supply chain benchmarking with scor

7/31/2019 Supply Chain Benchmarking With Scor

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This presentation is the exclusive property of the Supply

Chain Council. Copyright Supply Chain Council. 2006.

All rights reserved. The marks SCOR, CCOR, DCOR

and SCOR Roadmap are the exclusive property of the

Supply Chain Council.

Supp ly -Cha inBen ch m ar k in g w i t hSCOR

A Webinar to Get Your Benchmarking

Program Started

Joseph (Joe) FrancisCTO, Supply-Chain Council

Marisa BrownSr. Program Manager, APQC


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|Copyright Supply Chain Council. 2006. All rights reserved.Copyright Supply Chain Council. 2006. All rights reserved.Copyright Supply Chain Council. 2006. All rights reserved.

Tod ay s Sem in ar

Introductions & Assumptions

Supply-Chain Definition

Supply-Chain Prioritization

Supply-Chain Strategy

Supply-Chain Performance

Sources of Data & The Benchmark

Questions and Close

SCOR for Benchmarking 2


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Su p p ly - Ch ain Cou n c i l

The SCC is an independent, not-for-profit, global

corporation with membership open to all companies and

organizations interested in applying and advancing state-

of-the-art supply chain management systems andpractices.

Founded in 1996

Over 800 Company Members

Cross-industry representation

Chapters in Australia/New Zealand, Brazil, Europe, Japan,

North America, South Africa, South East Asia, and China with

petitions for additional chapters pending. The Supply-Chain Council (SCC) has developed and

endorsed the Supply Chain Operations Reference model

(SCOR) as the cross-industry standard for supply chain

management.



4/30|Copyright Supply Chain Council. 2006. All rights reserved.Copyright Supply Chain Council. 2006. All rights reserved.Copyright Supply Chain Council. 2006. All rights reserved.

W ide ly Used

3M

Abbott Laboratories

Agilent Technologies Inc.

Air Products & Chemicals

Amazon.com

AMD

American Electric Power

American Greetings Corp.

Arrow Electronics, Inc

ArvinMeritor, Inc.

Avnet, Inc.

Banta Global TurnkeyBausch & Lomb

Bayer AG

Becton Dickinson

Boeing

Brown-Forman

C.R. Bard, Inc.Canon

Cisco Systems, Inc.

Coca-Cola Company

Colgate Palmolive Co.

Cytec Industries

Dow Chemical

Eastman Kodak Company

Entergy Corporation

Exxon Mobil Corporation

FedEx

GE

General Motors Corporation

Genzyme Corporation

Hershey Foods Corporation

Hewlett-Packard Company

Honeywell International Inc.

IBM Corp.Intel Corporation

International Paper Company

Johnson & Johnson

KPMG Consulting, Inc.

Lennox International, Inc.

Lockheed MartinLockheed Martin Corporation

LSI Logic Corporation

Lucent Technologies

McKesson Corporation

MeadWestvaco Corporation

4SCOR for Benchmarking

Medtronic, Inc.Merck & Co., Inc.Microsoft CorporationMillennium Chemicals Inc.Nabisco, Inc.National SemiconductorNCR Japan, Ltd.Nortel NetworksNorthrop GrummanOracle CorporationOwens CorningPeopleSoft, Inc.PepsiCo, Inc.Pfizer Inc.

Pharmacia CorporationPhilipsPioneerPPG Industries, Inc.Progress Energy, Inc.PSS World Medical, Inc.QuantumRockwell International

Ryder System, Inc.SAP AG

Schering-Plough

Science Applications International

Shell

Siemens Corporation

Snap-On Incorporated

Sonoco Products Company

Sony

Sprint Communications

SPX Corporation

Sun Microsystems, Inc.

Target Corporation

Teradyne, Inc.

Textron Inc.

The Home Depot, Inc.

The Walt Disney CompanyTMP Worldwide, Inc.

Toshiba Corporation

Unilever

Unisys Corporation

United Defense Industries

United Parcel Service

United Technologies

Volvo

Whirlpool Corporation



SCOR Pr ocesses

Five distinct management processes link together (the

chain in supply-chain) seamlessly from supplier to

customer

SCOR for Benchmarking

Supplier

Plan

CustomerCustomersCustomer

SuppliersSupplier

MakeDeliverSource Make DeliverMakeSourceDeliver SourceDeliver

Internal or External Internal or External

Your Company

Source

Return Return ReturnReturn Return Return

Return Return

SCOR Mo del

5



Attribute Metric (level 1)

Reliability Perfect Order Fulfillment

Responsiveness Order Fulfillment Cycle Time

Supply Chain FlexibilityAgility (Flexibility)

Supply Chain Adaptability

Supply Chain Management CostCost

Cost of Goods Sold

Cash-to-Cash Cycle Time

Return on Supply Chain Fixed Assets

Assets

Return on Working Capital

Met r i cs

SCOR metrics: Standard Level 1 Metrics

SCOR for Benchmarking

Customer

Internal

upside and downside adaptability metrics

6



Tr a in ing & Cer t i f i ca t i on

Lev el Key Requ i r em en t s

SCOR

Scholar

(SCOR/S)*

SCOR University Curriculum

SCOR Level 0 Exam

SCOR

Professional

(SCOR/P)

SCOR Framework

SCOR Implementation

SCOR Level 1 Exam

SCOR

Expert

(SCOR/E)

SCOR/P

SCOR Project Case Study

SCOR Project Peer Review

SCOR Level 2 Exam

SCOR

Master

(SCOR/M)

SCOR/E

5 years SCM Experience

2 in SCOR Areas

2 years SCOR Experience

SCOR Practicum

Instruction Workshop

SCOR Level 3 Exam

Positive Training Evaluations

SCOR

Subject

Master

(SSM in)

SCOR/M

Subject Training

Positive Subject Training Evaluation

23SCOR 8.0 Convergence Training |Copyright Supply Chain Council. 2006. All rights reserved.

By Ma ndat e f r om t he Boa r d o f Di r e c t o r sh a s co nf e r r e d u p on

J oh n DoeHa ving c ompl e t e d t he r e qu ir e me n t s o f a nd

r e ce iving t h e t it l e o f

Ce r t if ied SCOR Mast e rGiven at Wash ingt on, D.C. This 1s t Day o f

November 2006

Chief Technol ogy Off icer

23SCOR 8.0 Convergence Training |Copyright Supply Chain Council. 2006. All rights reserved.

By Ma ndat e f r om t he Boa r d o f Di r e c t o r sh a s c on f e r r e d u p on

J oh n DoeHa ving c ompl e t e d t he r e qu ir e me n t s o f a ndr e ce iving t h e t it l e o f

Ce r t if ied SCOR Mast erGiven at Wash ingt on, D.C. This 1s t Day o f

November 2006

Chief Technol ogy Of ficer


*reserved for University Students in SCM Studies



B enc hmark i ng




Th e Valu e of Usin g SCOR1


1 www.pcor.com/scor Copyright 2006 Process Core Group Research SCOR company share performance
http://www.pcor.com/scorhttp://www.pcor.com/scor


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Valu e o f Usin g SCOR1

Ar ea I m p r ov em en t

Raw materials purchase cost 25%

Cost of Distribution 35%

Total resource deployed 50%Manufacturing space 50%

Investment in Tooling 50%

Order cycle time 60%New product development cycle 60%

Inventory 70%

Paperwork and Documentation 80%

Quality Defects 100%


1Hughes & Michels (1998) Transform your supply chain. Releasing value in business. London, UK


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A s s ump t i ons

Understand the concept of Supply-Chain and the major

business processes involved

Understand the concept and purpose of quantitative

benchmarking May be considering Benchmarking, or have had difficulty

in performing Benchmarking

Benchmarking is performed within a complete Supply-Chain performance improvement program

Interested in a simple and effective framework for linking

Supply-Chain Strategy, Performance Metrics, and

Benchmark Data



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Basic St eps t o Benchm ark ing

Supply-Chain Definition

Identification of Supply-Chains

Supply-Chain Prioritization

Discriminating between different supply-chains based oncompany priorities

Supply-Chain Strategy

Ranking the Five key Performance Attributes Supply-Chain Scorecard

Creating a Balanced SCORcard

Sourcing Data and Performing Benchmark

Pulling it all together and interpreting the result

Questions and Close



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|Copyright Supply Chain Council. 2006. All rights reserved.Copyright Supply Chain Council. 2006. All rights reserved.Copyright Supply Chain Council. 2006. All rights reserved. 13SCOR for Benchmarking

Su pp ly - Ch a in Def in i t i on

We use a tool called the Sup p ly Cha in Def in i t i on Mat r i x to define the

supply-chains within an enterprise

The Supply Chain Definition Matrix helps determine the number and

size of supply chains

Rules for Column Generation:

The columns in the matrix are focused on demand e.g. channels or segments

or customers

The lowest level entry in a column is a billable entity

The columns should total your revenue Ask your Sales or Marketing functions for customer segmentation information

Rules for Row Generation:

The rows in the matrix are focused on supply e.g. business lines or products

or locations or suppliers

The lowest level of detail in a row is a SKU

The rows should total your costs

Ask product divisions for product hierarchy data


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Example : Ai r Cond i t i on in g Com pany

Columns are Retail/Commercial, and sub-segmented

Rows are the Major Product Lines

Geography Customer or Market Channel

Retail CommercialSupply-Chain

Definition MatrixBig-Box

Retailer

Internet

Direct

Commercial

Building

Commercial

Major Acct

BigAirCo x x

Small Airco x x

Custom

Industrial x

Product

Standard

Industrial x x


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Fina l i zi ng t he Mat r i x

Each X represents a possible supply-chain

Some supply-chains are not unique

For each group of supply-chains, group together if

Share planning systems or

Share logistics network or

Share manufacturing sites or

Are managed together Do not group together if

Are distinct supply-chain types e.g. build-to-order, build-to-

stock

Are in different geographies e.g. Europe vs Asia

Each group is considered a logical supply-chain for

further work


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Ex am ple : Com fy Co

Continuing Information on our Example Company, what arethe distinct supply-chains

Geography Customer or Market Channel

Retail CommercialSupply-Chain

Definition MatrixBig-Box

Retailer

Internet

Direct

Commercial

Building

Commercial

Major Acct

Big AirCo x x

Small Airco x x

Custom

Industrial x

Product

Standard

Industrial x x

Big Air SCBig Air SC

Small Air SCSmall Air SC

Commercial SCCommercial SC

C


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Su pp ly Ch a in Pr io r i t i za t ion

We use a tool called the Supp ly Pr io r i t i za t i on

De f in i t i on Ma t r i x to order the supply-chains according

to relevance

Each supply chain can be ranked by a number of features We suggest:

size (revenue, volume, and margin),

complexity (# SKUs) strategic importance

You can also look at them by

Cash Consumption

Risk

Volume variability

Etc.

S l Ch i P i i


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Su pp ly Ch a in Pr io r i t y

Sup ply- Cha in Se lec t ion Dec ision Mat r ix

CriteriaRevenue

& Rank

Gross

Marg in

& Rank

N u m b e r of

SKUs &

Rank

Uni t

V o lu m e &

Rank

St ra teg i c

Va lue

& Rank

Supp lyChain

Overa l lRat ing

Weight 20 20 20 20 20

Big Air 100 1 2 0 2 4 0 1 2 0 1 2 0 1 2 0

SmallAir

200 2 4 0 1 2 0 2 4 0 2 4 0 2 4 0

Comml 300 3 6 0 3 6 0 3 6 0 3 6 0 3 6 0Ranking

WeightedResult

S l Ch i St t


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Su pp ly Ch a in St r a t egy

We use a tool called the Sup p ly Cha in St ra t egy Mat r i x to Identifypriority strategic features or attributes of supply-chains.

Each supply chain strategy is indicated by a collection of ranked

features

Reliability Responsiveness

Flexibility

Cost

Assets Our system allows for 1 Superior (S) feature, Two Advantage (A)

features, and two Parity (P) rankings.

Superior: performance in top-10% of all supply chains studied

Advantage: performance at midpoint between top-10% and median of all

supply chains studied

Parity: performance at median of all supply chains studied


At t i b t / M t i


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Attribute Metric (level 1)

Reliability Perfect Order Fulfillment

Responsiveness Order Fulfillment Cycle Time

Upside Supply Chain FlexibilityFlexibility

Supply Chain Adaptability

Supply Chain Management CostCost

Cost of Goods Sold

Cash-to-Cash Cycle Time

Return on Supply Chain Fixed Assets

Assets

Return on Working Capital

At t r i bu t e s/ Met r i cs

SCOR metrics: Standard Level 1 Metrics

Customer

In

ternal

upside and downside adaptability metrics

Sup p ly Cha in St r a t egy Mat r i x


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Sup p ly - Cha in St r a t egy Mat r i x

C ompe t i t i veR equ i r emen tsPe r f o r mance

A t t r i b u t e o r

Category BigAi rco

Smal l

A i rcoComm l

Re l iab i l i ty S

Responsiveness A

Flex ib i l i ty A

Cost P

Asset

Managemen t P

Each unique combinationof ratings defines Your

Supply Chain Strategy

for the channel

Think of the rating as a

desired state, NOT where

you want to improve the

most


Su pp ly Ch a in Per f o r m ance


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Su pp ly - Ch a in Per f o r m ance

We use a tool called the

Su pp ly Ch ain

SCORcard to Identify

performance characteristicsof supply-chains.

Each SCORcard is built

from a subset of hundreds

of SCOR metrics.

For supply-chain

benchmarking we generally

use only Level-1, 2 and 3metrics

The SCOR Manual provides

all necessary definitions


SCORcard Gener a t ion


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SCORcard Gener a t ion

We suggest the following procedure:

For each Feature or Attribute, choose at least 1 re l evan t

Level-1 Metric

For each Super io r Metric Identify the Level-2 metrics driving Level-1 performance

Break each Level-2 metric down to Level-3 metrics driving Level-

2 performance, and select 1 or more re levan t drivers

For each Adv an tage Metric Identify the Level-2 metrics driving Level-1 performance

For each Par i t y Metric

No further breakdown is necessary


SCORcar d Gen er at ion


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SCORcar d Gen er at ion


Attribute S/A/P Metric (level 1) Metric (Level 2) Metric (Level 3)

Reliability S Perfect Order Fulfillment

% Orders Delivered in Full

Delivery Item Accuracy

Delivery Quantity Accuracy

Delivery Performance to Customer

Commit Date

Customer Commit Date

Achievement Time Customer

Receiving

Delivery Location Accuracy

Accurate Documentation

Shipping Documentation Accuracy

Billing Documentation Accuracy

Perfect Condition

% Orders Received Damage-Free

SCORcard Gener a t ion ( 2 )


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SCORcard Gener a t ion ( 2 )


Attribute S/A/P Metric (level 1) Metric (Level 2) Metric (Level 3)

Responsiveness A Order Fulfillment Cycle Time

Source Cycle Time

Make Cycle Time

Deliver Cycle Time

Flexibility P Ups. Supply Chain Flexibility

Cost P Supply Chain Mgmt Cost

Assets A Cash-to-Cash Cycle Time

Days Sales Outstanding

Days Payable Outstanding

Inventory Days of Supply

Sou r ces of Dat a


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Sou r ces o f Dat a

Financial Data

10-K data, Company Annual Reports, Cost Center Reports

Must be Verified by Financial Team (Controller)

Non-Financial Data Customers

Delivery Performance

Total Cycle-Time Performance

IT Systems

Process-to-Process Transactions

Planning System Parameters (Lead Times)

Suppliers 3PL Providers


SCORmark


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SCORmark

Once the SCORcard is defined, and data for most metricsare gathered

Data are submitted electronically to the SCORmark

system With days or weeks, an electronic report is returned with

the results of comparison against selected demographic

groups

The principal function of the Benchmark is to determine

the gap between actual performance and performance

corresponding to desired strategic positioning.

The Benchmark is a component of Phase I and II of theSCOR Implementation Roadmap


I n t er p r e t i n g t h e Ben ch m ar k


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I n t er p r e t i n g t h e Ben ch m ar k

Used for choosing target performance

Critical to understand Performance in a particular

Demographic

Can be internal (competing against other supply-chains in same company)

Aligns Strategy, Performance, and Performance Goals

Attribute S/A/P Metric (level 1) You Parity Adv Superior

Target

Gap

Reliability S Perfect Order Fulfillment 97% 92% 95% 98% 1%

Responsive-

nessA Order Fulfillment Cycle Time 14 days 8 days 6 days 4 days 8 Days

Flexibility P Ups. Supply Chain Flexibility 62 days 80 days 60 days 40 days 0

Cost P Supply Chain Mgmt Cost 12.2% 10.8% 10.4% 10.2% 1.4%

Assets A Cash-to-Cash Cycle Time 35 days 45 days 33 days 20 days 2 Days

Clos ing an d Qu est ion s


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Clos ing an d Qu est ion s

Supply-Chain Definition 1-2 Day workshop

Supply-Chain Prioritization 1 Day Data Gathering

Supply-Chain Strategy 1 Day workshop

Supply-Chain Performance 1 Day workshop

Data and Benchmarking Days/Weeks

SCC/APQC will be hosting half-day Industry-Focusedworkshops to give 1:1 coaching for execution of each of

the five phases including template documents to use

Oil & Gas Event: www.apqc.org/oil

Questions?



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This presentation is the exclusive property of the Supply

Chain Council. Copyright Supply Chain Council. 2006.

All rights reserved. The marks SCOR, CCOR, DCOR

and SCOR Roadmap are the exclusive property of the

Supply Chain Council.

w w w . s u p p l y - c h a i n . o r g

For additional questions on SCORmark, please contact:

Joe Francis [email protected]

Marisa Brown [email protected]

Hands-on SCOR training for the oil & gas industry in Houstonwww.apqc.org/oil

supply chain benchmarking with scor

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