SCOR Framework
Introducing all elements of the Supply
Chain reference model: Standard
processes, metrics and best practices
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.
SCOR Framework Workshop
• Understand the History and Context of SCOR
• Learn the Components of the SCOR Framework
• Process Nomenclature
• Process Metrics
• Process Best Practices
• Understand how to model a Supply-Chain with SCOR
• Understand how to characterize a Supply-Chain with
SCOR metrics
• Apply the SCOR framework using a simplified SCOR
Project Roadmap
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2
Supply-Chain Council
•
The SCC is an independent, not-for-profit, trade association
•
Membership open to all companies and organizations
•
Focus is on research, application and advancement and advancing state-of-the-art
supply chain management systems and practices
•
Developer and endorser of the Supply Chain Operations Reference (SCOR®) as a
cross-industry standard for supply chain management
•
Offers Training, Certification, Benchmarking, Research, Team Development,
Coaching, and Cross-standard Integration focused on the SCOR® framework
•
Founded in 1996
•
Approaching 1000 Association Members
•
Chapters in North America, Europe, Japan, South Africa, Latin America,
Australia/New Zealand, South East Asia and Greater China, with developing
Chapters India and Middle East
Driving value through the use of SCOR®
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3
Supply-Chain
Product Design
DCOR™
Sales & Support
CCOR™
Customer processes
Supplier processes
Product/Portfolio Management
Supply Chain
SCOR ®
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Supply-Chain
Plan
Source
Make
Return
Deliver
Customer processes
Supplier processes
Supply Chain
Return
Process, arrow indicates material flow direction
Process, no material flow
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Information flow
5
SCOR: A Process Framework
• Process frameworks deliver the well-known concepts of
business process reengineering, benchmarking, and best
practices into a cross-functional framework
• Standard processes: Plan, Source, Make, Deliver, Return, Enable
• Standard metrics: Perfect Order Fulfillment, Cash-to-Cash Cycle Time,
Cost of Goods Sold, Order Fulfillment Cycle Time, etcetera
• Standard practices: EDI, CPFR, Cross-Training, Sales & Operations
Planning, etcetera
• Pre-defined relationships between processes, metrics and
practices and inputs and outputs
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6
Combines Best Techniques
Business Process
Re-Engineering
Benchmarking
Best Practices
Analysis
Process Reference
Framework
Capture the ‘As-is’
business activity
structure and derive
the future ‘To-be’ state
Capture the ‘As-is’
business activity
structure and derive
the future ‘To-be’ state
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
Characterize the
management practices
and software solutions
that result in superior
performance
Characterize the
management practices
and software solutions
that result in superior
performance
• 3 techniques become 1 integrated approach
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End-to-End Supply Chain
Plan
Plan
Deliver
Source
Return
Return
Suppliers’
Supplier
Make
Deliver
Return
Supplier
Source
Make
Return
Deliver
Return
Your Company
Internal or External
Plan
Source
Return
Make
Deliver
Source
Return
Return
Customer
Internal or External
Customers’
Customer
SCOR reference model
•
Whether from Cow to Cone or from Rock to Ring SCOR is not limited by
organizational boundaries
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End-to-End Supply Chain
Components
Source
Make
Deliver
Supplier’s Supplier
Sub assemblies
Source
Make
Manufacturer
Deliver
Source
Make
Deliver
MP3 Company
Supplier
Retailer
Source
Deliver
Customer
Consumer
Source
Customer’s Customer
Process, arrow indicates material flow direction
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9
SCOR Hierarchy
Level 1
Level 2
Level 3
Level 4
Level 5
Scope
Configuration
Activity
Workflow
Transactions
S
Source
S1 Source
Stocked
Product
S1.2
Receive
Product
Differentiates
Business
Differentiates
Complexity
Names Tasks
Sequences Steps
Links Transactions
Defines Scope
Differentiates
Capabilities
Links, Metrics,
Tasks and
Practices
Job Details
Details of
Automation
Framework
Language
Framework
Language
Framework
Language
Industry or
Company
Language
Technology
Specific Language
Standard SCOR practices
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EDI
XML
Company/Industry definitions
10
Organizational Hierarchy
Level 1
Level 2
Level 3
Level 4
Level 5
Scope
Configuration
Activity
Workflow
Transactions
S
Source
S1 Source
Stocked
Product
S1.2
Receive
Product
Differentiates
Business
Differentiates
Complexity
Names Tasks
Sequences Steps
Links Transactions
Defines Scope
Differentiates
Capabilities
Links, Metrics,
Tasks and
Practices
Job Details
Details of
Automation
CxO (COO, CIO)
EVP
SVP
SVP
VP
VP
Director
Line Manager
Manager
Team Lead
Team Lead
Individuals
Programmer
Organization focused
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EDI
XML
Activity focused
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SCOR Process Codification
• SCOR processes have unique identifiers:
1. One capital only are level 1 processes: P, S, M, D and R (5 in total)
2. A capital plus a number are level 2: P1, S2, M3, D2, D4 (15 in total)
Two groups of exceptions for level 2:
•
•
Enable: EP, ES, EM, ED and ER (5 in total) and
Return: SR1, DR1, SR2, DR2, SR3, DR3 (6 in total)
3. A capital plus a number, a period and a number are level 3 processes:
P1.1, P1.2, S2.1, M1.5, D3.12 (111 processes in total)
Two groups of exceptions for level 3:
•
•
•
Enable: EP.1, ES.3, EM.4, ED.8, ER.1 (47 in total)
Return: SR1.1, DR1.3, SR2.2, DR2.4, SR3.5, DR3.1 (27 in total)
X = level 1, Xn = level 2, Xn.m = level 3
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Exercises: The Dinner Party
• The supply chain used for the exercises is a dinner party
• You will host a party this weekend with 25-40 of your dearest friends
• You will serve them burgers from your grill (barbecue)
• You are responsible for organizing the event, ingredients, grill, tools and
utensils and general well-being of your guests
• We will be using “The Dinner Party” through the rest of today to exercise
different modeling characteristics
• Ingredients of a burger:
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750g minced steak
1 onion (rings)
1 tsp Worcestershire sauce
4 sesame seed buns
2 tbsp mustard
10 shredded lettuce leaves
2 sliced tomatoes
2 sliced dill pickles
10 thin slices Swiss cheese
Salt and pepper
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Execution Processes
Plan
Source
Make
Return
Deliver
Customer processes
Supplier processes
Supply Chain
Return
• Processes: Source, Make and Deliver
• Objective: value-add, revenue generating
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Capability Models
Level: Different capabilities
Stocked Product (S1, M1, D1)
• Inventory Driven (Plan)
• Standard Material Orders
• High Fill-rate, short turnaround
Make-to-Order (S2, M2, D2)
• Customer Order Driven
• Configurable Materials
• Longer turn-around times
Engineer-to-Order (S3, M3, D3)
• Customer Requirements Driven
• Sourcing New Materials
• Longest long lead-times, low fill rates
R1
S1
D1
M1
I1
D1
R2
S2
D2
M2
I2
D2
D3
M3
I3
D3
R1
S1
R3
S3
R2
R1
S2
R1
S1
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Source (Process ID: S)
• Objectives of this process:
• The ordering, delivery, receipt and transfer of raw material
items, subassemblies, product and/or services.
• Key processes comprehended:
• Schedule product deliveries
• Receive, inspect, and hold materials
• Issue material to Make or Deliver processes
• Supplier/Vendor Agreements
• Vendor certification and feedback, sourcing quality
• Manage Raw Materials inventories
• Freight, import/export documentation
•
Hint: Receiving processes? Probably Source in SCOR
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Source Configurations
•
Configurations:
• Source Stocked Product (Process ID: S1)
• The ordering and receiving of existing products, components and
services from existing contracts, based on requirement plans.
• Source Make-to-Order (Process ID: S2)
• The ordering and receiving of existing products, components and
services for a unique and identified customer order.
• Source Engineer-to-Order (Process ID: S3)
• The selection, ordering and receiving of specialized products or
services that are designed and/or built based on the requirements
or specifications of a particular customer order or contract.
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Source Process Elements
Stocked Product (S1)
Make-to-Order (S2)
Engineer-to-Order (S3)
S3.1
Identify Sources of
Supply
S3.2
Select Final Supplier(s)
and Negotiate
S1.1
Schedule Product
Deliveries
S2.1
Schedule Product
Deliveries
S3.3
Schedule Product
Deliveries
S1.2
Receive Product
S2.2
Receive Product
S3.4
Receive Product
S1.3
Verify Product
S2.3
Verify Product
S3.5
Verify Product
S1.4
Transfer Product
S2.4
Transfer Product
S3.6
Transfer Product
S1.5
Authorize Supplier
Payment
S2.5
Authorize Supplier
Payment
S3.7
Authorize Supplier
Payment
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Make (Process ID: M)
• Objectives of this process:
• The process of adding value to products through mixing, separating,
forming, machining, and chemical processes.
• Key Processes Comprehended:
• Schedule production, request and receive material from
Source and/or Make processes
• Manufacture, assemble/disassemble and test product,
package, hold/release product
• Managing product quality and engineering changes
• Managing facilities and equipment, production status
workflow and capacity management
• Manage Work-In-Process (WIP) inventories
• Hint: Itemnumber change? Probably Make in SCOR
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Make Configurations
• Make-to-Stock (Process ID: M1)
• The making of standard products and services. Planning (Plan)
processes determine what, how much and when to make.
• Make-to-Order (Process ID: M2)
• The making of standard or configurable products and services for
unique customer orders. Customer orders determine what, how much
and when to make. Customer orders can be traced throughout the
Make process.
• Engineer-to-Order (Process ID: M3)
• The making of specialized products or services that are fully or
partially designed and made based on the unique requirements and
specifications of a particular customer order or contract. Customer
orders and specifications can be traced throughout the Make process.
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Make Process Elements
Make-to-Stock (M1)
Make-to-Order (M2)
Engineer-to-Order (M3)
M3.1
Finalize Production
Engineering
M1.1
Schedule Production
Activities
M2.1
Schedule Production
Activities
M3.2
Schedule Production
Activities
M1.2
Issue Material
M2.2
Issue Sourced/InProcess Product
M3.3
Issue Sourced/In-Process
Product
M1.3
Produce and Test
M2.3
Produce and Test
M3.4
Produce and Test
M1.4
Package
M2.4
Package
M3.5
Package
M1.5
Stage Product
M2.5
Stage Finished Product M3.6
Stage Finished Product
M1.6
Release Product to
Deliver
M2.6
Release Finished
Product to Deliver
M3.7
Release Product to
Deliver
M1.7
Waste Disposal
M2.7
Waste Disposal
M3.8
Waste Disposal
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Deliver (Process ID: D)
• Objectives of this process:
• Perform customer-facing order management and order fulfillment
activities including outbound logistics.
• Key processes comprehended:
• Product, service and price quotations
• Order entry and maintenance
• Order consolidation, picking, packing, labeling and shipping
• Import/export documentation
• Customer delivery and installation
• Logistics and Freight Management
• Manage Finished Goods inventories
• Hint: Order taking or Shipping? Probably Deliver in SCOR
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Deliver Configurations
• Deliver Stocked Product (Process ID: D1)
• The delivery of standard products (and services) that are maintained in a
finished goods state prior to the receipt of a customer order.
• Deliver Make-to-Order Product (Process ID: D2)
• The delivery of standard or configurable products and services that are
obtained (Source or Make) for a customer order.
• Deliver Engineer-to-Order Product (Process ID: D3)
• The delivery of specialized products and services that have been fully or
partially designed in negotiation and based on requirements from a
customer order and customer provided specifications
• Deliver Retail Product (Process ID: D4)
• The delivery of standards goods in a retail store
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Deliver Process Elements (1/3)
Stocked Products (D1)
Make-to-Order (D2)
Engineer-to-Order (D3)
D1.1
Process Inquiry & Quote D2.1
Process Inquiry & Quote D3.1
Obtain & Respond to
RFP/RFQ¹
D1.2
Receive, Enter &
Validate Order
D2.2
Receive, Configure,
Enter & Validate Order
D3.2
Negotiate & Receive
Contract
D1.3
Reserve Inventory &
Determine Delivery
Date
D2.3
Reserve Inventory &
D3.3
Determine Delivery Date
Enter Order, Commit
Resources & Launch
Program
D1.4
Consolidate Orders
D2.4
Consolidate Orders
D3.4
Schedule Installation
D1.5
Build Loads
D2.5
Build Loads
D3.5
Build Loads
D1.6
Route Shipments
D2.6
Route Shipments
D3.6
Route Shipments
D1.7
Select Carriers & Rate
Shipments
D2.7
Select Carriers & Rate
Shipments
D3.7
Select Carriers & Rate
Shipments
¹ RFP = Request for Proposal, RFQ = Request for Quote
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Deliver Process Elements (2/3)
Stocked Products (D1)
Make-to-Order (D2)
Engineer-to-Order (D3)
D1.8
Receive Product from
Source or Make
D2.8
Receive Product from
Source or Make
D3.8
Receive Product from
Source or Make
D1.9
Pick Product
D2.9
Pick Product
D3.9
Pick Product
D1.10 Pack Product
D2.10 Pack Product
D3.10 Pack Product
D1.11 Load Product & Create
Documentation
D2.11 Load Product & Create
Documentation
D3.11 Load Product & Create
Documentation
D1.12 Ship Product
D2.12 Ship Product
D3.12 Ship Product
D1.13 Receive & Verify
Product by Customer
D1.13 Receive & Verify Product D1.13 Receive & Verify
by Customer
Product by Customer
D1.14 Install Product
D2.14 Install Product
D3.14 Install Product
D1.15 Invoice
D2.15 Invoice
D3.15 Invoice
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Deliver Process Elements (3/3)
Retail Products (D4)
D4.1
Generate Stocking
Schedule
D4.2
Receive Product at
Store
D4.3
Pick Product from
Backroom
D4.4
Stock Shelf
D4.5
Fill Shopping Cart
D4.6
Checkout
D4.7
Deliver and/or Install
• The Retail supply chain model does
not match up to the Manufacturing
supply chain model, therefore
processes are quite different
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Control processes: Plan, Enable
• Plan and Enable processes prepare the supply-chain to
ensure smooth execution
• Planning processes balance the need for resources,
materials, capacity, etc. with the availability of these
resources. This includes prioritization if needed.
• Enable processes address 8 control aspects for the supply
chain. They monitor compliance, deliver information from
other process areas and highlight dependencies
on these other process areas. They also
support maintenance of relationships
with suppliers.
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Planning Processes
Plan
Source
Make
Return
Deliver
Customer processes
Supplier processes
Supply Chain
Return
• Processes: Plan
• Objective: Drive/coordinate execution processes
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Plan (Process ID: P)
• Objectives of this process:
• The process of determining requirements and corrective actions to
achieve supply chain objectives
• Key Processes Comprehended:
• Supply chain revenue planning/forecasting
• Materials requirement planning
• Factory, repair, maintenance facilities capacity planning
• Distribution requirements planning
• Manage planning parameters
• Hint: Forecasting, S&OP, MRP?
Probably Plan in SCOR
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Plan Configurations (1/2)
• Plan Supply Chain (Process ID: P1)
• Planning overall supply chain targets. Plan Supply Chain drives and
coordinates P2, P3, P4 and P5 plans (Compare to “Revenue plan”, or
“Budget” in certain industries)
• Plan Source (Process ID: P2)
• Planning of material ordering and receiving activities. Plan Source
calculates which materials need to be available when to support the
production plan (P3) and/or the delivery plan (P4). (Compare to
“Materials Requirements Plan”)
• Plan Make (Process ID: P3)
• Planning of production and/or MRO activities. Plan Make ensures the
production resources (capacity) are in place as needed and may
generate production orders. (Compare to “Production Plan”)
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Plan Configurations (2/2)
• Plan Deliver (Process ID: P4)
• Planning of order management, material handling and transportation
activities. Plan Deliver ensures resources are in
place as needed and may generate or recalculate shipping dates based
on material availability. (Compare to “Shipment Plan”, “Load Planning”)
• Plan Return (Process ID: P5)
• Planning of the reverse logistics shipping and material handling capacity.
Note: This does not include the maintenance, repair or overhaul activity
planning as those are Make processes.
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Plan Processes
• Planning is an iterative process:
1. The output of Plan Supply Chain is the input for Plan Source, Plan
Make, Plan Deliver and Plan Return
2. The output of Plan Source, Plan Make, Plan Deliver and Plan Return
are inputs for Plan Supply Chain; The output of one cycle is the
input for the next cycle
1
P3.1
P3.3
P1.1
P3.4
P1.1
P3.2
P1.3
Plan Make
P1.4
P1.2
Plan Supply Chain
2
Plan Supply Chain
P2.3
P2.4
to P3.2
Plan Source
end full cycle
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P1.4
P1.2
P2.1
P2.2
P1.3
begin next cycle
35
Enable Processes
Plan
Source
Make
Return
Deliver
Customer processes
Supplier processes
Supply Chain
Return
• Processes: Enable Plan, Enable Source, Enable Make,
Enable Deliver and Enable Return
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Enable Processes
• Objective:
The Enable processes are five groups of processes under Plan, Source,
Make , Deliver and Return with 3 distinct types of objectives:
1. Manage process performance
2. Manage process control data
3. Manage process relationships
• Key processes comprehended:
• Managing business rules and monitoring adherence
• Measuring supply chain performance and determine corrective action
• Managing risk and environmental impact
• Managing the supply chain network and facilities
• Hint: Equipment or plant maintenance? Probably Enable
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Enable Categories
• Enable Plan (Process ID: EP)
• Performance, data and relationship management processes for all types
of planning processes: Plan Supply Chain, Plan Source, Plan Make, Plan
Deliver and Plan Return. Examples: maintain planning cycles, monitor
planning accuracy, manage supply chain risks.
• Enable Source (Process ID: ES)
• Performance, data and relationship management processes for all
receiving activities and supplier related processes. Examples: Monitor
supplier performance, maintain what is sourced where.
• Enable Make (Process ID: EM)
• Enable management processes for manufacturing, repair and overhaul
type processes. Examples: BOM maintenance, preventive equipment
maintenance, monitoring capacity utilization/shortage.
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Enable Categories
• Enable Deliver (Process ID: ED)
• Performance, data and relationship management processes for all order
management, warehouse and distribution activities and forwarder related
processes. Examples: Monitor order management and forwarder
performance, maintain a distribution network, managing risk.
• Enable Return (Process ID: ER)
• Enable management processes for all types of reverse logistics processes:
MRO returns, defective product returns and excess inventory returns.
Examples: Maintain return approval rules, Maintain issue tracking
software, maintain a return distribution network.
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Reverse Processes
Plan
Source
Make
Return
Deliver
Customer processes
Supplier processes
Supply Chain
Return
• Processes: Return (Source Return, Deliver Return)
• Objective: reverse material flows
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Return (Process ID: R)
• Objective of this process:
• Moving material from customer back through supply chain to address
defects in product, ordering, or manufacturing, or to perform upkeep
activities.
• Key Processes Comprehended
• Identification of the need to return a product or asset
• Requesting and issuing return authorization
• Inspection and disposition decision-making
• Transfer/Disposition of product or asset
• Managing return transportation capacity
• Managing returned material inventories
• Hint: Reverse material flow? Probably Return in SCOR
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Return Configurations
• Return Defective Products (Process IDs: SR1 and DR1)
• The return of products because the product is defective, the wrong
product was ordered or shipped.
• Return Maintenance, Repair & Overhaul (IDs: SR2 and DR2)
• The return of products or assets to perform preventative maintenance,
(end-of-life) overhaul or repairs due to breakage/aging with use
• Return Excess Products (Process IDs SR3 and DR3)
• The return of excess inventories and inventories of product which will be
retired (end-of-life excess). The product is new and in original packaging.
• SR = Source Return, DR = Deliver Return
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Return Configurations
• Positioning Source Return and Deliver Return
•
Consider the flow of goods; Notice the positions of Source and Deliver
Supplier
Deliver
•
My Company
Source
Deliver
Customer
Source
Now, notice the positions of Source Return and Deliver Return
Supplier
Deliver
Return
My Company
Source
Return
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Deliver
Return
Customer
Source
Return
43
Modeling with SCOR
• Drivers for modeling: Why do you model
• Business opportunities:
•
Strategy Development
•
Merger, Acquisition or Divestiture (Companies or Supply Chains)
•
Process optimization and Re-engineering
•
Standardization, Streamlining and Management alignment
•
New business start-up (Company and Supply Chain start-ups)
•
Benchmarking
•
Process Outsourcing
• Technology services:
•
Software implementation (ERP, PLM, QC)
•
Workflow & Service Oriented Architecture
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44
Different Model Types
• SCOR recognizes different types of models. Each serving a
different purpose:
• Business Scope diagram: Set the scope for a project or organization
• Geographic Map (a.k.a. Geo Map): Describes material flows in a
geographic context; Highlights node¹ complexity or redundancy
• Thread Diagram: Material flow diagram, focused on level 2 process
connectivity; Describes high level process complexity or redundancy
• Workflow or Process Models: Information, material and work flow
diagram at level 3 (or beyond); Highlights information, people and
system interaction issues
¹)
A node represents a logical or geographic entity in a supply chain.
Examples: Warehouse, Factory, Store
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45
Creating a Scope Diagram
• Steps to create a Business Scope Diagram
1. Create or open the business scope diagram template
2. Identify customers of your organization or project and enter these in the
customers column in the scope diagram.
3. Identify and enter the key nodes within your organization or project. A
node represents a logical or geographic entity in the supply chain.
Consider: Warehouse, Factory, Store, HQ etc.
4. Identify and enter the suppliers of your organization or project
5. Optionally link the nodes to reflect material and/or information flows. Use
a different color and/or stroke differentiate material and information
flows. Example:
Material and information flow
Information flow
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46
Creating a Scope Diagram
Supplier
My Organization
Customer
Supplier
My Organization
Customer
Flash Inc.
mp3 HQ
Steps to create a Business Scope Diagram
1. Create or open the business scope diagram template
2. Identify and enter the customers of your project or
organization
3. Identify and enter the key nodes within your project
or organization
4. Identify and enter the suppliers of your project or
organization
5. Optionally link the nodes to reflect material and/or
information flows (using different color/stroke)
1
Flash Inc.
Battery ltd.
4
My Organization
mp3 HQ
5
Customer
5
Battery ltd.
Factory
Comps
Supplier
DC
3
Retail Inc.
2
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Factory
DC
Retail Inc.
Comps
47
The Result: Scope Diagram
Suppliers
mp3, Inc.
Flash Inc.
Battery ltd.
Customers
mp3 HQ
Factory
Retail, Inc.
Components
Warehouse
Service Providers
Material and information flow
Information flow
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48
Modeling with SCOR
Steps to create the Geographic Map:
1. Create geographic context (a.k.a. the map)
2. Draw and name your customers on the map
a. Identify the level 2 processes
b. List the level 2 processes in the customer on your map
3. Beginning with your customers, repeat this for every node on the map:
a. Identify all supplying nodes (where does material come from)
b. Draw and name these supplying nodes on the map
c. Identify the level 2 processes
d. list these in the node on your map
e. Draw the material flows (arrows connecting the nodes)
Repeat until you have included all your suppliers/nodes
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49
Creating a Geographic Map
Steps to create the Geographic Map:
1. Create geographic context (a.k.a. the map)
2. Draw and name your customers on the map
a. Identify the level 2 processes
b. List the level 2 processes in the customer node
3. Starting with your customers, repeat for each node:
a. Identify all supplying nodes
b. Draw and name these supplying nodes
c. Identify the level 2 processes
d. List the level 2 processes in each node
e. Draw the material flows (connecting arrows)
Repeat until you have included all your suppliers
1
2
Retail, Inc
S1, P2
UK
Germany
Drive Supplier
D1, P1, P4 d²
b²
3
b
China
e²
France
India
Spain
b¹
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e¹
MP3 Factory
S1, M1, D1
d¹
50
Result: The Geographic Map
Retail, Inc
S1, P2
Battery Supplier
D1, P1, P4
HQ
P1, P2, D2, S2
Drive Supplier
D1, P1, P4
MP3 Factory
P3, S1, M1, D1
Question: No flow from HQ; Why?
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51
Modeling with SCOR
Steps to establish SCOR process models (workflows)
1. Obtain generic descriptions (this is what people describe)
2. Map these generic descriptions to SCOR process IDs (normalize)
3. Create swimming lanes to reflect organizational boundaries
4. Create workflow with these SCOR processes
5. Add description to workflows to reflect inputs/outputs of the processes
6. Optionally add other relevant information
1
2
1. Orders are faxed in and entered in OMS
2. Every night the orders are scheduled
3. The orders are released to the factory
based on the delivery date offset
4. Factory creates and schedules factory
work orders in SFCS
D2.2 Receive, Enter, Validate Order
D2.3 Reserve Inventory & Determine
Delivery Date
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M2.1 Schedule Production Activities
52
Elements of a Business Process
• Process is defined by more than just activity
not in SCOR
metrics
business rules
measurements
inputs
best practices
activity
people
outputs
technology
geography
skills
interface
organization
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platform
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Obtaining Generic Descriptions
• Staple-Yourself-To-An-Order;
• Proven technique to obtain generic language process descriptions:
• Follow the logical flow of an order through the process.
• Each level 1 process has an order (except Plan): Customer order for
Deliver, Production order for Make, Purchase order for Source and
Return Authorization for Return.
• For each order start with the process of order creation and follow the
order and document each activity until the order is completed/closed.
• Similarly follow the steps of the planning cycles you encounter.
• Finally cover any process you have missed so far; Use your SCOR list of
processes as a check-list.
• Hint: To obtain generic descriptions for an end-to-end supply chain: Start
with Plan, then Deliver, Make, Source.
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54
Obtaining Generic Descriptions
• The purpose of capturing process is to understand it and
remove, adjust or repair it where needed
• Recognize process characteristics:
• 'Measurements': It takes 30 minutes to build…
• 'Business rule': The plan is updated weekly…
• 'People': This is handled by Joanna on Thursdays …
• 'Business rule': This is done to provide .. with .. data..
• 'Inputs' or 'triggers': When we receive the document..
• 'Outputs': We send them the document..
• 'Technology': We print the document from the .. system..
• 'Business rules': We need two copies of the form ..
• Verify hearsay statements, to eliminate perception
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55
SCOR Metrics
• Definitions:
• Performance Attribute: a characteristic to describe a strategy.
Performance attributes serve as classification for KPIs and metrics
• Key Performance Indicator (KPI): a metric that is representative
to measure the overall performance or state-of-affairs
• Metric: a standard for measurement
• Measurement: an observation that reduces the
• amount of uncertainty about the value of a quantity
• SCOR metrics: Diagnostic metrics
• Linked to business objectives
• Highlight the gap in performance
• Change over time is more valuable than a single sample
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56
Internal
Customer
Performance Attributes
Attribute
Strategy
Reliability (RL)
Consistently getting the orders right, product
meets quality requirements
Responsiveness (RS) The consistent speed of providing
products/services to customers
Agility (AG)
The ability to respond to changes in the
market (external influences)
Cost (CO)
The cost associated with managing and
operating the supply chain
Assets (AM)
The effectiveness in managing the supply
chain’s assets in support of fulfillment
Question:
What is/are the most important attributes to achieve your
supply chain strategy?
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57
‘Levels’ in Metrics
• Level 1: Strategic metrics a.k.a. Key Performance Indicators
• Measure overall supply chain performance; health of the supply chain
• Set the scope and objectives for a supply chain, project or organization
• Translate a business problem or strategy into something measurable
• Establish the priority or priorities for organization
• Level 2: Diagnostic metrics
• Measure a part of the supply chain and/or a part of the strategic metric
• Provide direction to where problems originate
• Caution: Level 2 metrics do not by definition add up to a level 1 metric
• Beyond level 1 and 2: all metrics are called level 3
• SCOR does not specify levels for metrics that are not level 1 or 2
• These metrics serve as further diagnostic tools
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58
SCOR Metrics Codification
• SCOR metrics have unique identifiers:
1. Two capitals are performance attributes: RL, RS, AG, CO and AM (5)
2. Two capitals, a period the number one (1) and a number are strategic
(a.k.a. level 1) metrics:
RL.1.1, RS.1.1, AG.1.1, CO.1.1, CO.1.2, AM.1.3 (10 in total)
3. Two capitals, a period the number two (2) and a number are diagnostic
(a.k.a. level 2) metrics:
RL.2.1, RS.2.1, AG.2.1, CO.2.1, CO.2.2, AM.2.7 (36 in total)
4. Two capitals, a period the number three (3) and a number are diagnostic
(or level 3) metrics:
RL.3.1, RS.3.1, AG.3.1, CO.3.149, CO.3.151, AM.3.44 (>500)
• XX = performance attribute,
• XX.1.n = level 1, XX.2.n = level 2, and so on
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59
KPIs; Strategic Metrics
Customer
• Measuring strategy: KPIs are strategic (level 1) metrics
Attribute
Strategic metric
Reliability
RL.1.1 Perfect Order Fulfillment
Responsiveness
RS.1.1 Order Fulfillment Cycle Time
Agility
AG.1.1 Upside Supply Chain Flexibility
AG.1.2 Supply Chain Upside Adaptability
AG.1.3 Supply Chain Downside Adaptability
Internal
Cost
CO.1.1 Supply Chain Management Cost
CO.1.2 Cost of Goods Sold
Assets
AM.1.1 Cash-to-Cash Cycle Time
AM.1.2 Return on Supply Chain Fixed Assets
AM.1.3 Return on Working Capital
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60
Strategic Reliability Metric
Metric:
RL.1.1 Perfect Order Fulfillment
Definition:
The percentage of orders delivered on-time, in full.
Components of perfect include all items and quantities ontime, using the customer’s definition of on-time, complete
documentation and in the right condition
Calculation:
[Total Perfect Orders] / [Total Number of Orders]
Diagnostic
Metrics:
(examples)
•
•
•
•
Notes:
An order is perfect only if all L2/L3 metrics are perfect; An
order must be: on-time AND in-full AND right condition AND
right documentation
RL.2.1 % Orders Delivered in Full
RL.2.4 Perfect Condition
RL.3.19 % Orders Received Defect Free
RL.3.24 % Orders Received Damage Free
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61
Strategic Responsiveness Metric
Metric:
RS.1.1 Order Fulfillment Cycle Time
Definition:
The average actual cycle time consistently achieved to fulfill
customer orders. The actual cycle time starts with the receipt
of the order and ends with the customer acceptance of the
delivery. The unit of measure is days.
Calculation:
[Sum Actual Cycle Times For All Orders Delivered] / [Total
Number Of Orders Delivered]
Diagnostic
Metrics:
(examples)
•
•
•
Notes:
Order Fulfillment Cycle Time includes dwell time. Dwell time is
the time no value add activities are performed on the order or
product, imposed by customer requirements.
RS.2.2 Make Cycle Time
RS.2.3 Deliver Cycle Time
RS.3.96 Pick Product Cycle Time
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62
Strategic Agility Metrics
Metric:
AG.1.1 Upside Supply Chain Flexibility
Definition:
The number of days required to achieve an unplanned
sustainable 20% increase in quantities delivered. Seasonality
is not considered unplanned/unforeseen. The unit of measure
for flexibility is calendar days.
Calculation:
The larger of the number of days required to achieve
sustainable increase for Source, Make and Deliver
Diagnostic
Metrics:
•
•
•
Notes:
This metric may have more than one Source, Make and
Deliver Flexibility component depending on the complexity of
the supply chain.
AG.2.1 Upside Source Flexibility
AG.2.2 Upside Make Flexibility
AG.2.3 Upside Deliver Flexibility
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63
Strategic Asset Metrics
Metric:
AM.1.1 Cash-to-Cash Cycle Time
Definition:
The time it takes for cash invested in materials to flow back
into the company after finished goods have been delivered to
customers. The unit of measure for Cash-to-Cash Cycle Time
is calendar days
Calculation:
[Inventory Days of Supply] + [Days Sales Outstanding] –
[Days Payable Outstanding]
Diagnostic
Metrics:
•
•
•
Notes:
For services, the time between paying the resources assigned
to a service and receiving payment for the service delivery.
AM.2.1 Days Sales Outstanding (DSO)
AM.2.2 Inventory Days of Supply (IDOS)
AM.2.3 Days Payable Outstanding (DPO)
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64
Strategic Asset Metrics
Metric:
AM.1.2 Return on Supply Chain Fixed Assets
Definition:
The return an organization receives on its invested capital in
supply chain fixed assets. This includes the fixed assets used
to Plan, Source, Make, Deliver and Return. Examples of fixed
assets include land, buildings, machinery, trucks
Calculation:
([Supply Chain Revenue] – [COGS] – [Supply Chain
Management Costs]) / [Supply Chain Fixed Assets]
Diagnostic
Metrics:
•
•
•
•
Notes:
Supply-Chain Revenue is the operating revenue generated
from a supply chain. This does not include non-operating
revenue, such as investments, etc..
AM.3.11
AM.3.18
AM.3.20
AM.3.27
Deliver Fixed Assets Value
Make Fixed Assets Value
Plan Fixed Asset Value
Source Fixed Assets Value
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65
Metrics and Analysis
• Levels in metrics help root cause performance issues
• Strategic metrics (level 1) can be diagnosed by investigating the level 2
metrics.
• Different types of relationships exist between a metric (the ‘parent’) and
it’s diagnostic metrics (the ‘children’):
1. The parent is the sum of it’s children (e.g. time and cost)
2. The children are multiplied to calculate the parent (e.g. yield)
3. The relationship is undefined (but can be statistically observed)
• Diagnostic metrics don’t necessarily add up to their parents:
Order Fulfillment Cycle Time IS NOT the sum of Deliver Cycle Time +
Make Cycle Time + Source Cycle Time for most supply chains
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66
Metrics Data
• Each company will need to develop a tool or instructions
where to source the data for the SCOR metrics
• There are two types of data:
• Recorded data; obtain from transactional systems such as ERP
(Enterprise Resource Planning), WMS (Warehouse Management System),
financial systems, etc. For example: compare time-stamps in these
systems to calculate cycle times.
• Observed data; obtain through interviews, error logs, audits and/or timestudies. For example the observed percentage of orders requiring
additional customer setup in a system, percentage of manual repackaging
events on the shipping dock.
• There is no easy button
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67
Scorecards and SCORcards
• Definitions
• Scorecard: A visual display of the most important information needed
to achieve one or more objectives, consolidated and arranged in a
single view
• Balanced Scorecard: A scorecard providing metrics related to four
organizational strategies: financial, customer, internal process, and
employee learning and growth
• SCORcard: A scorecard providing metrics related to five supply chain
strategies: reliability, responsiveness, Agility, cost and assets
• Importance
• Communicate supply chain priorities
• Monitor all strategic areas, not just the top priority
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68
SCORcard Metrics Selection
• SCORcard metric requirements:
• Measurable and quantifiable
Avoid 'feel good' metrics like supplier satisfaction or customer
satisfaction, unless they are an aggregation of well-defined detail
metrics. Framework-based metrics simplify the selection process.
• Linkage to responsibility
Avoid metrics that have no impact on performance reviews (supplier
or employee), ensure the metric is linked to the (right) process
owner at the right level.
• Ensure metric is well-defined
Multiple interpretations of a metric may lead to 'work-arounds' and
negation of the effort. SCOR metrics are pre-defined; limiting the
discussion on metric definitions.
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69
Metrics Selection
• Interpreting the definitions
• Customer facing metrics should be measured as close to the
customer experience as possible.
•
The moment of order submission instead of order entry
•
Delivered performance instead of shipping performance
•
Received quality instead of produced or shipped quality
• Measure what makes sense: Don’t have data; approximate the
missing component until you will be able to obtain the data
• Tip: It is not about how you think it should be measured, ask your
customer what is important to him/her
• And: Internal focused metrics also have a customer
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70
Benchmarking
• Definitions
• Benchmarking: Comparing an organization’s performance,
products, practices, and/or services with those of other organizations
that operate in the same or comparable industry
• Parity: Being equal in performance; No real advantage over others
• Advantage: Being in a favorable position; In a stronger position
than
• Superior: Being of high rank or quality; Leading
• Usage
• Establish Goals. Know where you are relative to others (competitors
or peers), and express where you're going.
• Monitor Performance. Track relative progress you and others (your
competitors or peers) make.
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71
Benchmark Requirements
• Compare like for like
• Using standard metrics
A numerical comparison of the performance of two companies in the
same industry may not have value when the metric is different.
• Measuring the same process/business model
Avoid comparing the performance of a make-to-stock process to an
engineer-to-order process. The purpose of these processes is different,
measure them accordingly.
• Demographics
Make sure you understand the other organizations in the
benchmark. Regional differences, and differences in
product, or services may influence results.
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72
Best Practices
• Definitions:
• 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.
• Importance
• Alternatives to the way you do business
• Equalize the competitive landscape
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73
Types of Practices
• Best practices are Current, structured, proven and
repeatable methods for making a positive impact on
desired operational results.
• Leading practices are innovations adopted by single
companies or industries which provide dramatically
improved performance in a process, but because of
proprietary restrictions, or novelty, are not widely known
or adopted.
• Worst practices or Poor practices: Practices that are
known to produce negative impacts on operational results.
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74
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info@supply-chain.org
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.