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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. Copyright © Supply Chain Council. 2006. All rights reserved.
Supply-Chain
Council
& SCOR®
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The World of Supply Chain Management
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CFO language
• Operating Cycle DII + DSO• The number of days it takes to convert inventory
& receivables to cash
• Cash-to-cash Cycle DII + DSO - DPO• The number of days expired between canceling a
payable and generating cash
• EVA NOPAT – (CoC*Capital)• The amount by which earnings exceed or fall
short of the required minimum rate of return that shareholders and lenders could get by investing in other securities of comparable
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Return on assets
Return on assets
Capital turnoverCapital
turnover
$ Other Current Assets
$ Other Current Assets
$ Inventory$ Inventory
$ Accounts Receivable$ Accounts Receivable
$ CurrentAssets
$ CurrentAssets
$ Fixed Assets$ Fixed Assets
$ Total Assets$ Total Assets
$ Sales$ Sales
Profit margin %
Profit margin %
$ Sales$ Sales
$ COGS$ COGS
$ Variable Costs
$ Variable Costs
$ Fixed Costs
$ Fixed Costs
$ GrossMargin
$ GrossMargin
$ Total Cost
$ Total Cost
$ Operating Profit
$ Operating Profit
Supply Chain Management impacts all components
÷
-
+
-
÷
+
+
+
EVA Tree the CFO’s BOM
$ Sales$ Sales
Balance SheetBalance SheetBalance SheetBalance Sheet
P&LP&LP&LP&L
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SCM Environment
• Costs (transportation, warehousing)
• Flexibility
• Delivery Quality/ Reliability/ Performance:
• Inventory levels (RM, WIP, FG)
• Forecast/ Planning Accuracy
• Fulfillment/ Replenishment times
• Lead time reduction
• SC Manager problems:
•To customers•From suppliers
•Only “cost cutter”•Seen as the “problem”•Board room “enemies” (Sales & MKT)
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SCM The CFO’s perspective
• CFO beginning to understand that effective SCM plays an integral role in financial success, but:
• SCM is unsatisfactory to CFOs, because SC managers…• ... lack financial rigor
• ... lag in management efficiency
• ... do not provide clear visibility into SC financials
Therefore:
• 34% have taken more of a leadership role in SCM
• 49% think they will in 2 years
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The Value of Metrics
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A Bit of History: 1930-1950
o Bank Robber “Slick Willie” Sutton
o When asked why he robbed banks, Sutton simply replied
o "Because that's where the money is."
8
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Where the Money Is
• Supply-Chain generally accounts between 60% and 90% of all company costs 1
• A 2% improvement in process efficiency in SCM processes has 30,000% - 50,000% the impact of a 2% improvement in efficiency for… IT… HR… Finance… Sales…
• Any surprise most Process Methodologies or techniques had their origin primarily in SCM?
• Six-Sigma Lean BPR ERP ISO MRP-II TQM…
Fortune-10 Company Supply-Chain Cost % Total Costs2
GM Ford Conoco Wal-Mart Chevron IBM Exxon GE Citi1 AIG1
94% 93% 90% 90% 88% 77% 75% 63% 0% 0%
1 Exclusive of Financial Services companies2 Source: Hoovers 2006 Financial Data, Supply-Chain Council 2006 SCM Benchmark data on SCM cost for discrete & process industries
9
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Value of Using SCORArea Improvement
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%10
1Hughes & Michels (1998) Transform your supply chain. Releasing value in business. London, UK
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The Impact of SCOR®
• Companies with SCOR process management.
• Are over 780% more profitable on average than peers.
• Exhibit greater share growth than leading market indicators.
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Supply Chain Council
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Supply-Chain Council
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 and practices:
o Founded in 1996;
o Over 600 global Members;
o Cross-industry representation;
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.
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SCC – Global Reach
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Latin America
All Chapters
SCC AffiliationsAAIA – Automobile Aftermarket Industry AssociationAPICS – Association for Operations ManagementRLA – Reverse Logistics AssociationWBENC – Women's Business Enterprise National Council
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Group Description
Aerospace & Defense SIG
Special Interest Group to provide a source of knowledge, referral and research for members in the A&D industry
Automotive SIGSpecial Interest Group brings together practitioners in the automotive supply chain to share practices and experiences
CCOR Development
Project team established to develop the framework, training and tools for the customer chain (sales & support processes)
DCOR Development
Project team established to develop the framework, training and tools for the design chain (product/process engineering processes)
Steering Committee
Technical Development and Steering Committee and Training and Education Committee. Elected positions.
Energy, Oil & Gas SIG
Industry working group focuses on the development and integration of models specifically for the Energy, Oil and Gas industry
Reverse Logistics
Industry working group reviews the adaptability of SCOR for the reverse logistics industry. A joint effort of SCC and RLA.
Risk Management
Project team to enhance SCOR to help organizations avoid/minimize cost, mitigate disruptions and thus offer competitive edge
SCOR Convergence
Project team established to integrate SCOR with other tools and methods - such as Six Sigma and Lean
Talent Committee
Hosted by Supply Chain Council, the Committee is industry funded, with all research and program results of the Committee's work made public
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Global Members...Global Members...
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In Brasil...
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... And in Latin America
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SCC Models
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Quantify the operational performance of similar companies & establish internal targets based on “best-in-class” results
Benchmarking
Characterize the management practices & software solutions that result in “best-in-class” performance
Best Practices Analysis
Process Reference Model
Capture the “as-is” state of a process and derive the desired “to-be” future state
Business Process Reengineering
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 “best-in-class” performance
What is a Reference Model?
Capture the “as-is”state of a process and derive the desired “to-be” future state
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Process Models
Supply
Chain
Supply
Chain
Supply
Chain
Supply
Chain
Markets
SCOR™
CCOR™
DCOR™
MCOR™
Marketing Sales
Design
HR IT
Finance
Process
Suppliers
Bu
sin
ess
Cu
sto
mers
2005 1996
20072008
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SCORSupply Chain Operations
Reference model
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SupplierCustomer Customer’s
CustomerSupplier’s Supplier
Internal or External Internal or External
Your Company
SCOR ModelSCOR ModelBuilding blocks
Processes Metrics
Best Practices Enablers
Plan
MakeDeliverSource Make DeliverMakeSourceDeliver SourceDeliverSource
Return Return Return
Return ReturnReturn
Return Return
Structured around 5 distinct management processes
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Contains 3 levels of detailLevel Description Schematic Description
1 Top Level (Processes)
Defines scope and contents of SCOR application – here you define the basis of competitive performance objectives
2 Configuration Level (Process Categories)
The Supply Chain is “custom-configured” here – around 30 “process categories”. Companies implement their operating stragegies thru a single and unique Supply Chain configuration
3 Process Element Level (Decompose Processes)
Level 3 defines the Company ability to successfully compete within it’s chosen market. It consists of: •Process element definition •Process elements I/O info •Process performance metrics •Best practices if applicable •System ability to support best practicesCompanies “adjust” their operating strategies on Level 3
4 Implementation – process element decomposing
Implementation of specific SCM practices.Level 4 defines practices used to reach competitive advantages and adapt to constant business environment changes
Su
pp
ly C
hai
n O
per
atio
ns
Ref
eren
ce m
od
elO
ut
of
sco
pe
Plan
DeliverMakeSource
ReturnReturn
P3.1Identify, Prioritize and Aggregate Production
requirements P3.3Balance Production
Resources with Production
RequirementsP3.2
Identify, Assess and Aggregate Production
Resources
P3.4Establish Detailed Production Plans
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5 Processes5 Processes
Cust
om
ers
Sup
plie
rs DeliverMakeSource
PlanPlan
Return Source Return Deliver
EnableEnable
ExecutionExecution
ManagementManagement
PlanningPlanning
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Models Contents
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Different Audiences
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M2S2 D2 S1
European RM Supplier
European RM Supplier
Other RM Suppliers
Other RM Suppliers
Plant
ALPHALocal
Distributors
Local Distributors
M1S1 D1
D1
S1 D1
M2
S2
D2
S1
China Customs -
POE
China Customs -
POE China OEMChina OEM
Distribution nCenters
S1 D1
Brazil Customs -
POE
Brazil Customs -
POE
S2 M1 D1
Fiscal Inspection -
POE
Fiscal Inspection -
POE
DC’s in other states
S1 D1
S1 D1 S1 D1
S1 D1
M1.1 M1.2 M1.3 M1.4 M1.5
Production Planning
Production Planning
Production Orders
Production Orders
Production & Testing
Production & Testing
PackagingPackaging Unitization & protection
Unitization & protection
M1.6
Release to dispatch
Release to dispatch
SCOR Mapping
SR1DR1
SR1
SR1DR1
DR1
P4
P4
P3
P3P
2
P2
P1
P1
Production Rules
Mngmnt
Production Rules
Mngmnt
EM.1
Production Performance
Mngmnt
Production Performance
Mngmnt
EM.2
Production Reports Mngmnt
Production Reports Mngmnt
EM.3
WIP Mngmnt
WIP Mngmnt
EM.4
Equipment & Utilities Mngmnt
Equipment & Utilities Mngmnt
EM.5
Internal Transport Mngmnt
Internal Transport Mngmnt
EM.6
Production Relations Mngmnt
Production Relations Mngmnt
EM.7
Claims & Internal
Standards Mngmnt
Claims & Internal
Standards Mngmnt
EM.9
P4P4P3
P3P
2
P2
P1
P1
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Integrated set of performance metrics
Supply Chain Operations Reference-model (SCOR)
Level Description Schematic Metrics
1 Top Level (Processes)
Level 1 metrics characterize performance of the supply chain as a whole, define the basis of competition, and enable the setting of business-wide performance targets
2 Configuration Level (Process Categories)
Level 2 metrics characterize performance of the configured processes
3 Process Element Level (Decompose Processes)
Level 3 metrics provide details on performance issues and highlight potential corrective actionsBalance Production Resources
with Production RequirementsEstablish Detailed Production Plans
Identify, Prioritize, and Aggregate Production
Requirements
Identify, Assess, and Aggregate Production
Resources
P3.1
P3.3 P3.4
P3.2
Plan
DeliverMakeSource
ReturnReturn
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Level 1 Attributes & Metrics
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Level 1 Attributes Definition
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Different metrics are important at each level
• Business requirements (share, cash flow, operating income)
• Customer, product and performance priorities• Operating performance measures, benchmarks and targets
Basis ofCompetition
SCOR Level 1
Configuration • Supply, manufacturing & distribution asset constraints / return considerations
• Product volume & complexity considerations
• Channel constraints & requirements • Technology constraints & enablers
Supply-ChainConfiguration
SCOR Level 2
OperationsStrategy
• Performance targets
• Process• Practices• Enabling software
Performance Levels,
Practices & Systems Selection
SCOR Level 3
• Time-phase targets• Phased implementation plans• Program governance• Detailed implementation
Supply-Chain Processes &
Systems Implementation
SCOR Level 4
IntraCompany
Supply-Chainimprovements
InterCompany
IntraCompany
Process, Practice &System Configuration
Elements
IntraCompany
InterCompany
InterCompany
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Learning SCOR
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The SCOR Practitioner Lifecycle
How do I use it?
Pilot
What is SCOR?
Learn
How do I grow it?
Deploy
How do I refine it?
Mature
What’sNext?
Renew
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SCOR Curriculum
Learn Pilot Deploy Mature Renew
Basis Training
SCORFramework
SCORImplementation
SCORTeam
SCOR and Six-Sigma/Lean
DCOR
Executive Track
Executive SCOR
Framework
Executive SCOR Implementation
Executive SCOR Team
Executive SCORBusiness Benefit
Executive SCOR Business Trends
Advanced Track
SCOR AdviserAdvanced SCOR
ModelingSCOR for PBL
SCOR for Risk Management
Advanced SCOR Analysis
SCOR for ITSCOR PracticesBenchmarking
AdvancedSCOR Workshop
SCOR for HR SCOR for M&A
Rapid SCORSCOR for Industries
SCOR for ISO9000
SCOR PracticumSCOR forServices
SCOR for SOX404
SCOR FinancialsSCOR for
Management
Proposed/Future SCC offeringAvailable Late 2007/2008
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Andres von Simson – LATAM Chapter Administration asimson@supply-chain.org
Elcio Grassia – LATAM Chapter Chair
egrassia@yahoo.com
Further info www.supply-chain.org
top related