scor - reference model and integrated business reference framework
TRANSCRIPT
Supply Chain Operations (SCOR) Reference Model and the Integrated
Business Reference Framework
Scott StephensPresidentBusiness Forerunners, Inc.
Chief Technology OfficerSupply Chain Councilwww.supply-chain.org
Introduction• This presentation describes preliminary concepts in managing the
advancement of the state of the art of business operations by the Supply Chain Council– While SCOR development activities are relatively mature, the Council is
working to develop a consensus philosophy in the management of an integrated business reference framework
– This presentation should be considered a “working” paper
• The Integrated Business Framework (DCOR – SCOR – CCOR)• Common Process Structure• Common Metrics• Common Implementation Methodology• Component Model Linkage• Design Advantages• Common Tools
SCOR and Business Competitiveness
• Practitioners (business leaders) created the SCOR Model and the Supply Chain Council to improve competitiveness and cooperation between trading partners
• Competitiveness improved in three ways:– Reducing costs– Increasing revenue– Improving the efficiency of asset management
• Partner cooperation improved by establishing a cross-enterprise / cross-industry common language, set of common measurements, and a set of best practices
BusinessPlan
BusinessPlan
CustomerPlan
CustomerPlan
Supply ChainPlan
Supply ChainPlan
DesignPlan
DesignPlan
SourceSource MakeMake DeliverDeliver RelateRelate SellSell PricePriceResearchResearch DesignDesign IntegrateIntegrate
AssistAssistReturnReturnAmendAmend
Integrated Business Reference Framework
Version 8.0Spring 2006Version 8.0Spring 2006
Version 1.0Spring 2006Version 1.0Spring 2006
Version 1.0Spring 2007Version 1.0Spring 2007
The Components of a Business Framework
• DCOR spans the activities between customer requirements and the design or specification of a product to meet customer demand.
• SCOR spans the activities between recognition of demand through product delivery
• CCOR spans the activities associated with establishing and maintaining a customer relationship, identifying customer requirements and product support.
CustomerPlan
CustomerPlan
RelateRelate SellSell PricePrice
AssistAssist
Supply ChainPlan
Supply ChainPlan
SourceSource MakeMake DeliverDeliver
ReturnReturn
DesignPlan
DesignPlan
ResearchResearch DesignDesign IntegrateIntegrate
AmendAmend
Integrated Business Reference Framework and the Product Life Cycle
SC
OR
CC
OR
CC
OR
Common Structure for Component Models (DCOR/SCOR/CCOR)
DCOR/SCOR and CCOR Built with Common Objectives and a Common Structure
• Objective - The performance of key processes must link directly to financial objectives.
• Objective – The primary purpose of the framework and the component models is to achieve business advantage through implementation.
• Structure - Measurements must be hierarchical to support cross-enterprise optimization while supporting the management of specific improvement activities.
• Structure - For measurement purposes, there must be clear boundaries between activities and organizations.
• Structure - Measurement must be tied to the activities they are designed to monitor.• Structure - Processes must be hierarchical to allow cross-enterprise analysis and
cross-industry generalization, while allowing organizations to describe the particular nuances in their businesses.
• Structure - Best practice must be linked to the processes that they support and the measurements which are used to determine the success of their implementation.
• Structure - Inputs and outputs describe the transactions between processes,documenting the origin and destinations of material, information, and finances. Inputs and outputs provide the mechanism for integrating and de-coupling the models within the framework.
Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results
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
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
Capture the “as-is” state of a process and derive the desired “to-be” future state
Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results
Characterize the management practices and software solutions that result in “best-in-class” performance
What is a process reference model?• Process reference models integrate the well-known concepts of
business process reengineering, benchmarking, and process measurement into a cross-functional framework
SCOR Boundaries• SCOR Spans:
– Order entry through paid invoice– Physical material transactions, financials, information flow– Market interactions
• From the understanding of aggregate demand to the fulfillment of each order
– Returns• SCOR Considers but does not include process descriptions and
measurement for related activities including:– Sales and Marketing– Research and Development / Product Design– QA– It
Supplier
Plan
Customer Customer’sCustomerSuppliers’
Supplier
Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliver
Internal or External Internal or External
Your Company
Source
SCOR is structured around five distinct management processes
SCOR Model SCOR Model
Return Return Return Return Return Return Return Return
Building Block Approach
Processes Metrics
Best Practice Technology
Cus
tom
ers
Cus
tom
ers
Supp
liers
Supp
liers
P1 Plan Supply ChainP1 Plan Supply ChainPlanPlan
P2 Plan SourceP2 Plan Source P3 Plan MakeP3 Plan Make P4 Plan DeliverP4 Plan Deliver
SourceSource MakeMake DeliverDeliverS1 Source Stocked ProductsS1 Source Stocked Products M1 MakeM1 Make--toto--StockStock
M2 MakeM2 Make--toto--OrderOrder
M3 EngineerM3 Engineer--toto--OrderOrder
D1 Deliver Stocked ProductsD1 Deliver Stocked Products
D2 Deliver MTO ProductsD2 Deliver MTO Products
D3 Deliver ETO ProductsD3 Deliver ETO Products
S2 Source MTO ProductsS2 Source MTO Products
S3 Source ETO ProductsS3 Source ETO Products
SCOR 7.0 SCOR 7.0 –– ProcessesProcessesLevel 2Level 2
Return Return SourceSource
P5 Plan ReturnsP5 Plan Returns
Return Return DeliverDeliver
EnableEnable
D4 Deliver Retail ProductsD4 Deliver Retail Products
SCOR Process TablesProcess Element: Receive, Enter & Validate Order Process Element Number: D1.2 Process Element Definition Receive orders from the customer and enter them into a company’s order processing system. Orders can be received through phone, fax, or electronic media. “Technically” examine orders to ensure an orderable configuration and provide accurate price. Check the customer’s credit. Optionally accept payment. Performance Attributes Metric Reliability None Identified Responsiveness Receive, Enter and Validate Order Cycle Time Flexibility Upside Deliver Flexibility
Downside Deliver Adaptability Upside Deliver Adaptability
Cost Order cost / type of order Order Entry and Maintenance Costs as % of (S+M+D) cost
Assets Return on Supply Chain Assets Best Practices Features Electronic Commerce (customer visibility of stock availability, use of hand-held terminals for direct order entry, confirmation, credit approval), On-line stock check and reservation of inventory
EDI applications and integrated order management
Enable real-time visibility into backlog, order status, shipments, scheduled material receipts, customer credit history, and current inventory positions
None Identified
Continuous Replenishment Programs; Vendor Managed Inventory, Telemetry to automatically communicate replenishment of chemicals
Integrated demand/deployment planning to customer location driven by POS; Customer movement data
Remote (sales, customers) order entry capability
None Identified
Automatic Multi-level Credit Checking: Dollar Limits; Days Sales Outstanding; Margin Testing
Integrated Order/Financial Management
Value Pricing based on “Cost to Serve”; EDLP; Cost Plus Pricing
Activity Based Costing; Integrated Order Management by Customer by Line Item
Inputs Plan Source Make Deliver Return (Customer) Customer Order (Customer) Deliver Contract Terms (Customer) Customer Replenish Signal Outputs Plan Source Make Deliver Return
SCOR Graphics
RouteShipments
D1.6
Plan and BuildLoads
D1.5
Reserve Inventory and
DetermineDelivery 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
D1.11
Ship Product
D1.12
Receive & Verify
at Customer
Site
D1.13
InstallProduct
D1.14
• Scheduled Deliveries (P)
• (P2) Supply Plans• (P3) Production
Plans• (P4) Deliver Plans • (S) (M) (D) Inventory• (M) Scheduled
Output
• (Customer) Customer Order
• (Customer) Deliver Contract Terms
• (Customer) Customer Replenish Signal
• (S) (M) Scheduled Receipts
• Shipping Documents (carrier, cust, gov.)
• Delivered End Items (cust)
• (Customer) Inquiry
• Validated Order• Delivery Commit Date
Consolidate Orders
D1.4
• Daily Shipment Volume
Select Carriers and
Rate Shipments
D1.7
From Make or Source
• (D) Inventory
• (D) Inventory
• (D) Consolidated Product
• (D) Advanced Ship Notice
• Payment
Pack Product
D1.10
Invoice
D1.15
• Routing Guide (carrier)
• Rated Carrier Data (Carrier)
Common Metrics Structure for Component Models
(DCOR/SCOR/CCOR)
Linking Supply Chain Performance Attributes and Level 1 Metrics
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 Upside Supply Chain Flexibility Upside Supply Chain Adaptability
Supply Chain Flexibility
The agility of a supply chain in responding to marketplace changes to gain or maintain competitive advantage. Downside Supply Chain
Adaptability Supply Chain Management Cost
Supply Chain Costs
The costs associated with operating the supply chain.
Cost of Goods Sold Cash-to-Cash Cycle Time 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.
Return on Supply Chain Fixed Assets
Supply Chain Scorecard & Gap Analysis
50%
$30M Revenue
$30M Indirect Cost
35 days
97 days
0%
63%
Supply Chain SCORcard Performance Versus Competitive Population
Overview Metrics SCOR Level 1 Metrics Actual Parity Advantage Superior Value from ImprovementsDelivery Performance to Commit Date 85% 90% 95%
Fill Rates 94% 96% 98%
EXTE
RN
AL
SupplySupplyChainChainReliabilityReliability
Perfect Order Fulfillment 80% 85% 90%
Order Fulfillment Lead times 7 days 5 days 3 days
Flexibility
Responsiveness
Production Flexibility 30 days 25 days 20 days
Total SCM Management Cost 19% 13% 8% 3%
INTE
RN
AL Cost Warranty Cost NA NA NA NA NA
Value Added Employee Productivity NA $156K $306K $460K NA
Inventory Days of Supply 119 days 55 days 38 days 22 days NA
Assets Cash-to-Cash Cycle Time 196 days 80 days 46 days 28 daysNet Asset Turns (Working Capital) 2.2 turns 8 turns 12 turns 19 turns NA
Supply Chain Response Time 82 days 55 days 13 days
45 days
$7 M Capital Charge
Key enabler to cost and asset improvements
$30M Revenue
Common Implementation Methodologies for Component Models (DCOR/SCOR/CCOR)
SCOR/DCOR/CCOR Implementation• SCOR Implementations (Practitioner)
– Vary in scope and objective• Green Field – Establishing a new supply chain• Distribution analysis – Implementing distribution strategy• Planning – Improving planning processes• Supply Chain Failure Analysis• Change Management / COTS-Consultant Selection• Information Technology
• SCOR Implementation (Academia)– Curriculum– Research Projects
• SCOR Implementation (Consultants)• SCOR Implementation (Government)
Mapping material flow
Latin AmericanLatin AmericanSuppliersSuppliers
WarehouseWarehouse
ManufacturingManufacturing
European SupplierEuropean SupplierCustomer
Customer
Customer
CustomerWarehouseWarehouse
WarehouseWarehouse
(S1, S2, M1, D1)(SR1,,DR1)
Other SuppliersOther Suppliers(D1)
WarehouseWarehouse
(D1)
(S1)(SR1,SR3)
(D2)(DR1)
(S1, D1)(SR1,DR1,DR3)
(S1, D1)(SR1, DR3)
(S1, D1)(SR1,DR1,DR3)
(S1, D1)(SR1,DR1,DR3)
(S1)(SR1,SR3)
(S1)(SR1,SR3)
(S1)(SR1,SR3
Mapping the execution processes
S1S1
D1D1 S1S1
M2M2S2S2 D2D2
M1M1 D1D1 S1S1S2S2
D1D1M1M1
European RM SupplierEuropean European
RM SupplierRM Supplier
Key Other RM
Suppliers
Key Other Key Other RM RM
SuppliersSuppliers
Alpha Regional
Warehouses
Alpha Alpha RegionalRegional
WarehousesWarehouses
S1S1
DR1DR1 SR1SR1DR1DR1 SR1SR1 DR1DR1 SR1SR1
DR3DR3 SR3SR3
RM SuppliersRM Suppliers DistributorsDistributorsALPHAALPHA
DR3DR3 SR3SR3
S1S1
AmericasDistributorsAmericas
Distributors
SR1SR1
SR3SR3
S1S1 D1D1 S1S1
M2M2S2S2 D2D2
M1M1 D1D1 S1S1S2S2
D1D1M1M1
S1S1
Cycle TimeCycle Time
ScheduleScheduleAchievementAchievement
Perfect OrderPerfect OrderFulfillmentFulfillment
DeliveryDeliveryPerformancePerformance
SupplierSupplieron time deliveryon time delivery
Perfect OrderPerfect OrderFulfillmentFulfillment
SupplierSupplieron time deliveryon time delivery
Perfect OrderPerfect OrderFulfillmentFulfillment
On TimeOn Time
In FullIn Full
DocsDocs
DamageDamage
On TimeOn Time
In FullIn Full
DocsDocs
DamageDamage
RevenueRevenueAccounts ReceivableAccounts Receivable
Cash FlowCash Flow
Decomposing Metrics
European RM SupplierEuropean European
RM SupplierRM Supplier
Key Other RM
Suppliers
Key Other Key Other RM RM
SuppliersSuppliers
ConsumerConsumerAlpha Alpha RegionalRegional
WarehousesWarehousesRM SuppliersRM Suppliers ConsumerConsumerALPHAALPHA
ConsumeConsumerr
RM RM SuppliersSuppliers
S1S1 D1D1 S1S1
M2M2S2S2 D2D2
M1M1 D1D1 S1S1S2S2
D1D1M1M1
S1S1
Cycle TimeCycle Time
ScheduleScheduleAchievementAchievement
Perfect OrderPerfect OrderFulfillmentFulfillment
DeliveryDeliveryPerformancePerformance
SupplierSupplieron time deliveryon time delivery
Perfect OrderPerfect OrderFulfillmentFulfillment
SupplierSupplieron time deliveryon time delivery
Perfect OrderPerfect OrderFulfillmentFulfillment
On TimeOn Time
In FullIn Full
DocsDocs
DamageDamage
On TimeOn Time
In FullIn Full
DocsDocs
DamageDamage
RevenueRevenueAccounts ReceivableAccounts Receivable
Cash FlowCash Flow
Perfect OrderPerfect OrderFulfillment Fulfillment
Actual Actual -- 85%85%
Perfect OrderPerfect OrderFulfillmentFulfillmentGoal Goal –– 95%95%
ScheduleScheduleAchievementAchievementActual Actual –– 95%95%
Perfect OrderPerfect OrderFulfillment Fulfillment
Actual Actual –– 90%90%
DeliveryDeliveryPerformance Performance Actual Actual –– 99%99%
SupplierSupplieron time deliveryon time delivery
Actual Actual –– 85%85%
MetricsMetricsConflictConflict
InventoryInventory
UnderUnder--performanceperformance••ProcessProcess••SystemsSystems
UnderUnder--performanceperformance••ProcessProcess••SystemsSystems
Performance Measurement
ConsumerConsumerAlpha Alpha RegionalRegional
WarehousesWarehousesRM SuppliersRM Suppliers ConsumerConsumerALPHAALPHA
European RM SupplierEuropean European
RM SupplierRM Supplier
Key Other RM
Suppliers
Key Other Key Other RM RM
SuppliersSuppliers
Component Models (DCOR/SCOR/CCOR) Linked by
Inputs / Outputs, Best Practice, and Metrics
BusinessPlan
BusinessPlan
CustomerPlan
CustomerPlan
Supply ChainPlan
Supply ChainPlan
DesignPlan
DesignPlan
SourceSource MakeMake DeliverDeliver RelateRelate SellSell PricePriceResearchResearch DesignDesign IntegrateIntegrate
AssistAssistReturnReturnAmendAmend
Integrated Business Reference Framework -Linkages
Customer Requirements
Producability,Supportability, Transportability
BOM, Recipe, Specification
Product
Component Models (DCOR/SCOR/CCOR) Loosely
Integrated – Tightly Bundled
Design Philosophy
• Tight Bundle – Component Models work together to support analysis,
measurement, and improvement of the end-to-end product life cycle
– Models used together will better support analysis and measurement of complex activities
• Time to Market• Time to Volume
• Loose Integration– Component Models are separable so organizations can use
individual Models of interest without the others– Component Models can be separately improved based on
advances in specific disciplines
SCOR Release History
1997
1998Version 2.0Model modified to reconcile distinctions between discrete and process industries
Version 1.0First version of the Model, Plan, Source, Make, Deliver, metrics, best practice, and technology
Version 3.0Model modified to enhance inputs and outputs and infrastructure elements. Specific reference to software products removed. Version 3.1Restructured infrastructure / enable elements. Restructuring of metrics begun – definitions of performance attributes developed. Language to support services as well as tangible goods providedVersion 4.0Restructuring of infrastructure enable elements completed. Returns introduced. Version 5.0Returns processes introduced. E-business practices updated Metrics re-structuring continued
Version 6.0 Retail D4, revamped MRO, Make e-biz best practices
Version 7.0 New Level 1 Metrics, New Best Practices, Addition of 2 appendices
Version 6.1 Updated Return, Best Practices
2003
1999
2001
2000
2002
2004
2005
Current Technical Projects
• SCOR Rehost– Release 8.0
• XML / HTML• Access• Word• Excel
• DCOR– Version 1.0
• Best Practice• Metrics• ISA 95
SCOR Version 8.0Best Practice UpdateMetrics UpdateISA 95Restructure – dB Host
Integrated Business Reference Framework Release Plan
2001
2008
2006
2007
SCOR Version 4.1 DCOR Strawman (Version 0)Posted
CCOR Strawman (Version 0)Posted
DCOR Version 1.0Best Practice UpdateMetrics UpdateInput/Output UpdateBusiness Validation
CCOR Strawman (Version 0)Validation
SCOR Version 9.0Best Practice UpdateMetrics UpdateInput/Output UpdateRisk ManagementIntegration
DCOR Version 2.0Best Practice UpdateMetrics UpdateInput/Output UpdateIntegration
CCOR Version 1.0Best Practice UpdateMetrics UpdateInput/Output UpdateBusiness ValidationIntegration
SCOR Version 10.0Best Practice UpdateMetrics UpdateISA 95Restructure – dB Host
DCOR Version 3.0Best Practice UpdateMetrics UpdateInput/Output UpdateBusiness Validation
CCOR Version 2.0Best Practice UpdateMetrics UpdateInput/Output UpdateBusiness Validation
Integrated Business Framework Version 1.0Metrics Best Practice Inputs / Outputs
Component Models (DCOR/SCOR/CCOR) Design
Philosophy Supports Common Tools and IT
Common Tools
www.supply-chain.org