Certified SCOR trainer - IBM · PDF fileCertified SCOR trainer. ... Level 1 Level 2 Level 3 Level 4 Level 5 ... Standard Strategic (Level 1) Metrics Attribute Metric (Strategic)

Introduction to Supply ChainIntroduction to Supply Chain Operations Reference‐model (SCOR)

Lim Yeong ChuanLim Yeong ChuanCertified SCOR trainer

What Keeps You Up at Night?

Stock Market Volatility, Oil Prices, Labor, Political Instability, Security, y, y

Reducing Total Supply Reducing Inventory/Working Capital/ Asset

Chain Costs

Supply Chain

Management

Supply Chain Resiliency &

Sustainability:Risk Management

Competing in a Global MarketRisk Management

& GreenProviding Superior & Consistent

Customer Service While Increasing Revenue & Margin

Business As Usual Has Been Cancelled…Now What?

2 AMR 2009 ‐ SCC & SCOR Executive Overview

Superior Supply Chain Management (SCM) has Long Been a Source of Competitive Advantage p g

Total Supply Chain Management Costs (% of Revenue) Best-in-ClassMedian

12.3%

10.7%10.0%

10.7%12.0%

14.0%

e 9.2%%

9.1%

6.6%7.4%

5 5%%%

8.0%

10.0%

Rev

enue

4.8%5.5%5.3%

4.2%3.5% 3.6%

5.4%

3.4%

2 0%

4.0%

6.0%

% o

f R

0.0%

2.0%

Automotive Industrial Chemical &Advanced Materials

Computer Consumer Goods Pharmaceutical Semiconductor TelecommunicationsEquipmentq p

Best-in-class Companies’ Outperform Their Median Competitors with a 50% Cost Advantage

Source: PRTM/The Performance Measurement Group


But 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

Fortune-10 Company Supply-Chain Cost as % of Total Costs 2time high of $1.4 trillion (10.1% of US nominal

Gross Domestic Product ) 3

• Supply‐chain generally accounts for between 60%

GM 94%

Ford 93%

Conoco 90%and 90% of all company costs1

• A 2% improvement in process efficiency for supply‐chain processes has 3000% 5000% the impact of a

Conoco 90%

Wal-Mart 90%

Chevron 88%

IBM 77%chain processes has 3000% ‐ 5000% the impact of a 2% improvement in efficiency for… IT… HR… Finance1… Sales…

IBM 77%

Exxon 75%

GE 63%

1 Exclusive of Financial Services companies2 Source: Hoovers 2006 Financial Data, Supply-Chain Council 2006 SCM Benchmark data on SCM cost for discrete & process industries3 CSCMP 19th Annual State of the Logistics Industry

Citi1 0%

AIG1 0%

Focused initiatives in Supply Chain Management can result in 30-35% cost reductions, liberation of working capital, and revenue increases of 3-5%!


And SCM Improvement Creates Shareholder Valuep

The Supply Chain The Supply Chain Impacts . . . Impacts . . .

& Shareholder & Shareholder Value Value

All Financial All Financial Metrics . . . Metrics . . .

• Improve customer service and response

• Optimize inventory flow Improve

Liberate Working Capital

• Optimize inventory flow, utilization & productivity

• Best-in-class customer

ImproveCapital

EfficiencyReduce

Fixed CapitalBest in class customer

relationships• Differentiated service

capabilities

Increase

Shareholder Value

Capital

IncreaseRevenue d M i

• Best-in-class strategic supplier partnerships

• Leverage of outsourcing of

Increase

Profit

and Margin

OptimizeLeverage of outsourcing of business processes

• Unique supply chain models

p

Cost Model

Effective Supply Chain Management can increase a Return on Capital Employed by 30% and More!


SUPPLY CHAIN COUNCIL, INC.


SCC: An independent, non‐profit global association

• Formed in 1996 to create and evolve a standard industry process reference model of the supply chain for the benefit of helping companies rapidly and pp y p g p p ydramatically improve supply chain operations

• SCC has established the supply chain world’s most widely accepted framework – the SCOR® process reference model – for evaluating and comparing supplythe SCOR process reference model for evaluating and comparing supply chain activities and their performance

– It can be used to describe supply chains that are very simple or very complex using a common set of definitions and enabling a commoncomplex using a common set of definitions and enabling a common understanding

– It lets companies quickly determine and compare the performance of supply chain and related operations within their company or against othersupply chain and related operations within their company or against other companies

• SCC continually advances its tools and educates members about how i it li i th t lcompanies are capitalizing on those tools

– With membership open to all interested organizations


Global Scope With Over 800 Member Organizations

Member Distribution

China

Australia/New Zealand

South Africa

Latin America

Member Affiliation

AmericaSoutheast

Asia

Japan

North America

SME

GovernmentEurope

Enabling Technology

End User

SME

Also developing chapters in India and the Middle East

0% 10% 20% 30% 40% 50%

Non-Profit/Academic

Consultant

AMR 2009 ‐ SCC & SCOR Executive Overview8

Industry Membership Scope


THE ROLE OF THE SCOR MODEL INTHE ROLE OF THE SCOR MODEL IN OPTIMIZING SUPPLY CHAIN

PERFORMANCE


What is a Supply Chain?


What is a Supply‐Chain?

CProduct Management

proc

esse

s

Product DesignDCOR™

Custom

er pSales & SupportCCOR™

Sup

plie

r DCOR™

processes

CCOR™

Supply Chain SCOR™


What is SCOR®?

CC• SCOR is a supply chain process reference model Custom

cess

es Supply Chain

Custom

cess

es Supply ChainPlan

process reference model containing over 200 process elements, 550 metrics, and 500 best practices including

mer proer

pro

c

mer pro

ier

proc

DeliverMakeSource

500 best practices including risk and environmental management

f

ocessesSupp

li

ocessesSupp

liReturnReturn

• Organized around the five primary management processes of Plan, Source, M k D li d R t

ss

Process, arrow indicates material flow directionProcess no material flow Information flow

Make, Deliver and Return

• Developed by the industry for use as an industry open Process, no material flow Information flow y pstandard ‐ Any interested organization can participate in its continual development

13

p


The SCOR® model – a cross‐industry open standard

• The five integrated processes provide a boundary‐free view of the true end‐to‐end Extended Supply Chainend to end Extended Supply Chain

• Supports intra‐ and cross‐enterprise optimization of arbitrary scale

Plan

Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliverSource

R t R t R t Return Return

Supplier Customer Customer’sCustomerSuppliers’

SupplierYour Company

Return Return Return Return Return Return Return Return

ppInternal or External Internal or External


SCOR Processes – Five Levels of Decomposition

Level 1 Level 2 Level 3 Level 4 Level 5

Scope Configuration Activity Workflow Transactions

S1SourceSupply-Chain S1.2

EDIXML

Differentiates B i

Differentiates C l it

Names Tasks Sequences Steps Links T ti

Source Stocked Product

pp ySource Receive Product XML

Business Complexity 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

Standard SCOR definitions Company/Industry definitions


p y y

Supply Chain Balanced SCORcard

Standard Strategic (Level 1) Metrics

Attribute Metric (Strategic)

Reliability Perfect Order Fulfillment

er

Responsiveness Order Fulfillment Cycle Time

Agility Supply Chain Flexibility

Supply Chain Adaptability†Cu

sto

m

Supply Chain Adaptability

Cost Supply Chain Management Cost

Cost of Goods Sold

nal

Assets Cash‐to‐Cash Cycle Time

Return on Supply Chain Fixed AssetsInte

rn

Return on Working Capital

† upside and downside adaptability metrics


How Does SCOR Help Improve Supply Chains?

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’ performanceperformance and by which SCC members can measure suppliers performance

•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)g j g y q y p


How companies benefit from SCOR?



SCOR®: CASE IN POINT


Fonterra Brands ‐ Creating a More Flexible, Responsive and $Marter Supply ChainResponsive and $Marter Supply Chain

Supply-Chain Council SEA Conference 2006

ADVA Optical Networking

The Challenge

• €370.2M Revenue Enterprise1The Solution

• Using SCOR, ADVA identified performance gaps p

• Rapid growth in demand for storage, voice & data transport

• Focus on capturing this growth while maintaining profitability

g p g pin key metrics between current and required to reach parity status

• Also using SCOR, identified process disconnects, drivers of inventory and projectsmaintaining profitability

• Needed to identify inventory drivers and optimize inventory levels to enable ADVA to reach inventory reduction targets whilst i i t ti f ti i O d

disconnects, drivers of inventory and projects required for improvement

• Grouped and prioritized proposed projects based on potential impact and amount of effort/riskimproving customer satisfaction in Order

Fulfillment Cycle Time (OFCT) and On‐time Delivery (OTD)

• Created a transformation plan that would

effort/risk

• Agreed to project list including: – New S&OP Process

– Supplier scorecards and quarterly business i ith liallow ADVA to proactively plan, drive and

manage the inventory levels and better achieve the balance of cost and service

reviews with suppliers,

– Information transparency and others

Benefits Achieved

• Gross inventory reduced from €59 million to €38 million in 10 months

• Inventory days of supply reduced 47% from initial scorecard1Hoovers.com


SASOL Supply Chain Optimization

The Challenge

• US$16B annual South African Petrochemical

The Solution

• The SASOL Supply Chain Optimization Journey Concern 1

• Embarked on Supply Chain Optimization to identify synergies and improvement opportunities across multiple business units

pp y p y

• Awareness – identified SCOR as a tool (2004)

• Embarked on SCOR pilot project – tackling problem area to show benefits and understand processopportunities across multiple business units

• Complex changing political environment and introduction of substantial Managerial class without deep experience

process

• First in‐house project (to build internal success)

• Approval for permanent Center of Excellence (CoE) competency

• Prioritization of supply chain projects (project demand exceeds supply)

• Project 2, 3, 4…..X

• Embraced “The SCOR Way” (2007)• Embraced The SCOR Way (2007)

Benefits Achieved

• Ongoing CoE for supply chain optimization

• Sample project generated IRR of 139% over the project lifetime

• Estimated US$1B cost improvements over 3 year period

1Hoovers.comyear period


Even More Companies

$200M Cost Improvements Single$200M Cost Improvements Single Division

US$2.3B Savings supported with Merger

$5B Working Capital

$66M Revenue/Inventory

€2M Improvements Single Division (Peroxides)


Even More Companies

• Comparison of Fortune‐1000 Council member company share price aggregate growth from 2003 – present to S&P 500 and DOW indices.

• Growth inflected after 2 years, and the spread between SCOR index companies and other industrials has grown to almost 30 points.

• Growth is increasing exponentially: Compound interest on SC performance.interest on SC performance.

• Correlates SCC Membership/SCOR investments with Shareholder value.

S tt id t i FTSE• Same pattern evident in FTSE‐100, DAX, NIKKEI and other indices.

Realtime: www.scorlabs.org/scor/scorindex


Thank you!

More info:S l Ch iwww.Supply‐Chain.org

Lim Yeong ChuanLim Yeong Chuanylim@supply‐[email protected]

Documents

Certified SCOR trainer - IBM · PDF fileCertified SCOR trainer. ... Level 1 Level 2 Level 3 Level 4 Level 5 ... Standard Strategic (Level 1) Metrics Attribute Metric (Strategic)