SmartSCOR: Enabling a Quantitative Supply Chain Transformation

Supply Chain Council 2008 Award for Supply Chain Academic Excellence

SmartSCOR:

Enabling a Quantitative Supply Chain Transformation

Submitted by: IBM China Research Lab December, 2007

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Table of Contents

Section Page

Table of Contents ........................................................................................................................... 2

Executive Summary ........................................................................................................................ 4

Section 1. General Information and Project Complexity ........................................................................... 6

(1) Provide the name of the submitting organization (corporation, service, etc.). .................................... 6

(2) Identify the organizational unit responding (site, function, etc.). ..................................................... 6

(3) Provide a brief mission description of the overall business objectives, product lines, and mission of the organization............................................................................................................................ 6

(4) Indicate the award category of submission. (Operations, Academic or Technology). .......................... 6

(5) Provide a brief description of the supply chain and the processes the submission spans (e.g. Plan, Source, Make, Deliver, Return process descriptions from the SCOR model) ......................................... 6

(6) Provide the names of the supply chain partner organizations (external) involved in the project. Indicate the number of people involved from each partner organization and the functional category of each............ 8

(7) Provide the names of the functional organizations (internal) involved in the project. Indicate the number of people involved from each functional organization and the functional category of each............................ 8

(8) Provide a point of contact for each supply chain partner (direct contact information may be requested). . 9

Section 2. Implementation............................................................................................................... 10

(1) Describe the reason that the supply chain initiative was undertaken and how it was selected. ............ 10

(2) Indicate the duration of the project. ....................................................................................... 11

(3) Describe, in detail, the process used to complete the initiative..................................................... 12

(4) Identify significant challenges encountered, the process for resolution, and the solutions. Identify best practices employed / developed. ............................................................................................... 18

(5) Indicate the metrics used to measure (a) progress and (b) success. ............................................. 21

(6) Document and quantify cost and performance benefits. ............................................................. 22

(7) Outline how the success of this effort supports the organizational objectives. ................................. 23

Section 3. Knowledge Transfer ........................................................................................................ 25

(1) Describe the efforts to share lessons from this effort with other internal organizations....................... 25

(2) Indicate how this initiative can be transferred to other organizations, and specify the likely candidates for transference. ........................................................................................................................ 26

December, 2007 Page 2 of 28

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List of Figures

Figure 1: SmartSCOR Scopes ……………………………………………………………………………………………….7

Figure 2: SmartSCOR R&D Roadmap ……………………………………………………….……………………………12

Figure 3: SmartSCOR R&D Process ………………………………………………………………………………………12

Figure 4: Methodology for Process-Centric Supply Chain Transformation ……………………………………………15

Figure 5: SmartSCOR Architecture ………………………………………………………………………………………..16

Figure 6: SmartSCOR Screenshots ……………………………………………………………………………………17-18

Figure 7: SmartSCOR Methodology align with SCOR Project Roadmap and IBM Method Blue …………………...20

Figure 8: SmartSCOR Project Statistics …………………………………………………………………………………..22

Figure 9: Knowledge Transfer Roadmap ………………………………………………………………………………….25

List of Tables

Table 1: Organizations and Contact Information …………………………………………………………………………..9

Table 2: Client Benefits from SmartSCOR ………………………………………………………………………………..23


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Executive Summary

The IBM China Research Laboratory (CRL) was established in September 1995 in Beijing and is one of the eight worldwide IBM Research laboratories. IBM CRL is vital to help IBM realize its value of “Innovation that matters – for the company and for the world”. IBM CRL is a key asset of IBM as “the innovator’s innovator” to help clients differentiate themselves by providing profound understanding of both business and information technology.

IBM CRL is now submitting for Supply Chain Council 2008 Award for Supply Chain Academic Excellence, with one of our most important applied research project – SmartSCOR, which brings together advanced A&O (Analytics and Optimization) technologies, industry knowledge and standards in an integrated platform to make the SCOR-based supply chain transformation more “Smarter”.

Supply chain transformation is an emerging service area in the market which is offered to help companies in maximizing the performance of their supply chain operations while reducing costs. A supply chain transformation initiative consists in changing the ways how an enterprise forms and operates its supply chain, concerning the decisions from supply chain network rationalization to business process re-engineering. It is a very complex initiative which may involve various departments and has major impact on a supply chain’s performance.

The SCOR model has been popular for years and proven to be a very effective methodology and tool for supply chain diagnosis, however, most of the current applications of SCOR are qualitatively based on SCOR reference processes, performance metrics, benchmarking and best practices, but less A&O technologies are applied during the supply chain transformation process. While from the academic point of view, there are thousands of algorithms and models around supply chain analytics, but these valuable research findings are not well used in practice. So SmartSCOR project is trying to close the gap between academia and industry (theory and practice) by building an integrated platform that deploys a variety of A&O technologies to support SCOR-based supply chain transformation. Moreover, SmartSCOR also includes a comprehensive methodology together with the platform to ensure the effective implementation.

The original idea of SmartSCOR came from our practices in some consulting projects in early 2004, and through about 4 years’ research, development, and continuous improvement, it is ready for mass deployment now. In the SmartSCOR project, we overcame several big challenges such as how to introduce quantitative methods and algorithms to real supply chain practices, how to integrate different models, methods and technologies in a single transformation service delivery platform, etc. We worked with players from both academia and industry for the collaborative innovation on SmartSCOR.

By using and adopting SmartSCOR, both our clients and ourselves benefited a lot from the project. SmartSCOR has been adopted as the consulting tool by IBM global SCM consulting team, which has more than 7,500 SCM consultants. Up to now, SmartSCOR has successfully supported more than 100 consultant users from 29 countries for 27 projects and presale engagements. Through these projects, our clients not only benefited from the supply chain


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performance improvement and business insights brought to them, but also experienced the advanced technologies, concepts, and ideas.

We are always trying to nurture a collaborative SCM innovation ecosystem, which ranges from IBM internal to external, from academia to industry. We funded several research projects related to SmartSCOR each year for top universities in China and AP, we built collaborative innovation relationships with our clients, we contributed our ideas to the SCOR model, we presented our SmartSCOR ideas in various conferences and speeches – which were all embodiments of how we act as “the innovator’s innovator”.


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Section 1. General Information and Project Complexity

(1) Provide the name of the submitting organization (corporation, service, etc.).

International Business Machines Corp. New Orchard Road Armonk, New York 10504 914-499-1900

(2) Identify the organizational unit responding (site, function, etc.).

IBM China Research Laboratory Building 19 Zhongguancun Software Park, 8 Dongbeiwang West Road, Haidian District Beijing 100094, P.R. China

(3) Provide a brief mission description of the overall business objectives, product lines, and mission of the organization.

The IBM China Research Laboratory (CRL) was established in September 1995 in Beijing and is one of the eight worldwide IBM Research laboratories. IBM CRL is vital to help IBM realize its value of “Innovation that matters – for the company and for the world”.

IBM CRL is a key asset of IBM as “the innovation partner of choice” to help clients differentiate themselves by providing profound understanding of:

− identify customer’s problem and opportunity − define and articulate the problem and opportunity − process to build/test/verify the solution / idea − measure early results and predict outcome with larger scale − prepare the solution for massive deployment

As one of the most important applied research area, IBM China Research Lab is bringing together advanced A&O (Analytics and Optimization) technologies, industry knowledge and standards to provide end-to-end SCOR-based supply chain transformation method and tool.

(4) Indicate the award category of submission. (Operations, Academic or Technology).

Award for Supply Chain Academic Excellence

(5) Provide a brief description of the supply chain and the processes the submission spans (e.g. Plan, Source, Make, Deliver, Return process descriptions from the SCOR model).

SmartSCOR project is to provide a comprehensive framework and methodology for On-Demand SCM problem-solving based on the cross-industry process standard SCOR model and a variety of simulation\optimization techniques. SmartSCOR is to enable the end-to-end supply chain transformation, so it covers all the five major processes (Plan, Source, Make, Deliver, Return), and not only embed all these processes in the tool, but also complement the process framework with concrete process template accumulated from real practices in industry.


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Supply chain transformation is a very complicated process which includes various aspects ranging from strategic and tactical level (e.g., enterprise culture, organization structure, collaboration relations, etc.) to operational and execution level (e.g., business process, performance measurement, IT system, etc.). From the industrial point of view, supply chain transformation initiatives can be divided into two categories. One is to improve a supply chain from managerial point of view, which may involve a lot of consulting activities related to, e.g., supply chain strategy review, maturity assessment, network optimization and business process reengineering. This type of transformation consists in helping clients to better design and plan their supply chain strategy and operations, by aligning to best practices and operation excellence. The other is more IT oriented, which focuses on either the implementation of new IT systems or upgrading existing IT systems, e.g., ERP (Enterprise Resource Planning) system, CRM (Customer Relationship Management) system, etc. IT-oriented transformation intends to add more supply chain visibility and improve operation efficiency via advanced IT systems. These two types of transformation are interrelated with each other and require a comprehensive platform to support the decision-making. SmartSCOR project focuses on the non-IT part of supply chain transformation, while it can provide easy way to integrate and implement with IT world.

Figure 1 depicts what SmartSCOR covers from the supply chain decision levels. Supply chain strategy design/redesign transforms a supply chain in a fundamental manner by means of manufacturing and distribution network reconfiguration, value chain integration, etc. Supply chain process improvement helps align the underlying business processes to strategy settings and get them streamlined. The two levels interact with each other and result in a profound while smooth transformation.

Figure 1: SmartSCOR Scopes

From the supply chain process point of view, SmartSCOR focuses on the research of methodology and tool to design and analyze processes, i.e., align industry standards and best


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practices for process design, leverage advance A&O technologies such as process simulation to diagnose supply chain process to find bottlenecks, duplicates, and find opportunities to improve.

(6) Provide the names of the supply chain partner organizations (external) involved in the project. Indicate the number of people involved from each partner organization and the functional category of each.

During the research and development (R&D) of SmartSCOR, we collaborated closely with both Tsinghua University from academia and International System Technology Company (ISTC) from industry.

Tsinghua University is one of the most famous universities in China. We collaborated with Center for Contemporary Integrated Manufacturing System (CIMS) on some fundamental A&O technologies and algorithms, such as SCOR-based supply chain simulation, System Dynamics (SD) for supply chain performance analysis, etc. We funded Tsinghua University through IBM Shared University Research (SUR) program, and Professor Yueting Chai, vice director of the CIMS Center, with his team of 5 researchers, 4 Ph.d students, and 8 master students worked with us since the beginning of the SmartSCOR project.

International System Technology Company (ISTC) is an IBM joint venture, which locates at Shenzhen in China and acts as a strategic fulfillment and manufacturing site for X and P series servers for IBM AP and global. As our industry partner, we collaborated with ISTC on the methodology design and verification, e.g., the alignment of SCOR with Lean Six Sigma. We also worked together to use SmartSCOR in its Xccelerator deployment program, which was to merge the processes of two different product line (X and P) together. Ms. Cindy Zhang, CIO of ISTC who leads about 60 BT/IT staffs, is our main sponsor in ISTC.

(7) Provide the names of the functional organizations (internal) involved in the project. Indicate the number of people involved from each functional organization and the functional category of each.

Within IBM, IBM Global Business Services (GBS) and IBM Integrated Supply Chain (ISC) are our main partners and sponsors for the SmartSCOR project.

IBM Global Business Services (GBS) is the world's largest consulting services organization, with over 60,000 experienced professionals working in 160 countries. Combining world-class industry and business process insight with leading technology expertise, IBM GBS provides clients with broad set of solutions spanning strategic and change, customer relationship management, supply chain management, financial management, human capital, IT, and business-process outsourcing. We had very close collaboration with IBM GBS in SmartSCOR project, since SmartSCOR could greatly help the SCM consulting business for GBS, and the experiences and insights gained from industry practices could also greatly enhance the SmartSCOR method and tool. IBM GBS Global SCM team, which includes more than 7,500 SCM consultants globally, is our main partner. Yoo Yeonho (GBS AP SCM Leader) and Seongmin Ryu (GBS Greater China SCM Leader) are the sponsors. Up to now, there are more than 100 consultants from GBS involved in the SmartSCOR project.


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IBM Integrated Supply Chain (ISC) organization manages the daily operations of IBM's supply chain, and is accountable for about $39 billion of cost and expense. Supply chain transformation at IBM ISC began in 1993 and has played a key role in the company's overall shift to an On Demand enterprise. ISC is both the sponsor and testbed of SmartSCOR. We worked closely with the Retail Store Solution (RSS) division to use SCOR-based simulation to help them identify opportunities to improve the end-to-end supply chain. We also worked with ISC Singapore Manufacturing to test SCOR-based process modeling and analysis technologies in SmartSCOR at a storage product line.

(8) Provide a point of contact for each supply chain partner (direct contact information may be requested).

Table 1: Organizations and Contact Information

Organization Contact Information

IBM China Research Lab (CRL) Name: Jin Dong

Title: Manager, SCM & Logistics Research

Address: Building 19 Zhongguancun Software Park, 8 Dongbeiwang

WestRoad, Haidian District, Bejing 100094, P.R. China

Tel: 86-10-5874-8018

Email: [email protected]

IBM Global Business Services

(GBS)

Name: Sean Ryu

Title: GBS Supply Chain Management Leader, Great China Group

Address: 19/F, Central Plaza, Huaihai Zhonglu, Shanghai,

P.R. China.

Tel: 86-21-63262288 ext. 6650


Tsinghua University Name: Yueting Chai

Title: Professor, Vice Director of the CIMS Center

Address: CIMS Center, Tsinghua University, Beijing 100084,

P.R. China

Tel: 86-10-6278-9634/5/6 ext. 1071


International System

Technology Company (ISTC)

Name: Cindy Zhang

Title: CIO of ISTC

Address: 1/F, GreatWall Building 2#, Science & Industry Park,

Nanshan District, Shenzhen 518057, P.R. China

Tel: 86-755-8636-2888 ext. 2169



mailto:[email protected]




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Section 2. Implementation

(1) Describe the reason that the supply chain initiative was undertaken and how it was selected.

Project Background

To compete successfully in the “flat world”, companies across industries are struggling at work trying to bring their increasingly complex supply chains to the next level of performance in order to meet the growing expectations of customers. Across their supply chains, companies are looking for ways to improve margins, hone inventory levels, enhance collaboration with partners, improve quality and manage customer demand more effectively. With increasingly complex supply chains, however, companies often do not know where to begin.

Supply chain transformation is an emerging service area in the market which is offered to help companies in maximizing the performance of their supply chain operations while reducing costs. A supply chain transformation initiative consists in changing the ways how an enterprise form and operate its supply chain, concerning the decisions from supply chain network rationalization to business process re-engineering. It is a very complex initiative which may involve various departments and has major impact on a supply chain’s performance. However, in practice most supply chain transformation efforts focused on either the implementation of new IT systems or upgrading existing IT systems. These projects generally need considerable investment and take much time to complete. Little attention has been paid in the past to the optimization of existing supply chain operations from managerial point of view. However, such optimization efforts may help firms reduce costs and improve efficiency tremendously with a limited investment. For example, a periodic review and improvement of the inventory control policies for a manufacturing firm may help reduce its inventory carrying cost and improve its customer service level considerably with almost no investment on IT systems.

Though the concept of supply chain transformation is relatively new, people from both industry and academia are always trying to provide methods and technologies to transform supply chain from different perspectives. The reason of why a lot of supply chain transformation efforts can not meet expectations is that they lack a systematic view of supply chain transformation. Supply chain is a typical complex, adaptive, and dynamic system with nonlinearities, delays, and networked feedback loops, thus not a single technology or method can effectively work. Supply chain transformation needs a comprehensive methodology that can cover activities ranging from strategic, tactical, operational, and execution levels, with the support of related models, analytical methods, technologies and tools.

Identified as a strategic area, supply chain transformation plays a critical role in IBM’s business today. IBM itself runs a huge global supply chain, although IBM sells most hardware business in recent years. IBM is continuously transforming its global supply chain with relevant investment, and accordingly, the return is remarkable. In addition to the IT related solutions, IBM is also continuously enhancing its SCM offering to provide more integrated supply chain transformation service ranging from consulting service to supply chain system implementation. To fulfill clients’ demanding requests as well as respond to the fierce competition, SCM related


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staff are all looking for methodologies and supporting tools which enable efficient and effective supply chain transformation.

Project Purpose

In 2003 and 2004, our research team participated in several SCM consulting projects, and we found from these projects that there were 3 main gaps in supply chain transformation practice, which were:

− Gap between theory and practice

This is a general problem – the research in academia is far beyond the application in practice. The fruitful research results and quantitative analysis technologies are not well used in real SCM practices.

− Gap between business and IT

The fact is that nowadays business men and IT engineers are talking with different languages. During a supply chain transformation project, a traditional approach is to design strategy and business process by business consultants, and then implement IT systems by IT engineers. But in practice there are a lot of disconnects, e.g., IT guys do not like the processes designed by business consultants, so they usually design another version processes in their own language, which leads to very inefficient project delivery and lack of consistency.

− Gap between methodology and tool

There are a lot of software tools available for SCM related practices from technical point of view. However, in a supply chain transformation project, the key point is not the software tool itself, but how to use the tool to support each phase of the whole supply chain transformation process. So a comprehensive methodology is a big plus to a software tool.

In order to close the above gaps, we started the SmartSCOR project, which aimed at providing a comprehensive methodology and tool for supply chain transformation from a process-centric point of view. SmartSCOR represented a way how we address this problem.

From the academic point of view, although the SCOR model had been popular for years, however, most of the research on the SCOR model were either to improve SCOR itself, or related to the methodology for applying SCOR. SmartSCOR attempted to use advanced A&O technologies to help SCOR-based supply chain modeling and diagnosis, which could be a big plus to SCOR practices and SCOR evolution.

(2) Indicate the duration of the project.

The original idea of SmartSCOR came from our practices in some consulting projects in early 2004, and through about 4 years’ research, development, and continuous improvement, it is ready for mass deployment now. Figure 2 shows the roadmap and milestones of SmartSCOR research and development.


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Figure 2: SmartSCOR R&D Roadmap

(3) Describe, in detail, the process used to complete the initiative.

In SmartSCOR project, we used IBM Unified Method Framework (UMF) to plan and manage the whole R&D process. IBM UMF provides five main phases for a research project (see Figure 3):

Figure 3: SmartSCOR R&D Process

1. Prepare

Since SmartSCOR targeted end-to-end supply chain transformation, a variety of models and techniques were employed in SmartSCOR, thus we conducted a comprehensive background survey and research from the below 4 aspects:

Supply chain transformation method and tool

The application of SCOR model

We focused on the methodologies and tools for SCOR application.

Supply chain design and planning

We focused on simulation and optimization technologies for supply chain design and planning.

Business process management

We focused on methods and tools for business process design and analysis.

Through the background research, we identified that SmartSCOR would focus on three basic research topics, respectively supply chain network optimization, supply chain simulation, and SCOR-based supply chain process design. And upon the three research topics, we also needed a unified method and platform to integrate these various models and technologies together.


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2. Focus

During this phase, we focused on the research of the three topics we identified.

Supply Chain Network Optimization

The supply chain network optimization module was developed to facilitate decision-making at strategic level, concerning facility location, production and distribution strategy design, transportation volume allocation and service territory assignment.

A variety of methods were employed to enable the optimization, including mixed integer programming, linear programming, heuristics and meta-heuristics. The key enabling component was a mixed integer programming model addressing multi-commodity facility location and network flow optimization problem. The objective was to minimize the total supply chain cost, with respect to all necessary constraints. More specifically, the total cost function was composed of procurement cost, transportation cost, assembly cost, operation cost, facility fixed cost, facility investment cost, inventory carrying cost and tax. A large number of constraints had been taken into account in the model, including supply capacity, assembly capacity, transportation capacity, single sourcing rule, etc. The programming model could be solved using heuristics, open source solver and commercial optimization solver.

Supply Chain Simulation

To support an end-to-end supply chain transformation, supply chain decisions may cross levels from strategic, tactical to operational level. It requires the modeling with various levels of details. Simulation has its unique advantages in handling the modeling of different level of details. Considering that, we positioned simulation as the pivot analytical means in SmartSCOR, which stuck different modules together.

Supply chain simulation could provide great insights to a supply chain’s real operations by capturing supply chain dynamics with finest level of granularity.

SCOR-based Supply Chain Process Design

Despite the widespread recognition of the importance of business processes in supply chain transformation, there are still many issues which require further studies. Firstly, the principal gap in the current business process modeling is not the modeling tool itself, but how to abstract business processes from real world supply chain, i.e., the difficulty mainly lies in the process of understanding specific processes and expressing them in a logical way, while not the concrete expression modes. Domain knowledge is crucial to an effective business process modeling, so it is important to utilize industry best practices and accumulate knowledge in the modeling process. Secondly, in order to find the gaps existing in the as-is business processes, more effective analysis methods are required for the diagnosis, especially those quantitative methods. Moreover, most of the COTS tools are modeling-oriented, while lacking a global view of the whole transformation process.

In order to overcome the above issues, SmartSCOR provided an end-to-end support for supply chain process transformation by leveraging the advantage of SCOR model and an IBM standard BPM software product – IBM WebSphere Business Modeler (WBM).


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(a) Business Process Modeling

Besides the powerful functions on business process mapping, WBM can also model detailed organization, resource, and data information. It also provides some advanced features such as multi-user support, detailed reporting, and workflow integration. In order to enhance WBM’s modeling ability in supply chain management, we introduced SCOR model and seamlessly integrated it with WBM.

As a process reference model, SCOR provides a hierarchical framework for supply chain process expression. Level 1 is the top level and deals with process types. It defines the scope and content for SCOR, i.e., the five basic processes. Level 2 is the configuration level and deals with process categories, and it defines 26 categories within the Level 1 processes. Level 3 allows businesses to define in detail the processes identified, as well as performance metrics and best practices for each activity. Level 4 describes the detailed tasks within each of Level 3 activities. These tasks and their interactions are unique to each business, so implementation of supply chain processes takes place at this level. SCOR provides the framework for supply chain process modeling and defines some general aspects of supply chain processes in high level, while leaving the concrete features of processes and workflows to WBM. With this hierarchical framework, a business can quickly and unambiguously describe its supply chain.

More important, SmartSCOR provided various industry templates, including typical business processes, input and output logics, organizations, roles, resource and data definition, reference cases, performance measures, and benchmarks. It also provided a mechanism for knowledge accumulation, so that enabled a continuous self-improvement. These industry best practices enable a fast modeling from scratch.

(b) Business Process Diagnosis

WBM provides a variety of analysis functions that allow users to diagnose or validate processes. Besides process simulation, there are two types of analysis one can perform:

− Static analysis: analysis of the models in their static form.

− Dynamic analysis: analysis of the data generated by a simulation of a modeled process.

Static analysis is comprised of three subsets of analyses: resource analysis, organization analysis, and general analysis, while dynamic analysis has four categories: aggregated analysis, process instance analysis, weighted average case analysis, and comparison analysis.

Besides the above analysis methods provided by WBM, we introduced a performance driven change mechanism for business process transformation. SCOR defines a set of metrics that one can use to evaluate processes at each level of the process hierarchy, and WBM also provides the performance metrics modeling function, so it will be much easier to build up the performance model while mapping the processes. Based on the performance model and the measurement results, a lot of analyses can be conducted to aid decision making and find appropriate directions to improve.

Through above analyses, we can know the gaps and which metrics should be improved, and the objectives as well. SmartSCOR provided best practices for each Level 2 and Level 3


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processes, which aimed to identify management practices and software solutions used successfully by similar companies that were considered top performers. The identification of the best business practices needed to support the “to-be” state of the processes became the roadmap for implementation.

3. Design

In this phase, both the transformation methodology and software architecture of transformation platform were designed.

The transformation methodology design

Figure 4: Methodology for Process-Centric Supply Chain Transformation

Figure 4 illustrates the methodology of how we conduct a process-centric supply chain transformation and what we will/can do at each stage. From the supply chain transformation lifecycle’s point of view, our supply chain transformation methodology includes five main steps: capture as-is supply chain model, diagnose as-is supply chain model, design to-be supply chain model, validate to-be supply chain model, and implement transformation. While from the transformation activity’s point of view, the activities during supply chain transformation may occur at strategic and tactical level, operational level, and execution level.

(a) Capture as-is supply chain model

The as-is supply chain model includes three levels: supply chain network, business process, and performance metrics.

(b) Diagnose as-is supply chain model

Diagnose to find the bottlenecks and problems in the as-is supply chain model, by both qualitative and quantitative methods (benchmarking, process and policy simulation, performance analysis).

(c) Design to-be supply chain model

As the required areas for improvement have been identified, the to-be supply chain can be drawn based on the results from analysis and best practices.


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(d) Validate to-be supply chain model

Simulation based what-if scenario evaluation is used to evaluate the performance of the to-be supply chain. And ROI (Return On Investment) analysis is used to evaluate the potential result of the transformation.

(e) Implement transformation

As the to-be supply chain has been confirmed, roadmap for realizing the value proposition could be designed. And in order to implement IT system to support the transformation, it also needs to translate the to-be models into IT implementation scenarios.

The whole transformation process is not a simple linear progression, while it requires developing and reviewing at a number of different levels as the situation changes. Note that in many cases it may not need to go through all five phases in a single supply chain transformation project.

The transformation platform

SmartSCOR is an integrated platform to support an end-to-end supply chain transformation, which deploys a variety of models and techniques including SCOR, simulation and optimization. To support an end-to-end transformation, SmartSCOR comprised a number of modules for the analysis. These modules could be used separately as specific function unit or used as a comprehensive package. Figure 5 depicts the architecture of SmartSCOR.

Figure 5: SmartSCOR Architecture

More specifically, a supply chain network optimization module was developed to address supply chain design issues, such as where to locate new plants and distribution centers, how to define the distribution strategy, etc. Once the network structure was determined, major


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supply chain processes could be modeled according to SCOR model using the process modeling module. Execution level processes could be further modeled in WBM. These three modules addressed decisions at different levels and interacted with each other. Supply chain simulation module was a key component in SmartSCOR. It supported the analysis of supply chain from strategic level to operational level. Accordingly the simulator had connections with all other three modules.

4. Develop

Technically, SmartSCOR was implemented as an add-on to IBM WBM. All SmartSCOR modules were developed on the Eclipse platform which enabled a seamless integration with other applications. Eclipse is an open source platform to build Integrated Development Environment (IDE) and applications. The easy extensibility of SmartSCOR was ensured based on such a universal development framework. Though SmartSCOR focused on non-IT part, it was easy to integrate with IBM WebSphere Business Integration platform, other packaged applications, and other SCM related assets. SmartSCOR was a milestone on the way to a service-oriented architecture (SOA).

To facilitate an efficient network modeling, an intuitive and easy-to-use graphical user interface (GUI) was provided. Supply chain data could be entered manually using the tool interface, or automatically imported from MS-Excel files or MS-Access database. Moreover, a Geographic Information System (GIS) was integrated for graphical representation, which enabled a flexible and precise representation of the actual supply chain networks.

Figure 6 are some screenshots of SmartSCOR.

(a) SCOR-based Supply Chain Process Modeling


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(b) Supply Chain Network Optimization (c) Performance Analysis

(d) SCOR-based Supply Chain Simulation

Figure 6: SmartSCOR Screenshots

5. Deploy

After we released the first version of SmartSCOR in 2006, we did a pilot case with a Hong Kong based home improvement manufacturer to validate the method and tool, and then we practised it in a series of consulting projects with IBM GBS team for method and tool hardening and improvement.

The models and methods developed by researchers were tested and verified in practice. The industry insights and experiences, gained from real supply chain consulting practice, were then fed back to researchers. Such a closed-loop of research and practice would help further enhance SmartSCOR.

(4) Identify significant challenges encountered, the process for resolution, and the solutions. Identify best practices employed / developed.

The SmartSCOR project tried to build “quantitative” method and tool to aid SCOR-based supply chain transformation by introducing advanced A&O technologies, and our ultimate objective was to close the gap between theory and practice, business and IT, and methodology and tool. The main challenges we encountered in the SmartSCOR R&D process were,


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Quantitative vs. Qualitative

There are two facts nowadays, one fact is that in practice SCOR has been used for years and proven to be a very good methodology and tool for supply chain diagnosis, however, most of the current applications of SCOR model are based on SCOR reference processes, performance metrics, benchmarking and best practices, which are qualitative, though people do use SCORCard for performance comparison. The other fact is that in academia, there are thousands of algorithms and models around supply chain analytics, but these valuable research findings are not well used in practice.

SmartSCOR project tried to apply more quantitative technologies in SCOR-based supply chain transformation, so the challenge was how to effectively introduce quantitative methods and algorithms to real supply chain practices. In order to overcome this challenge, we built both organizational and technical supports.

(a) Collaboration across industry and academia

In order to do the applied research, we collaborated with players from both academia and industry. We worked with top universities in China and Asia-Pacific on some fundamental A&O technologies and algorithms, e.g., we collaborated with Tsinghua University in China for SCOR-based supply chain simulation research and System Dynamics technology for supply chain performance analysis. Through the collaborations with academia, we could get state-of-the-art supply chain research results and then applied them in SmartSCOR.

We also had very tight collaboration with IBM Global Business Services, and thus built up a channel to directly touch the industry. On the one hand, we could learn the real requirements of customers from supply chain consultants in consulting projects, and on the other hand, we could also get our SmartSCOR solution tested in real projects, and got feedbacks from consultants and customers, which were crucial to the continuous improvement of SmartSCOR.

Besides the collaboration with consultants, we also worked with our customers directly to get the first-hand feelings and feedbacks. For example, we used SmartSCOR in International System Technology Company to help them design their end-to-end supply chain process, through which we got our methodology verified and hardened.

The ecosystem with industry and academia partnerships we had built provided a solid foundation of SmartSCOR research and development.

(b) Tool together with methodologies

Our basic idea of helping apply the quantitative analytics in practices is to build a software tool and fruitful templates for practitioners, because for the potential users, either consultants or industry practitioners, most of them do not have that much mathematics background to build models and conduct analyses from scratch by themselves. SmartSCOR tried to provide easy-to-use environment and fruitful templates to help people without advanced academic background do advanced analyses. Users can easily get started with the intuitive graphic interface, and various templates.

We also believe that though a powerful tool itself is important, however, a comprehensive methodology that can tell users where and how to use the tool is even more important. So besides the software tool, we also developed a supply chain transformation methodology


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based on SCOR project roadmap and IBM Method Blue, to guide users in the journey of applying advanced analytics in practices.

Various methods and technologies vs. Single platform

In SmartSCOR, we included various methods, models, algorithms and technologies to support SCOR-based supply chain transformation. The challenge was how to integrate different models, methods and technologies in a single transformation service delivery platform. In order to achieve the integration, we made great efforts from three aspects, i.e., uniform methodology, standard reference model, and open platform.

(a) Uniform methodology

A uniform methodology can help to link various separated stuffs together. Based on the SCOR Project Roadmap and IBM Method Blue, we developed a methodology to support SmartSCOR implementation. Figure 7 depicts how SmartSCOR methodology aligns with other methodologies.

Figure 7: SmartSCOR Methodology align with SCOR Project Roadmap and IBM Method Blue

(b) Standard reference model

In SmartSCOR we had various models and algorithms for supply chain analysis, which could cover broad areas including competitive strategy (strategic), firm focused tactics (tactical), and operational efficiencies (operational). From academic point of view, SmartSCOR made use of theories like Operations Research (OR), Discrete Event Simulation (DES), Game Theory, System Dynamics, etc. And from the application point of view, it might related to industry standards, consulting techniques, and software technologies. In order to organize so many things in a single environment, we have to unify the language we use to guarantee the consistency.

Thus we chose SCOR model as the standard framework, i.e., used SCOR process classifications as the standard for supply chain modeling, and used SCOR terms and glossary as the standard language. The use of “standard” language reduced ambiguity and confusion in the development and application of SmartSCOR.


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(c) Open platform

We have included a lot of functions in a single platform, and the functions are always evolving, so from the software technology point of view, it requires the SmartSCOR platform to be open and easy to extend.

We used Eclipse as the basic platform, and built all SmartSCOR function modules as Eclipse plug-ins. Eclipse is an open development platform comprised of extensible frameworks, tools and runtimes for building, deploying and managing software across the lifecycle. This open environment makes SmartSCOR very easy to extend and integrate with other systems (packaged applications, other SCM related assets, etc.) which are also built under Eclipse platform, e.g., currently we seamlessly integrate SmartSCOR to an IBM BPM product – WebSphere Business Modeler (WBM) as an add-on, so that we can fully leverage the BPM functions provided by WBM, while do not need to modify any codes of WBM.

(5) Indicate the metrics used to measure (a) progress and (b) success.

Given that developing SmartSCOR was an academic project, supply chain metrics were not used to track the progress. However, the project was quantified and measured in several ways.

Metrics that were used to measure progress

A detailed project plan with key milestones was developed to track the project and control costs. The project management function included monitoring progress against the project schedule on each subproject and task. Some tasks were not quantifiable at the start of the project, and were allowed some flexibility once a minimum threshold had been passed.

In addition to project management tools, the below key performance metric was used to measure progress during the project,

- Perfect milestone delivery (on time in full)

Metrics that were used to measure success

The success of the SmartSCOR project had many intangible aspects, but included some quantitative indicators as well, these included,

(a) Internal metrics

- Consulting project supported (by number and by contract value)

- Internal user number

(b) External metrics

- Customer number

- Customer cost saving

- Academic impact: publications (level and number)


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(6) Document and quantify cost and performance benefits.

1. Internal Benefits

There are over 60,000 consulting staffs in IBM Global Business Services (GBS) division working in 160 countries globally, among which more than 7,500 experiences professionals are working for supply chain management related business. SmartSCOR has been adopted by GBS Global SCM Team as a compulsory method and tool for supply chain consulting project, and there are already over 200 consultants trained in U.S., EMEA, AP, and ANZ by a series of training events. Up to now, SmartSCOR has successfully supported over 100 consultant users from 29 countries for 27 real projects.

Figure 8 shows the statistics of the projects that SmartSCOR has supported.

Project Statistics (By Sector)

50%

32%

7%

4% 7%

IndustrialCommunicationsPublicGMBDistribution

Project Statistics (By Service)

52%

21%

17%

10%

SCMISCAMSS&C

Project Statistics (By Country)

4%18%

44%

9%

4%

4%

4%13% UK

AustraliaUSGermanyThe NetherlandsSwedenRussiaChina

Figure 8: SmartSCOR Project Statistics


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Beside the GBS division, SmartSCOR also helped Integrated Supply Chain (ISC) division achieve tremendous cost saving by optimizing the Retail Store Solution (RSS) supply chain.

2. External Benefits

Partnered with GBS division, we helped our clients realize significant cost and performance benefits by using SmartSCOR methodology and tool to diagnose and improve their supply chain. Some selected cases are shown in Table 2.

Table 2: Client Benefits from SmartSCOR*

Company Project Benefits

A Hong Kong based

home-improvement

manufacturer

Design procurement mode and

processes, evaluate inventory

control policy

Reduced 5% defective product rate

Reduced 7 days in source cycle time

Saved $0.5 million annually for each

product line

A leading bus

manufacturer in Asia

Design supply chain strategy,

evaluate manufacturing modes

(MTS, MTO, ETO)

Improved supply chain efficiency

A main PC manufacturer

around the world

Design global logistics process

for IT system implementation

Reduced consulting cost

A main mobile service

operator in China

Logistics and procurement

strategy and process design

Greatly reduced logistics cost

* Based on the Non-Disclosure Agreement (NDA) with clients, we do not include the client names and some numbers

in this table.

Since we have contributed part of our SmartSCOR ideas to the SCOR model (SCOR metrics), and published and presented the work in various conferences and speeches, so people can also benefit from the SCOR model and our publications.

(7) Outline how the success of this effort supports the organizational objectives described in Section 1, Item 3.

IBM has always delivered innovation to clients, but IBM’s business today goes further - to help clients innovate, to partner with them in getting special. IBM is trying to be an innovator's innovator. As one of IBM’s research laboratories, the objective of IBM CRL is to help our clients and other IBM business units win by providing profound understanding across business and IT, we are the innovator's innovator’s innovator.

The success of SmartSCOR project is an appropriate embodiment of how we act as the innovator's innovator’s innovator, which can be exhibited from the below aspects,

Contribute to academia

From the academic point of view, SmartSCOR brought a lot of quantitative methods and technologies to the SCOR-based supply chain transformation, which made the analyses and decision-making during the transformation more scientific and believable. We developed an open platform to support all these advanced analytics, together with a comprehensive


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methodology support, which was a good trial of closing the gap between industry and academia.

Help clients win

By providing the innovative SmartSCOR platform, our clients have greatly benefited from the insights and new concepts brought to them.

Help IBM win

As a powerful weapon for IBM consultants, SmartSCOR helped IBM GBS division provide more advanced and differentiated SCM consulting services to customers, which helped GBS get more consulting business and achieve delivery excellence.

SmartSCOR also helped improve IBM’s own global supply chain, and built up expertise for the practitioners in Integrated Supply Chain (ISC) division.

Contribute to the community

During the SmartSCOR project, we collaborated with universities and contributed part of the SmartSCOR ideas to the SCOR model.

In summary, SmartSCOR is a good showcase of how we always trying our best to nurture an open and collaborative innovation environment for the company, for our clients, and for the world.


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Section 3. Knowledge Transfer

IBM CRL is trying to nurture a collaborative SCM innovation ecosystem, which ranges from IBM internal to external, from academia to industry. Figure 9 shows the roadmap of how we transfer our knowledge.

Figure 9: Knowledge Transfer Roadmap

In summary, IBM CRL plays multiple roles in the SCM innovation chain:

A practitioner – Help IBM transform its own global supply chain.

“The innovation partner of choice” - Help clients differentiate themselves by providing profound understanding of supply chain transformation.

An active player in supply chain communities - IBM is an active member of SCC/SCC-GC, and is also a contributor and practitioner of the SCOR model.

The incubator - IBM collaborates with top universities in China and AP for SCM research.

(1) Describe the efforts to share lessons from this effort with other internal organizations.

Act as the innovation engine, one of our mission is to help other IBM internal business units win. SmartSCOR has been widely used by IBM Global Business Services and IBM Integrated Supply Chain.

Help IBM GBS provide more advanced SCM consulting services

SmartSCOR has been adopted as a compulsory consulting tool by GBS Global SCM team, which has more than 7,500 SCM consultants. Up to now, SmartSCOR has successfully supported more than 100 consultant users from 29 countries for 27 projects and presale


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engagements. These projects bring huge contract value and business opportunities.

We are trying to transfer our knowledge on SmartSCOR to consultant users by the below ways,

− On-job training, i.e., some researchers from CRL join the project delivery teams for coaching and shadowing.

− Support website. We launch an internal website to support users, and there are more than 100 downloads up to now.

− Training courses and workshops. The SmartSCOR training courses or presentations have been given in GBS training events in U.S., Korea and China.

Help IBM ISC transform its global supply chain

SmartSCOR has been successfully used in two divisions of IBM ISC,

− Retail Store Solution (RSS) Division. SmartSCOR was used to diagnose its end-to-end supply chain.

− International System Technology Company (ISTC), an IBM joint venture. SmartSCOR was used to design its end-to-end supply chain processes (including Plan, Source, Make, Deliver).

In the above two projects, we not only provided the support of SmartSCOR tool, but also held a series of seminars and workshops to coach practitioners on advanced technologies and ideas, like SCOR, Simulation, Lean Six Sigma, etc.

(2) Indicate how this initiative can be transferred to other organizations, and specify the likely candidates for transference.

Just like showed in the knowledge transfer roadmap, the knowledge and ideas on SmartSCOR has transferred to external organizations by 4 channels: (a) consulting projects and collaborations with clients, (b) collaborate with academia\universities, (c) contribute to SCM communities, and (d) publications and presentations.

Collaborative innovation with clients

SmartSCOR has been used in 27 customer projects, and besides the insights derived from this tool, the more important point is that we are trying to help the clients grasp advanced technologies, concepts, and ideas.

Collaborate with academia\universities

We fund several research projects related to SmartSCOR each year for top universities in China and AP through IBM Shared University Research (SUR) program. The topics of these projects are the common interests of both sides, such as supply chain simulation, supply chain network optimization, etc. In these projects, we can provide industry knowledge and necessary data, while universities can fully utilize their advantages in fundamental research, which demonstrates the collaboration between industry and academia.

We also provide some visiting scholar and visiting student positions each year to work together on related topics.


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Moreover, we hold seminars and short courses frequently in top universities in China, to share some industry knowledge and our research topics to students, such as the SCOR model.

Contribute to SCM communities

Part of our research results and experiences have been transferred to the SCOR model. In SCOR version 8.0, we designed a template based on our SmartSCOR experiences to reflect the causal relations and hierarchy of SCOR performance metrics. And currently, we are co-leading the new Metrics team for SCOR 9.0 development.

We are also an active member in Supply Chain Council – Greater China Chapter. We promote the SCOR model and related ideas in greater china region with our SmartSCOR efforts.

External publications and presentations

The idea and results of SmartSCOR have been presented in various conferences and speeches. The following list represents the most important ones:

Publication list:

A SCOR-Based Framework for Supply Chain Performance Management. IEEE International Conference on Service Operations and Logistics, and Informatics, Shanghai, China, June 2006.

A Comparison of Business Process Models. IEEE International Conference on Service Operations and Logistics, and Informatics, Shanghai, China, June 2006.

Linking Strategic Objectives to Operations: Towards a More Effective Supply Chain Decision Making. 2006 Winter Simulation Conference, Washington, D.C., USA., December 2006.

Applying Simulation in a Supply Chain Transformation Case. 2006 Winter Simulation Conference, Washington, D.C., USA, December 2006.

IBM SmartSCOR-A SCOR-Based Supply Chain Transformation Platform Through Simulation and Optimization Techniques. 2006 Winter Simulation Conference, Washington, D.C., USA, December 2006.

A Novel Approach for Process Mining Based on Event Types. 2007 IEEE International Conference on Services Computing, Salt Lake City, Utah, USA, July 2007.

Impact of Business Service Modes on Distribution Systems: A Reinforcement Learning Approach. 2007 IEEE International Conference on Services Computing, Salt Lake City, Utah, USA, July 2007.

A Method and Tool for Process-Centric Supply Chain Transformation. 2007 IEEE/INFORMS International Conference on Service Operations and Logistics, and Informatics, Philadelphia, USA, August 2007.


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Presentation list:

A Performance Driven Mechanism for Supply Chain Transformation. 2006 INFORMS Annual Meeting, Pittsburgh, USA, November 2006.

Integrated Supply Chain Network Optimization and Analysis. 2006 INFORMS Annual Meeting, Pittsburgh, USA, November 2006.

A Business Process Driven Supply Chain Simulation Framework. 2006 INFORMS Annual Meeting, Pittsburgh, USA, November 2006.

Adding Value to Performance Management by Using System Dynamics and Statistics Techniques. The 14th Annual Spring Research Conference (SRC) on Statistics in Industry and Technology, Iowa, USA, May 2007.

Scheduling assembly flow-shops with resource leveling: a GA based heuristic approach. The Fourteenth Applied Probability Society of INFORMS Conference, Eindhoven, The Netherlands, July 2007.

Enabling a Process-Centric Supply Chain Transformation through Simulation and Analytics. 2007 INFORMS Annual Meeting, Seattle, USA, November 2007.


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SmartSCOR: Enabling a Quantitative Supply Chain Transformation

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