
P
4
M2S2 D2
M1 D1 S1S2D1
M1
European
RM Supplier
Key Other
RM
Suppliers
S1
Alpha
Regional
WarehousesRM
Suppliers
DistributorsALPHA
P1 P1 P1
ITL-SCBC& SCOR 2011
Configure Supply Chain
Thread Diagram
Integrated Level 2 Metrics
Supplier On Time
Delivery
to 97%
Source Cycle Time
90 to 1 day
Material Acquisition
Cost
3.2% to 2.2%
$32M to $22M
RM Days of Supply
72 to 15 days
$107M to $22M
P1Schedule
Achievement
to 97%
Make Cycle Time
30 to 3 days
Unit Cost
WIP Days of
Supply
17 to 25 days
$26M to $37M
Faultless Invoices
to 97%
Order Management Cycle
Time
1 day
Order Management Cost
11.3% to 9.3%
$113M to $93M
Finished Good Inventory
30 to 15 days
$44M to $22M
Days Sales Outstanding
107 to 55 days
$292M to $151M
P2P4
P3
Linking Supply Chain Performance Attributes
between Level 1 and Level 2 Metrics
ITL-SCBC& SCOR 2011
Performance Attribute Performance Attribute Definition Level 1 Metric
Supply Chain Reliability
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.
Perfect Order Fulfillment
Supply Chain
Responsiveness
The speed at which a supply chain
provides products to the customer.
Order Fulfillment Cycle
Time
Supply Chain Flexibility
The agility of a supply chain in
responding to marketplace changes to
gain or maintain competitive
advantage.
Upside Supply Chain
Flexibility
Upside Supply Chain
Adaptability
Downside Supply Chain
Adaptability
Supply Chain CostsThe costs associated with operating the
supply chain.
Supply Chain Management
Cost
Cost of Goods Sold
Supply Chain Asset
Management
The effectiveness of an organization in
managing assets to support demand
satisfaction. This includes the
management of all assets: fixed and
working capital.
Cash-to-Cash Cycle Time
Return on Supply Chain
Fixed Assets
Calculation: [ Total Perfect orders/ Total number of orders] x 100%
Calculation: [ Total number of orders delivered in full/ Total number of orders delivered] x 100%
Calculation:
[ Total number of orders delivered on the original commitment date] x 100 %[Total number of orders delivered]
Calculation:
[ Number of orders in perfect condition] x 100 %[Number of orders delivered]
Calculation:
[ Total number of orders delivered with accurate documentation] x 100 %[Total number of orders delivered]
Calculation:
[ Sum actual cycle time for all orders delivered][Total number of orders delivered]
SCOR Level 3
Process Flow
SCOR Level 3
SCOR Level 3
P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements (Metric)
Best Practice
Input
Output
P1.2 Identify, Assess, and Aggregate Supply Chain Resources (Metric)
Best Practice
Input
Output
SCOR Level 3
SCOR Level 3 Performance Categories and Measures
Process Element: Schedule Process Deliveries
Performance Attribute Categories Measures
Reliability Percentage of schedules generated within supplier’s lead time
Percentage of schedules changer within supplier’s lead time
Responsive Average release cycle of changes
Flexibility Average days per schedule change
Average days per engineering change
Cost Product management and planning costs as a percentage of
product acquisitions costs
Assets None identified
ITL-SCBC& SCOR 2011
An example of SCOR Level 3 process
element logic flow
Inventory
Source Execution Data
Sourcing Plans
Replenishment Signals
Procurement Signal Material on Order
Purchased Materials
Material Pull Signals
Material Inventory Location
WIP Inventory Location
Finished Goods Inventory Location
Receipt Verification
Schedule
Material
Deliveries
S1.1
Receive &
Verify
Material
Transfer
Material
S1.3S1.2
Inputs
Process
Elements
Outputs
Level 3 Example — S1 Source Stocked Product
• Inputs, outputs, and basic logic flow of
process elements are captured
3
An example of a SCOR Level 3 standard process
element definition and standard performance metrics
Process Element:Schedule Material Deliveries
Process Number: S1.1
Process Element DefinitionScheduling and managing the execution of the individual deliveries of material against anexisting contract or purchase order. The requirements for material releases aredetermined based on the detailed sourcing plan or other types of material pull signals.
PerformanceAttributes
Metric
Cycle Time Total Source Lead Time
% of EDI Transactions
Cost Materials Management as a % of Material Acquisition Costs
Service/Quality % defective
Assets Raw Material Days of Supply (DOS)
3
• % of order changes
• # of end devices/SKUs
• Production volume
• Inventory carrying cost
Level 3
Diagnostic Metrics
• Product volume by
channel
• # of channels
• Supply-chain
complexity, # of
S/M/D sites
• Planning cycle time
• Forecast accuracy
• Obsolete/end of life
inventory days of supply
• Replan cycle
• Order entry methods
• Order entry modes
Supply-Chain
Management
Practices
Measures
Level 2
Performance Metrics
Supply-Chain
Complexity
Measures
Supply-Chain
Configuration
Measures
• Material acquisition costs
• Source cycle time
• Raw material DOS
• Purchased material by
geography
• % of purchasing
spending by distance
• Supplier delivery
performance
• Payment period
• % part numbers received
with lead time < 8 weeks
• % unpenalized 30-day
decrease
• % purchasing spending
by distance
• # of suppliers
• Supply-chain finance and
planning costs
• Demand/supply planning costs
• Inventory days of supply
So
urc
eP
lan
AssetsDeliveryPerformance/
Quality
CostFlexibility &
Responsiveness
Levels 2 and 3 performance metrics and diagnostic
measures drive performance improvement3
2
•Value-add %
•% build-to-stock, %
build-to-order
•% of mfg. order changes
due to internal issues
•WIP & plant FG DOS
• # of devices/SKUs
• Upside production
flexibility
• # of orders, line
items & shipments
by channel
• % parts returned
• % re-returns
• Delivery locations by
geography
• # of channels
• Field & samples FG
DOS
• Published delivery
lead time
• # of faultless invoices
• Manufacturing
process steps by
geography
• Asset turns
• Fill rates
• Order management costs
• Order fulfillment lead time
• Forecast accuracy by channel
• # of returns/complaints
• Build order attainment
• Make cycle time
• Product quality
Level 3
Diagnostic Metrics
Supply-Chain
Management
Practices
Measures
Level 2
Performance Metrics
Supply-Chain
Complexity
Measures
Supply-Chain
Configuration
Measures
De
liv
er
Ma
ke
AssetsCostFlexibility &
Responsiveness
DeliveryPerformance/
Quality
Levels 2 and 3 performance metrics and diagnostic measures
drive performance improvement (continued)3
2
Implementation of supply-chain management
practices within the company occurs at Level 4
(and below)
• Below Level 3, each process element is described by classic
hierarchical process decomposition
D1 - Deliver Stocked Product
Level 4Process Element - D1.2
Activities
Tasks
1. Contact customer account rep.
2. Look up customer history
3. If necessary, account rep. calls sales
manager to authorize additional
credit
4a. Account rep clears credit issue
4b. Account rep refuses credit request
Task - D1.2.3
Activities
Enter
Orde
r
Receive
Order
Validat
e Price
Access
Credit Screen
Check Credit
Availability
Clear
Order
Contact
Accounting
Communicate
Results to
Customer
Check
Credit
Route
Shipments
D1.6
Plan & Build
Loads
D1.5
Reserve
Inventory
&
Determine
Delivery
Date
D1.3
Receive,
Enter &
Validate
Order
D1.2
Process
Inquiry &
Quote
D1.1
Receive
Product
D1.8
Pick
Product
D1.9
Load
Vehicle
Generate
Ship Docs
& Ship
D1.10
Receive & Verify Product
at Customer
Site
D1.11
Install
Product
D1.12
Invoice &
Receive
Payment
D1.13
Consolidate
Orders
D1.4
Select
Carriers &
Rate
Shipments
D1.7
From Make
or Source
Level 5
Level 6
4
Applying the Model
© Copyright 1998 Supply-Chain Council
3651MV—SCOR Overview 134
SCOR can be used to achieve many
objectives
• Rapidly map own or others’ supply chain
– Illustrate current supply-chain configurations
– Establish common reference point and definitions
– Communicate effectively with suppliers and
customers
• Compare process performance to targets
– Benchmark metrics across multiple industries
– Compare existing practices to industry best
practices
• Determine required information systems capabilities
– Identify software vendors providing required
capabilities
SCOR can be used to achieve many
objectives
• Identify supply-chain management improvement
opportunities
– Identify gaps in current processes
– Quantify the potential benefits of specific process
improvements
– Provide data for project financial justifications
• Implement supply-chain process improvements
– Design to meet strategic objectives
– “Fine tune” based on pilot results and changing market
needs
• Influence creation of desired software products
– Communicate needed product features to software
vendors
Continued
SCOR Level 1Basis
of
Competition
Operations
Strategy
1
SCOR Level 2
Intra-
Company
Configuration
Inter-Company
Configuration
Supply-Chain
Configuration
2
Intra-Company
Process, Practice,
and System
Configuration
Elements
SCOR Level 3Performance
Levels, Practices,
and System(s)
Selection
Inter-Company
Process, Practice,
and System
Configuration
Elements
3
Supply-Chain
Processes and
System(s)
Implementation
SCOR Level 4
Intra-Company
Supply-Chain
Improvements
Inter-Company
Supply-Chain
Improvements
4
Supply-chain configurations are defined and
implemented by iterating through the SCOR model
Applying the Model:A Case Study
138
Beta Corporation designs, manufactures, distributes, and
repairs consumer electronics products
• Company overview– Number 1 in market share for core product lines in
North America, Beta also has a presence in over 50 other countries
– A full breadth of products supports multiple channels of distribution and consumer preferences
– A core competence in manufacturing consistently demonstrates competitive performance
• Problem– Significant losses (20% of revenue) were being incurred
despite the brand premium– The presence in more than 50 countries grossed less
than 10% of total revenue– The product line was unfocused; over 50% were not
designed by Beta– More than 70% of the products were produced by
Original Equipment Manufacturers (OEMs) despite the core competence in manufacturing
Beta Corporation designs, manufactures, distributes,
and repairs consumer electronics products (continued)
• Diagnostic approach
– Understand the business problem from
management’s viewpoint (Level 1 metric
performance)
– Map supply-chain processes using SCOR
– Determine the strategic elements requiring change
and associated performance targets
– Define the new supply-chain configuration
Supply-Chain Performance VersusCompetitive Population
0% – 20% 20% – 40% 40% – 60% 60% – 80% 80% – 100%
KeyPerspectives Level 1 Metrics
Major
Opportunity
Dis-
advantage
Average
or Median Advantage
Best-
in-Class
Delivery Performance to Request xx%
Order Fulfillment Lead Time (MTO) xx days
Fill Rate xx%
Perfect Order Fulfillment xx%
Supply-Chain Response Time xx days
Upside Production Flexibility xx days
Supply-Chain Management Cost xx%
Warranty Cost as % of Revenue xx%
Value-Added per Employee $xxxK
Total Inventory Days of Supply xx days
Cash-to-Cash Cycle Time xx days
Net Asset Turns xx turns
Flexibility &
Responsiveness
Supply-Chain
Reliability
COGS/
Expense
Assets/
Utilization
SCOR Level 1 metrics quickly revealed that the supply
chain was a key contributor to the problem
Beta Performance
Pacif
ic R
im
Several
Hundred
Suppliers
CA
Manufacturing
Distribution
Captive Retail Retailers OEM
Manufacturing
Suppliers
Distribution
Many
OEMs
Drawing the supply chain showed that North
American operations supported a lot of traffic
SCOR Level 2 modeling reinforced that Beta
had a very complex supply chain
OEM SupplyChain
Many OEM Suppliers
80% of product supply ($$)
Deliver
Stocked
Product
60% of productvolume
High Volume Retailers
50% product volume
Retailers
15% product volume
OEM
5% product volume
Captive Retail
30% product volume
P2
P4
Manufacturing Supply Chain
S1
S1
MTS Components20% of product supply ($$)
M2
M2
MTSFactories
D1
D1
Deliver Stocked Product
40% of productvolume
P2
P2
P3
P3
P4
P4
P4
D1 S
1
S1
S1
S1
S1
D1
M1 M
1 M1 M
1 M1 M
1 M1 M
1 M1
D2 D
2 D2 D
2 D2 D
2 D2 D
2 D1
D2 D
2 D2 D
2 D2 D
2 D2 D
2 D1
D2
D2
D1
D2
D2
D1
M1 M
1 M1 M
1 M1 M
1 M1 M
1 M1
Management set the performance targets at Level 1 to
assure a competitive basis would be achieved
Supply-Chain Scorecard and
Performance Targets
COGS/Expense
Asset Utilization
Supply-Chain Flexibility/
Responsiveness
Supply-Chain
Reliability
Key Supply-Chain
Performance Attribute
Performance vs. CompetitionMajor
Opportunity Disadvantage Parity Advantage Best-in-Class
Actual
Performance
Performance
Requirement
Performance targets drove the specific actions
required to migrate to a new configuration
• Simplify supply-chain logistics
– Consolidate factories (Make)
– Consolidate distribution centers (Deliver)
– Reduce the number of distinct channels (Deliver)
– Dramatically reduce the number of suppliers and the reliance
on OEM product (Source)
– Consolidate product lines (Total Supply Chain)
• Improve customer-facing performance
– Institute processes and systems to more closely link Beta Co.
to high-volume customers
– Move from make-to-stock to make-to-order to improve supply-
chain flexibility and response time and reduce inventory
investment
– Implement Enterprise-wide Resource Planning (ERP)
Pacif
ic R
im
<100
Suppliers
SuppliersCA
Co-located
Manufacturing
and Distribution
OEM
Retailers
Few OEMs
Performance gains came from simplifying
and focusing the supply-chain configuration
SCOR Level 2 modeling reveals how the simplified supply
chain achieved greater performance
Company
Single, Co-located Manufacturing and Distribution
Suppliers Customers
D2
D2D2D1
80% Manufactured
Product Supply
20% Manufactured
Product Supply
MTO Components
MTS Components
MTO
Components
MTS
Components
High-Volume Retailers
80% product volume
Trend
Retailers
15% product volume
Trend
OEM
5% product volume
Trend
95% of productvolume
ManufacturingSupply-ChainPlanning VMI
OEMOEM
Cross-
docking
5% of productvolume
OEM Supply-ChainPlanning
OEM
Supply-Chain Execution
P1
S2
S1
D2M2
S2 D1
P2 P4
P1
P2 P3 P4
S2
S2
S2
D2D2D2
P1
P4
S2D2
D2D2D1
D2D2D2
S1
S2
P1
P2 P4
P3
VMIP2
Make
D1
S2
S2
S2
Cross-
docking
D2M2Source
Deliver
Multiple systems were chosen to support the enterprise-
wide supply chain, based on Level 3 analysis
Suppliers Customers
ManufacturingSupply-ChainPlanning
OEM Supply-ChainPlanning
Supply-Chain Execution
ERP
System
&
Legacy
Advanced Planning
System
Advanced Planning
System
Customized
3rd Party
System
Delivery Performance
Up 54 pts
% C
us
tom
er
Req
ue
ste
d S
hip
Date
Year 1 Year 2 Year 3 Year 4
Inventory Days of Supply
Down 55%
Da
ys
Year 1 Year 2 Year 3 Year 4
Incr. Cash Flow from Operations
Up 10% of Rev
$
Mil
lio
ns
Year 1 Year 2 Year 3 Year 4
100
Cash-to-Cash Intervals
Down 55%
Days
Year 1 Year 2 Year 3 Year 4
Gross margin improved 50% in two years
on the basis of supply-chain performance
Go
od
Go
od
Go
od
Go
od
Applying the Model:Developing Supply-Chain
Configurations
© Copyright 1998 Supply-Chain Council
3651MV—SCOR Overview 150
The concept of “configurability”
• The primary use for SCOR is to describe, measure, and
evaluate supply-chain configurations
• A supply-chain configuration is driven by
– Deliver channels, inventory deployment, and products
– Make production sites and methods
– Source locations and products
– Plan levels of aggregation and information sources
• SCOR must accurately reflect how a supply chain’s
configuration impacts management processes and
practices
Configurability
1. Select the business entity to be modeled (geography, product set, organization)
2. Illustrate the physical locations of:
Production facilities (Make)
Distribution activities (Deliver)
Sourcing activities (Source)
3. Illustrate primary point-to-point material flows using “solid line” arrows
4. Place appropriate Level 2 execution process categories to describe activities at each location
Configuring a supply-chain “thread”
illustrates how SCOR configurations are done
Source Make Deliver
S1 Source Stocked Materials
S2 Source Make-to-Order Materials
M1 Make-to-Stock
M2 Make-to-Order
M3 Engineer-to-OrderS3 Source Engineer-to-Order Materials
D1 Deliver Stocked Products
D2 Deliver Make-to-Order Products
D3 Deliver Engineer-to-Order Products
Execution Process Toolkit
Step 1: We will focus on ACME’s North
American supply-chain execution
processes
ACME North America produces desktop and laptop PCs that are sold
through retailers
Step 2: Identify the location of
manufacturing facilities
Desktop
Production
Monitor
Production
Laptop
Production
Step 2 (cont’d): Identify the location of
distribution activities
Desktop
Production
Desktop
DCMonitor
Production
Laptop
Distributor
Laptop
Production
Desktop
Retailer
Laptop
Retailers
Monitor
North American
Distribution
Center
Step 2 (cont’d): Identify the location of the
major sourcing activities
ACME
Taiwan
Desktop
Production
Desktop
DC
Monitor
Production
North American
Distribution Center
Laptop
Distributor
Semiconductor
Distributor
(S1, D2)
Laptop
Production
Desktop
Retailer
Laptop
Retailers
Semiconductor
Manufacturer
Step 3: Illustrate primary point-to-point
material flows using “solid line” arrows
ACME
Taiwan
Desktop
Production
Desktop
DC
Monitor
Production
North American
Distribution Center
Laptop
Distributor
Semiconductor
Distributor
Laptop
Production
Desktop
Retailer
Laptop
Retailers
Semiconductor
Manufacturer
Step 4: Place appropriate Level 2 execution
process categories to describe activities
ACME
Taiwan
(D2)
Desktop
Production
(S1, M1, D2)
Desktop DC
(D1)Monitor
Production
(S1, M1)
North American
Distribution Center
(D1)
Laptop
Distributor
(S1, D1)
Semiconductor
Distributor
(S1, D2)
Laptop
Production
(S1, M1 , D1)
Desktop
Retailer
(S1, D1)
Laptop
Retailers
(S1, D1)
Semiconductor
Manufacturer
(S1, M2, D2)
Legend
S1 = Source Stocked Material
M2 = Make-to-Order
M1 = Make-to-stock
D2 = Deliver Make-to-Order Products
5. Describe each distinct supply-chain “thread”
– A supply-chain thread ties together the set of Source-Make-Deliver supply-chain processes that a given product family flows through
– Develop each thread separately to understand common, and distinct, execution process categories
– Consider end-to-end threads in the Intercompany case
6. Place planning process categories, using dashed lines to
show links with execution processes
7. Place P1, if appropriate
– P1 – Plan Supply Chain aggregates outputs from P2, P3, and P4
Configuring a supply-chain “thread” illustrates
how SCOR configurations are doneContinued
Step 5: Describe each distinct supply-chain
“thread”
ACME
Taiwan (D2)
San Jose
Desktop
Production
(S1, M1, D2)
Desktop
DC (D1)
Monitor
Production (S1, M1)
North American
Distribution Center (D1)
Laptop
Distributor
(S1, D1)Semiconductor
Distributor
(S1, D2)
Laptop
Production
(S1, M1 , D1)
Desktop
Retailer
(S1, D1)
Laptop
Retailers
(S1, D1)
Semiconductor
Manufacturer
(S1, M2, D2)
Legend
S1 = Source Stocked Material
M2 = Make-to-Order
M1 = Make-to-Stock
D2 = Deliver Make-to-Order Products
ACME Laptop
Supply-Chain Thread
SCOR configurations utilize a horizontal flow to show
the total supply-chain links
D3
D2
ACME
Taiwan
Semiconductor
Distributor
S1 M1 D1
CustomersACME
ACME
Laptop
Production
(San Jose)
ACME
Laptop
Production
(San Jose)
ACME
Laptop
Distribution
(San Jose)
Semiconductor
Manufacturer
S1D2
Customer’s
Customer
Laptop
Distributor
Laptop
Retailer
S1 D1S1 D1
SuppliersSupplier’s
Supplier
ACME Laptop Supply-
Chain Thread
Step 6: Place planning process categories, using dashed
lines to show links with execution processes
D3
D2
ACME
Taiwan
Semiconductor
Distributor
S1
P2 P4P3
M1 D1
CustomersACME
ACME
Laptop
Production
(San Jose)
ACME
Laptop
Production
(San Jose)
ACME
Laptop
Distribution
(San Jose)
P4
Semiconductor
Manufacturer
S1D2
Customer’s
Customer
Laptop
Distributor
Laptop
Retailer
S1
P2
D1S1 D1
P2
SuppliersSupplier’s
Supplier
Step 7: Identify any P1 supply-chain planning
activities that aggregate the outputs from P2 – P4
D3
D2
ACME
Taiwan
Semiconductor
Distributor
S1
P2
P1
P4P3
M1 D1
CustomersACME
ACME
Laptop
Production
(San Jose)
ACME
Laptop
Production
(San Jose)
ACME
Laptop
Distribution
(San Jose)
P4
Semiconductor
Manufacturer
S1D2
Customer’s
Customer
Laptop
Distributor
Laptop
Retailer
S1
P2
D1S1 D1
P1
P2
SuppliersSupplier’s
Supplier
In our ACME example, P1 could be extended
to manage an intercompany supply chain
D2
D2
ACME
Taiwan
Semiconductor
Distributor
S1
P2
P1
P4P3
M1 D1
CustomersACME
ACME
Laptop
Production
(San Jose)
ACME
Laptop
Production
(San Jose)
ACME
Laptop
Distribution
(San Jose)
P4
Semiconductor
Manufacturer
S1D2
Customer’s
Customer
Laptop
Distributor
Laptop
Retailer
S1
P2
D1S1 D1
P1
P2
CustomersSupplier’s
Supplier
P1
Plan Intercompany Supply Chain
Supply Chain Operations
Reference-model: Summary
165
SCOR Summary
SCOR is a process reference model
designed for effective communication
among supply chain partners
– A standard language helps management to
focus on management issues
– As an industry standard, SCOR helps
management focus across inter-company
supply chains.
SCOR Summary (II)
SCOR is used to describe, measure and
evaluate Supply Chain configurations
– Describe: Standard SCOR process definitions
allow virtually any supply-chain to be configured.
– Measure: Standard SCOR metrics enable
measurement and benchmarking of supply-chain
performance.
– Evaluate: Supply-chain configurations may be
evaluated to support continuous improvement
and strategic planning.
SCOR has a powerful role in defining
complex supply chains
SCOR Level 1 Basis of Competition
– Set business requirements and define the basis of competition
– Evaluate the performance of the current operations strategy vis-a-visrequired performance
– Set SCOR Level 1 metrics and targets, and define the gap
– Set business priorities and state what needs to change
SCOR has a powerful role in defining
complex supply chains
SCOR Level 2 Supply-Chain Configuration
– Model current supply-chain
configuration, considering
asset, product volume and mix,
and technology requirements
and constraints
– Reconfigure the supply chain
at SCOR Level 2 to determine
expected performance
Continued
SCOR has a powerful role in
implementing supply chains
SCOR Level 3 Performance Levels, Practices, and System(s) Selection
– Develop process models that support strategic objectives and work within the new supply-chain configuration
– Set process metrics and performance targets
– Establish business practices at the operating level
– Build system requirements that support the supply-chain configuration, processes, and practices
– Select appropriate system(s)
Continued
SCOR Level 4
Continued
Supply-Chain Process and System(s) Implementation
– Implement best practices to achieve results
SCOR has a powerful role in
implementing supply chains
Case Study
Oil Producing CompanyIn Iran
Case Study IOC : A schematic diagram of IOC’s Supply Chain
pipeline
Case Study IOC : Geographical of IOC Supply Chain
Supplier
Plan
CustomerCustomer’s
CustomerSuppliers’
Supplier
MakeDeliverSource Make DeliverMakeSourceDeliver SourceDeliver
Internal or External Internal or External
Your Company
Source
Level 1
SCOR Model
Return Return ReturnReturn Return Return
Return Return
Building Block Approach
Processes Metrics
Best Practice Technology
ITL-SCBC& SCOR 2011
ITL-SCBC& SCOR 2011
Level 2
Level 3
Level 3
Level 3
Level 3
Supply Chain PerformanceImprovement Projects
Supply Chain PerformanceImprovement Projects
Supply Chain PerformanceImprovement Projects
Projects Prioritize
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