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					    Supply Chain Operations
       Reference Model
         Jimmy K.C. Lam
The Hong Kong Polytechnic University
                Agenda

n   What is Supply Chain Operations Reference
    Model (SCOR Model)
n   Supply Chain Council
n   SCOR Process Reference Model
n   SCOR Scope
n   SCOR Methodology
n   Summary
      SCOR Model & Supply Chain
            Council (I)
n   The Supply Chain Operations Reference Model
    (SCOR) is a cross-industry standard for supply-
    chain management and is developed and
    endorsed by Supply Chain Council (SCC)
n   The SCC is an independent organization and its
    membership is opened to all companies who
    have interested in applying and advancing state-
    of-the-art supply chain management systems
    and practices.
     SCOR Model and Supply Chain
            Council (II)
n   Currently, the SCC has over 400 Company
    Members (practitioners, vendors, academics)
    and operated in wide range of industries
    (manufacturers, distributors, retailers)
n   SCOR Model is to assist companies in
    evaluating their supply chain performance,
    identifying weak areas, and developing
    improvement solutions (SCC, 1997)
    SCOR is founded on four distinct
       management processes
n   Plan
n   Source
n   Make
n   Deliver
        SCOR is founded on four distinct
           management processes

                                                         Plan




                                    Deliver
                                              Source      Make        Deliver
Suppliers’
      Deliver   Source     Make                                                 Source     Make   Deliver   Customer’s
                                                                                                            Source

 Supplier                                                                                                    Customer
                         Supplier                      Your Company                      Customer

                  Internal or External                                            Internal or External
            SCOR Process Model

n   The SCOR model is built by a process reference
    models
n   The process reference model integrates the
    business process reengineering, benchmarking,
    and process measurement into a cross-
    functional framework.
Capture the “as-is” state
 Capture the “as-is” state
of a process and derive
 of a process and derive
the desired “to-be” future
 the desired “to-be” future
state
 state
                              Quantify the operational
                                Quantify the operational
                                                               Best Practices
                              performance of similar
                                performance of similar           Analysis
                              companies and establish
                                companies and establish
                                                                                          Process Reference
                              internal targets based on
                                internal targets based on                                       Model
                              “best-in-class” results
                                “best-in-class” results
Business Process
 Reengineering                                              Characterize the            Capture the “as-is” state
                                                             Characterize the
                                  Benchmarking              management practices
                                                             management practices       of a process and derive
                                                            and software solutions      the desired “to-be” future
                                                             and software solutions
                                                            that result in “best-in-    state
                                                             that result in “best-in-
                                                            class” performance          Quantify the operational
                                                             class” performance
                                                                                        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
Supply Chain Operations Reference
         -model : Scope

      The boundaries of the model
             SCOR boundaries (I)

n   SCOR spans
    – All customer interactions, from order entry through
      paid invoice
    – All physical material transactions, from your
      supplier’s supplier to your customer’s customer,
      including:
      » Equipment, supplies, spare parts, bulk product,
        software, etc.
    – All market interactions, from the understanding of
      aggregate demand to the fulfillment of each order
              SCOR boundaries (II)
SCOR does not include

   Sales administration processes
   Technology development processes
   Product and process design and development processes
   Post-delivery customer support operations including
   technical support processes

Links to processes not included within the model’s scope, such
as product development, are noted in SCOR
       Scope of SCOR processes
                PLAN
           n   Demand/supply planning
               – Assess supply resources, aggregate
                 and prioritize demand requirements,
                 plan inventory, distribution
Plan             requirements, production, material,
                 and rough-cut capacity for all products
                 and all channels
               – Manage planning infrastructure
               – Make/buy decisions, supply-chain
                 configuration, long-term capacity and
                 resource planning, business planning,
                 product phase-in/phase-out,
                 manufacturing ramp-up, end-of-life
                 management, product-line
                 management
         Scope of SCOR process
                 Source

             n   Sourcing/material acquisition
                 – Obtain, receive, inspect, hold, and
                   issue material
             n   Manage sourcing infrastructure
Source           – Vendor certification and feedback,
                   sourcing quality, in-bound freight,
                   component engineering, vendor
                   contracts, initiate vendor payments
       Scope of SCOR process
                Make
          n   Production execution
              – Request and receive material,
                manufacture and test product,
                package, hold and/or release
Make
                product
          n   Manage make infrastructure
              – Engineering changes, facilities
                and equipment, production
                status, production quality, shop
                scheduling/sequencing, short-
                term capacity
          Scope of SCOR Process
                 Deliver
           n   Order management
               – Enter and maintain orders, generate quotations, configure
                 product, create and maintain customer database, manage
                 allocations, maintain product/price database, manage
                 accounts receivable, credits, collections and invoicing
           n   Warehouse management
Deliver        – Pick, pack and configure products, create customer
                 specific packaging/labeling, consolidate orders,
                 ship products
           n   Transportation and installation
               management
               – Manage traffic, manage freight, manage product
                 import/export
               – Schedule installation activities, perform installation,
                 verify performance
           n   Manage deliver infrastructure
               – Manage channel business rules, order rules, manage
                 deliver inventories, manage deliver quality
SCOR Methodology
                                   SCOR Methodology: Applied in
                                   SCOR Methodology: Applied in
                                   Four Steps
                                   Four Steps
1Analyze Basis                                                                        SCOR Level 1
                      Operations
       of
                       Strategy
    Competition




2                                                                                       SCOR Level 2
     Configure                 Intra-     Inter-Company
    Supply-Chain             Company       Configuration
                            Configuration



3     Align
       Align                                 Intra-Company        Inter-Company
  Performance
   Performance                              Process, Practice,   Process, Practice,
                                                                                        SCOR Level 3
Levels, Practices,                             and System           and System
 Levels, Practices,
  and Systems                                 Configuration        Configuration
   and Systems
                                                Elements             Elements


                                                                                        SCOR Level 4
4 Implement
    Implement
 Supply-Chain
  Supply-Chain                                                          Intra-Company    Inter-Company
 Processes and
  Processes and                                                          Supply-Chain     Supply-Chain
    Systems
     Systems                                                            Improvements     Improvements
                              Level 1 Performance Metrics


                                              Customer-Facing                 Internal-Facing
            SCOR Level 1                       Delivery       Flexibility &
                                             Performance/                      Cost    Assets
       Supply-Chain Management                  Quality     Responsiveness



Delivery performance                               3
Order fulfillment performance                      3
  • Fill rate
  • Order fulfillment lead time
Perfect order fulfillment                           3
Supply-chain response time                                           3
Production flexibility                                               3
Total logistics management cost                                                  3
Value-added productivity                                                         3
Warranty cost or returns processing cost                                         3
Cash-to-cash cycle time                                                                  3
Inventory days of supply                                                                 3
Asset turns                                                                              3
           Analyze Basis of Competition
           Analyze Basis of Competition
     Supply Chain Scorecard --Representative
     Supply Chain Scorecard Representative
              Supply Chain Scorecard v. 3.0                            Performance Versus Competitive Population
           Overview Metrics    SCOR Level 1 Metrics         Actual       Parity   Advantage   Superior
                               Delivery Performance to
                               Commit Date
                                                            50%          85%         90%         95%

                               Fill Rates                   63%          94%         96%         98%
                 Delivery
EXTERNAL




               Performance/
                 Quality       Perfect Order Fulfillment
                                                             0%          80%         85%         90%


                               Order Fulfillment
                               Lead times                   7 days      7 days      5 days      3 days

               Flexibility &
                               Production Flexibility      45 days     30 days     25 days     20 days
             Responsiveness
                               Total Logistics
                               Management Costs             19%          13%         8%          3%
INTERNAL




                  Cost         Warranty Cost                 NA           NA          NA          NA


                               Value Added Employee
                               Productivity)
                                                           $122K        $156K       $306K       $460K

                               Inventory Days of Supply
                                                           119 days    55 days     38 days     22 days

                               Cash-to-Cash Cycle Time
                 Assets                                    196 days    80 days     46 days     28 days
                               Net Asset Turns (Working
                               Capital)
                                                           2.2 turns    8 turns    12 turns    19 turns
                                Configure Supply Chain
                               Geographic Map - Sample



                                         (S1,
                                         D1)
                             Warehouse            (S2, M1, D1)

                   (S2)                           Manufacturing

                                                                              Warehouse
                             Warehouse



 Other Suppliers                                                  Warehouse
 (D1)
                                                Texas Supplier
S1 = Source Stocked Material
M2 = Make-to-Order                               (D2)
M1 = Make-to-stock
D2 = Deliver Make-to-Order Products
                                                                                    (D1)
                                  Configure Supply Chain
                                  Configure Supply Chain
                                    Thread Diagram
                                     Thread Diagram
                       P1
                      P1                                  P1
                                                         P1                       P1
                                                                                 P1



             P2
            P2               P3
                            P3

                                    P4
                                   P4                     P3
                                                         P3
                                                                                P2
                                                                               P2

                                               P2
                                              P2                     P4
                                                                    P4                       P4
                                                                                            P4


Texas RM
            S2         M2         D2
 Supplier


Key Other   S1         M1         D1     S2         M1         D1         S1           D1           S2
   RM
Suppliers


                                                                             Alpha
                                                                              Alpha
                  RM Suppliers                      ALPHA                   Regional              Consumer
                                                     ALPHA                   Regional
                                                                           Warehouse
                                                                            Warehouse
               Integrated Level 2 Metrics
                Integrated Level 2 Metrics

     Schedule
      Schedule                   P1                  Faultless Invoices
   Achievement                   P1                   Faultless Invoices
                                                             to 97%
    Achievement                                               to 97%
       to 97%
        to 97%                                    Order Management Cycle
 Make Cycle Time                                   Order Management Cycle
  Make Cycle Time                                             Time
                                                               Time
    30 to 33days                                              11day
     30 to days             P3                                   day
     Unit Cost
      Unit Cost             P3                    Order Management Cost
                                                   Order Management Cost
WIP Days of Supply
WIP Days of Supply                                      11.3% to 9.3%
   17 to 25 days                                          11.3% to 9.3%
    17 to 25 days                                       $113M to $93M
                                                         $113M to $93M
   $26M to $37M
    $26M to $37M        Supplier On Time          Finished Good Inventory
                         Supplier On Time          Finished Good Inventory
                              Delivery                   30 to 15 days
                                                          30 to 15 days
                               Delivery
                               to 97%                    $44M to $22M
                                                          $44M to $22M
                                to 97%
                       Source Cycle Time          Days Sales Outstanding
                                                   Days Sales Outstanding
                        Source Cycle Time
                             90 to 11day                107 to 55 days
                                                         107 to 55 days
                              90 to day
                     Material Acquisition Cost         $292M to $151M
                                                        $292M to $151M
                      Material Acquisition Cost
                            3.2% to 2.2%
                             3.2% to 2.2%
                           $32M to $22M
                            $32M to $22M
   P2                  RM Days of Supply
   P2                   RM Days of Supply                                    P4
                           72 to 15 days
                             72 to 15 days                                   P4
                          $107M to $22M
                           $107M to $22M
             SCOR Summary

n   SCOR is a process reference model designed for
    effective communication among supply chain
    partners
    – A standard language helps management to focus on
      management issues
    – As an industry standard, SCOR helps management
      focus across inter-company supply chains.
          SCOR Summary (II)

n   SCOR is used to describe, measure and evaluate
    Supply Chain configurations
    – Describe: Standard SCOR process definitions allow
      virtually any supply-chain to be configured
    – Measure: Standard SCOR metrics enable
      measurement and benchmarking of supply-chain
      performance
    – Evaluate: Supply-chain configurations may be
      evaluated to support continuous improvement and
      strategic planning.

				
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