SCOR Benchmarking - Presentation

Keeping SCOR in your Supply Chain
Benchmarking
Joseph Francis Executive Director Supply-Chain Council
SCOR Benchmarking
Understand the Context of SCOR
Process Metrics Best Practices
Understand the 7 Steps of a Benchmarking Program Supply Chain Council

History Value
SCOR Benchmarking - Presentation
What is a Supply-Chain
Product Management Customer processes Supplier processes
Product Design DCOR
Sales & Support CCOR
Supply Chain SCOR
The SCOR model an industry open standard

SCOR is a supply chain process reference model containing over 200 process elements, 550 metrics, and 500 best practices including risk and environmental management Organized around the five primary management processes of Plan, Source, Make, Deliver and Return Any interested organization can participate in its continual development
Plan
Deliver Return
Source Return
Make
Deliver Return
Source Return
Make
Deliver Return
Source Return
Make
Deliver Return
Source Return
Suppliers Supplier
Supplier
Internal or External
Your Company
Customer
Internal or External
Customers Customer
SCOR Processes
Level 1
Scope
Supply-Chain Source
Level 2
Configuration
S1 Source Stocked Product
Level 3
Activity
S1.2 Receive Product
Level 4
Workflow
Level 5
Transactions
EDI XML
Differentiates Business
Defines Scope
Differentiates Complexity
Differentiates Capabilities
Names Tasks
Links, Metrics, Tasks and Practices
Sequences Steps
Job Details
Links Transactions
Details of Automation
Framework Language
Framework Language
Framework Language
Industry or Technology Company Specific Specific Language Language
Standard SCOR definitions
Company/Industry definitions
Performance Metrics
SCOR metrics: Standard Strategic (Level 1) Metrics
Attribute Customer Reliability Responsiveness Agility Cost Internal Assets Metric (Strategic) Perfect Order Fulfillment Order Fulfillment Cycle Time Supply Chain Flexibility Supply Chain Adaptability Supply Chain Management Cost Cost of Goods Sold Cash-to-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital
upside and downside adaptability metrics
Best Practices
Best practice: "A current, structured, proven and repeatable method for making a positive impact on desired operational results."
Current Must not be emerging and can not be antiquated Structured Has clearly stated Goal, Scope, Process, and Procedure Proven Success has been demonstrated in a working environment and can be linked to key metrics Repeatable The practice has been proven in multiple environments.
The SCOR Reference Process
Benchmarking
What is Benchmarking
Qualitative Benchmarking
Comparing best practices among organizations Maturity Assessments
Quantitative Benchmarking
Comparing levels of measured performance Assessment of Performance Gaps
Competitive Benchmarking
Quantitative Benchmarking between companies Identifies superior relative performance
7 Steps of a Benchmarking Program

Supply Chain Definition Supply Chain Prioritization Supply Chain Strategy Selecting Metrics Sourcing Data Creating a Balanced SCORcard Performing Benchmark
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What is a Supply-Chain
Product Management Customer processes Supplier processes
Product Design DCOR
Sales & Support CCOR
Supply Chain SCOR
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Supply-Chain Definition
Supply Chains are the Totality of processes spanning operations from supplier to end-customer, focused on material, work and information flow We use a tool called the Supply Chain Definition Matrix to define the supply-chains within an enterprise The Supply Chain Definition (i/o Matrix) Matrix helps determine the number and size of supply chains Columns: Customers (Output) Rows: Products (Input) The intersection of each column and row if the goods or services flow to the customer is a supply chain
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Column Definition
The columns in the matrix are focused on demand e.g. channels or segments or customers start with making a list of customer groups, level by level. Ask your Sales or Marketing functions for customer segmentation information Where you have one customer base with different fulfillment models create two customer segments one for each model In general you can go to any level of detail you want but be sensible. Examples:
Level 1 Europe, Asia, US Commercial, Retail Eastern, Western Region Level 2 Major Accounts Grouped Accounts One-Time Buyer Level 3 Same-Day Shipping Bulk Shipping MOQ 1 Ordering
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Row Definition
The rows in the matrix are focused on supply e.g. business lines or products or locations or suppliers start by making a list of products, level by level Ask product divisions for product hierarchy data If you have the same product that may be build two different create two different products. In general you can go to any level of detail you want but be sensible. Examples:
Level 1 Level 2 Level 3
Business Divisions
Fulfillment Models Planning Models
Product Lines
Supplier Groups Warehouses
Product Families
Parts
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The Matrix
We now place the customer list as column headings repeating until finished And then the products list as row headings repeating until finished For each product that flows to a customer, we put an X in the cell Its that simple.
Group 1 Customer A Product 1 Business 1 Product 2 Product 3 Business 2 Product 4 Customer B Group 2 Customer C Customer D
X X X X
X X X
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Example: Air Conditioning Company

Columns are Retail/Commercial, and sub-segmented Rows are the Major Product Lines
Customer/Market/Channels
Your Company Supply-Chain Definition Matrix Retail Internet Big Box Direct Commercial Mom & Major Pop Building Account Stores Distrib
Lines of Business Product Families
Air Conditioners
Big Airco Small Airco Custom Industrial Standard Industrial
x x
x x x x
x x x
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Logical Supply Chain

Some supply-chains are not unique, group supply chains together where they have common management and goals Each group is considered a logical supply chain Key Differentiators:
Build Strategy Make Buy Model BTO BTS ETO Lifecycle Introduction Mid-Life Commodity EOL Other Region Tax Regime Logistics Strategy Customs/Duty ERP System
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Example: Air Conditioning Company

Columns are Retail/Commercial, and sub-segmented Rows are the Major Product Lines
Customer/Market/Channels Your Company Supply-Chain Definition Matrix
Retail Internet Big Box Direct Commercial Mom & Major Pop Building Account Stores Distrib
Lines of Business Product Families
Air Conditioners
Big Airco Small Airco Custom Industrial Standard Industrial
x x
x x x x
x x x
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Supply Chain Prioritization

We use a tool called the Supply Chain Prioritization Matrix 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.
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Supply Chain Priority

Each supply chain is given a rank in each category The total of the values gives the final overall ranking Weightings and other criteria may apply
Revenue Gross Margin % 2 1 3 # of SKUs 2 3 1 Unit Volume 2 3 1 Strategic Value 2 1 3 Rank 11 10 9
Big Air Small Air Commercial
3 2 1
1=low 3=high
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Supply Chain Strategy

We use a tool called the Supply Chain Strategy Matrix to Identify priority strategic features or attributes of supplychains. Each supply chain strategy is indicated by a collection of ranked features:
Reliability On time? Complete? Undamaged? Responsiveness From Customer Request to final acceptance Flexibility How long to scale up? How expensive to scale down? Cost Cost of Processes? Cost of Goods Sold? Assets Working Capital? Return on Investments?
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Comparative Ranking
We advocate using a simple ranking system for industry comparison Each rank corresponds to a specific percentile in industry performance We do not use averages or other statistical tests Our key ranks:
Performance Superior Advantage Parity Percentile 90th 70th 50th Choices 1 2 2 Interpretation Top 10 performer Top Half performer Half better/Half worse
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Supply Chain Strategy in 5 Minutes

Build Strategy Buy Make ETO BTO BTS Start Middle Commodity EOL Model Lifecycle Likely Priority
1. Assets 2. Cost
1. Reliability 2. Response 1. Assets 2. Reliability 1. Flexibility 2. Response 1. Cost 2. Reliability
1. Cost 2. Assets
1. Assets 2. Cost
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Supply-Chain Strategy Matrix

Supply-Chain Strategy Matrix
Big Airco
Small Airco
Comml
Reliability
P P A A S
Responsiveness
A A
P P
Flexibility
Each unique combination of 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
External
Cost
Internal
Assets
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The SCORcard
We use a tool called the Supply Chain SCORcard to Identify performance characteristics of supplychains. Each SCORcard is built from a subset of hundreds of SCOR metrics. For supply-chain benchmarking we generally use only Level 1, 2 and 3 metrics The SCOR Manual provides all necessary definitions
25
Performance Metrics
SCOR metrics: Standard Strategic (Level 1) Metrics
Attribute Customer Reliability Responsiveness Agility Cost Internal Assets Metric (Strategic) Perfect Order Fulfillment Order Fulfillment Cycle Time Supply Chain Flexibility Supply Chain Adaptability Supply Chain Management Cost Cost of Goods Sold Cash-to-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital
upside and downside adaptability metrics
26
SCORcards in 5 Minutes
Philosophy You need to have the most data where performance is most critical You need to have least data where performance is least critical
For Every Select Superior Level 1 Metric and Level 2 Metric and Level 3 Metric Advantage Level 1 Metric Level 2 Metric Parity Level 1 Metric
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A Metrics Architecture
Supply-Chain SCORcard Reliability Reliability Reliability Reliability Reliability External Reliability Reliability Reliability Reliability Reliability Reliability Reliability
Perfect Condition Accurate Documentation Shipping Documentation Accuracy Billing Documentation Accuracy Delivery Performance to Commit Date
S/A/P
S
Level-1 Metric
Perfect Order Fulfillment
Level-2 Metric
Level-3 Metric
Summary
Perfect Order Fulfilment
% Orders Delivered in Full Delivery Item Accuracy Delivery Quantity Accuracy
% Orders Delivered in Full

Delivery Item Accuracy Delivery Quantity Accuracy Delivery Performance to Commit Date
Date Achievement
Location Achievement
Date Achievement
Location Achievement Accurate Documentation Shipping Documentation Accuracy Billing Documentation Accuracy Perfect Condition
% Orders Received Damage- % Orders Received DamageFree Free
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Metrics Selection
Supply-Chain SCORcard Responsiveness Responsiveness External Responsiveness Responsiveness Flexibility Cost Assets Internal Assets Assets Assets
P
S/A/P
A
Level-1 Metric
Order Fulfilment Cycle Time
Level-2 Metric
Level-3 Metric
Summary
Order Fulfillment Cycle Time
Source Cycle Time
Source Cycle Time
Make Cycle Time
Make Cycle Time
Deliver Cycle Time
Deliver Cycle Time
Upside Supply-Chain Flexibility

Total Supply Chain Management Cost Cash to Cash Cycle Time
Upside Supplly-Chain Flexibility

Total Supply Chain Management Cost Cash to Cash Cycle Time
Days Sales Outstanding Days Payables Outstanding Inventory Days of Supply
Days Sales Outstanding Days Payables Outstanding Inventory Days of Supply
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Planning Data Gathering: Sources of Data

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
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Data Gathering Plan

Look at who owns the data Consider where the transactions may be Organize to alert data owners to gather data Collect and assess Data Quality Use SCOR Metrics Definition as a guide
Process D1.16 D1.17 D1.1 D1.17 Owner Logistics 3PL Provider Deliver Team Due Date 2/2/2008 2/15/2008 2/22/2008 Status Complete 50% Collected Not started
Metric On-Time Delivery Undamaged Order Fulfillment Cycle Time Etc
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The Create the SCORcard

Based on average data averaged over many samples Comes from root transactions, not aggregates Six-Sigma team support a big help
Attribute Reliability Response
SAP
S A P P A
Metric (level 1)
Perfect Order Fulfillment Order Fulfillment Cycle Time Ups. Supply Chain Flexibility Supply Chain Mgmt Cost Cash-to-Cash Cycle Time
You 97% 14 days
Parity
Adv
Superior
Gap
Flexibility
Cost Assets
62 days
12.2% 35 days
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SCORmark
Once the SCORcard is defined, and data for most metrics are 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 the SCOR Implementation Roadmap
33 SCOR Benchmarking - Presentation
Interpreting the Data

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 Reliability Response Flexibility Cost Assets SAP
S A P P A
Metric (level 1)
Perfect Order Fulfillment Order Fulfillment Cycle Time Ups. Supply Chain Flexibility Supply Chain Mgmt Cost Cash-to-Cash Cycle Time
You 97% 14 days 62 days 12.2% 35 days
Parity 92% 8 days 80 days 10.8% 45 days
Adv 95% 6 days 60 days 10.4% 33 days
Superior 98% 4 days 40 days 10.2% 20 days
Gap 1% 8 Days 0 1.4% 2 Days
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Planning
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
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Supply Chain Excellence Tools
SCOR AND SUPPLY CHAIN COUNCIL

A Bit of History: 1930-1950
Bank Robber Slick Willie Sutton When asked why he robbed banks, Sutton simply replied "Because that's where the money is."
Where the Money Is

Supply-chain generally accounts for between 60% and 90% of all company costs1 A 2% improvement in process efficiency for supply-chain processes has 3000% - 5000% the impact of a 2% improvement in efficiency for IT, HR, Finance1 Sales Any surprise most Process Methodologies or techniques had their origin primarily in Supply-Chain Management?
Six-Sigma Lean BPR ERP ISO MRP-II TQM
Fortune-10 Company Supply-Chain Cost % Total Costs2

GM 94% Ford 93% Conoco 90% Wal-Mart 90% Chevron 88% IBM 77% Exxon 75% GE 63% Citi1 0% AIG1 0%
1 Exclusive of Financial Services companies 2 Source: Hoovers 2006 Financial Data, Supply-Chain Council 2006 SCM Benchmark data on SCM cost for discrete & process industries
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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 dramatically improve supply chain operations SCC has established the supply chain worlds most widely accepted framework the 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 common understanding It lets companies quickly determine and compare the performance of supply chain and related operations within their company or against other companies SCC continually advances its tools and educates members about how companies are capitalizing on those tools With membership open to all interested organizations
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Global Operations Supporting Over 800 Member Organizations

Member Location
Australia/Ne w Zealand China
South Africa Latin America Southeast Asia Japan
North America
Member Affiliation
Europe
Government SME End User Enabling Technology
Also developing chapters in India and the Middle East
Consultant Non-Profit/Academic
0% 10% 20% 30% 40% 50%
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Industry Membership Scope
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SCOR has proven to improve operating results many ways

Improvement of operating results of an average of 3% in the initial SCOR implementation phase by means of cost reduction and improvement in customer service1 Increase in profitability (between 2x and 6x) with regard to project investment costs within first 12 months of implementation1 Reduction in IT costs through minimizing system customization and making better use of standard functionality1 Continuous actualization of process change portfolio by continuous conversion of supply chain improvements with the objective of increasing annual profits by 1% to 3%1
1Poluha
Benefits of SCOR
Improvement in stock market value Increase of profits and margins Increase of available financial means through improved investment selection (portfolio management of initiatives) Reduction of overall costs Optimization of Enterprise Resource Planning
(2007) Application of the SCOR Model in Supply Chain Management, New York, USA
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The Value of SCOR
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supply-chain.org scorlabs.org
For additional questions on Supply Chain Council benchmarking or SCORmark, please contact: info@supply-chain.org

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Keeping SCOR in your Supply Chain

Joseph Francis Executive Director Supply-Chain Council

Understand the 7 Steps of a Benchmarking Program Supply Chain Council