Supply Chain Operations Reference (SCOR) Model Convergence with Lean and Six Sigma
Using Supply Chain Architecture to Manage Enterprise TransformationTransformation
SCORSCOR
LEANLEAN
ConvergeConverge
SIXSIX
SIGMASIGMA
Matthew J. Milas
© 2006 Matthew Milas
Agenda
What is Convergence
How is SCOR Used for Convergence
C i f M th d l iComparison of Methodologies
Benefits of Convergenceg
Why Convergence
2
© 2006 Matthew Milas
Integrated Improvement… SCOR, Six Sigma and Lean
SCOR, Six Sigma and Lean aim to improve the business by optimizing system performance, reducing variation, and eliminating wasteful activities.
LeanSix Sigma
Y= f (X1= f (X= f (X1 , ... , XN, ... , X, ... , XN )
SCOR
μ
σ
• Speed in the value chain• Waste elimination• Value system redesign
• Variation reduction• Problem solving methodology• Stability and accuracy
• Top-Down Analysis• End-to-End View• Optimizing supply-chain
as a whole
3
© 2006 Matthew Milas
Convergence is a Coordinated Approach
Business StrategyLean 6σ
SCOR
Combined
SCOR
Strategy
Supply Chain Benchmarking
Supply Chain
SYMB
Lean Six
Supply Chain Assessment
Value Stream Mapping
Value Stream Mapping
Value Stream Mapping
IOTIC
SYNERGISTIC
Lean Six Sigma Six Sigma Projects
and Kaizen
Bottom-line Results
Six Sigma Projects and Kaizen
Bottom-line Results
Six Sigma Projects and Kaizen
Bottom-line Results
C
4
ResultsResultsResults
© 2006 Matthew Milas
The SCOR Framework
SCOR defines supply chain as the integrated processes of Plan, Source, Make, Deliver and Return, spanning your suppliers’
li t t ’ t li d ith O ti l supplier to your customers’ customer, aligned with Operational Strategy, Material, Work & Information Flows.
Plan
PlanPlanPlanPlan
Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliverSource
PlanPlanPlanPlan
Supplier Customer Customer’sCustomer
Suppliers’Supplier
Internal or External Internal or External
YOUR COMPANY
Return
5
Supply Chain Operations Reference Model
© 2006 Matthew Milas
What is a Process Reference Model?
Process reference models integrate the well-known concepts of business process reengineering benchmarking and process
Best Practices Process ReferenceBusiness Process
business process reengineering, benchmarking, and process measurement into a cross-functional framework
BenchmarkingBest Practices
AnalysisProcess Reference
Model
Capture the “as-is” state of a process and derive the
Business Process Reengineering
Capture the “as-is” state of a process and derive the desired “to-be” future
Quantify the operational performance of similar companies and establish internal targets
and derive the desired “to-be” future state
Quantify the operational performance of similar companies and establish
the desired to-be future state
internal targets based on “best-in-class” results Characterize the
management practices and software solutions that result in “best-in class”
companies and establish internal targets based on “best-in-class” results
Characterize the management practices and
ft l ti
6
in-class performance software solutions
that result in “best-in-class” performance
© 2006 Matthew Milas
SCOR Structure for Convergence
7
© 2006 Matthew Milas
Example SCOR Geo Map – Aerospace Mod Kits
Manufacturer Sqdn
S1, DR1, DR2
S1, DR1, DR2
Supplier B
S1, S2, M2, D2
D2
D1Supplier C
Supp e
Supplier ASqdn
D2
S1, DR1, DR2 Distribution
Sqdn
S1, D1, DR1, DR2
8
© 2006 Matthew Milas
DeliveryExample Problem Identification
P1P1
P1P1
Delivery PerformanceGoal – 90%
Delivery Performance Actual - 66%
P
11
PP
11
P
P3P3
Actual - 66%Supplier
on time deliveryActual – 95%
Candidate for: P4P4
P2P2
P4P4
P2P2
D2
D2
S2
S2• Level 3 Process Review• Kaizen• Lean Event
D1 S1 S1M1 D1 S1 D1• Six Sigma• Process Improvement
SuppliersS d
9
Distribution centerManufacturerLevel 1 Level 2
Squadron
© 2006 Matthew Milas
S 1.4Exceeding Requirements
Meeting Requirements
Level 3 SCOR VSM Map
Transfer Product
Meeting Requirements
Missing Requirements
Unknown Transportation 0.5 days
M 2.1 M 2.2
Issue
M 2.3 M 2.4 M 2.5 M 2.6Manufacturing
Schedule Productio
n Activities
Issue Sourced /
In-Process Product
Produce and Test Package
Stage Finished Product
Release Finished Product
to DeliverI
10 days 5 days 3 days 1 day
D 2.1 D 2.2 D 2.3Reserve
D 2.4 D 2.5 D 2.6 D 2.7 D 2.9D 2.8Sales
30 days
Process Inquiry
and Quote
Receive, Configure, Enter
and Validate Quote
Reserve Resource
s & Determine Delivery
DateConsolid
ate Orders
Build Loads
Route Shipment
s
Select Carriers & Rate
Shipments
Pick Product
Receive Product
from Source or
MakeI I I II
10
I I I II25 days
10 days
4 days15 days
6 days12 days
15 days5 days
5 days1 day60 days
© 2006 Matthew Milas
Convergence Implementation Approach
Identify
SCOR PrioritizeOpportunitiesPlan Strategy
& BenchmarkOpportunities
Measure Allocate
LeanImprovement
Allocate Resources
Six SigmaImplement Solutions Discover
Select Approach
11
Discover Root Causes
© 2006 Matthew Milas
Comparison of Methodology Strengths
12
© 2006 Matthew Milas
Benefits of Convergence
Standard framework
System’s opportunity identification
S t i ibilitSystem visibility
13
© 2006 Matthew Milas
Benefits of a Standard Framework
Standard process and metrics framework for organizing enterprise processes and improvements– Manage processes across enterprise– Common processes across “different” products,
programs & business unitsprograms, & business units– Measure, track, categorize, and align operational
improvements– Library of categorized best practices– Cataloging system for process improvement ideas
14
© 2006 Matthew Milas
Benefits of Opportunity Identification
High-level system’s process assessment tool
– Identifying, prioritizing, and aligning improvements• Prioritizing based on alignment to specific strategies, system g g p g , y
impact, focus area, or other criteria
– Linking business strategy to improvement effortsLinking business strategy to improvement efforts• Resource planning and allocation
Strategic competitive assessment and benchmarking– Strategic competitive assessment and benchmarking• Internal processes across enterprise• External competitive performance with system metrics
15
© 2006 Matthew Milas
Benefits of System Visibility
A system’s view of processes & performance– Map the whole system to avoid system sub-
optimization through local optimizationIdentify constraints and critical paths to improve– Identify constraints and critical paths to improve performance
– Manage multiple projects running concurrently across g j g yenterprise
– Identify high-level improvement disconnects and opportunitiesopportunities
– Collaborate with suppliers and customers to improve relations
16
© 2006 Matthew Milas
Why Convergence
Large companies experience disarray implementing ti i tcontinuous improvement
– Lack of “true” leadership and cultural change management– Lack of architecture for managing enterprise transformation
An Imperfect world is the reality, but we must continue to competep
Convergence instills a structured approach that is more systematic, manageable, and holistic y g– Mitigates imperfections and augments continuous improvement
17
Convergence bridges the gap between strategic enterprise planning, continuous improvement, and transformation