scor lean six sigma

8/8/2019 Scor Lean Six Sigma

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Supply ChainExcellence

ISSSP

SCOR Executive Brief

Peter BolstorffSeptember 25, 2003


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Copyright 2003 SCE Limited

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Key Questions? Who is the Supply Chain Council?

? What is SCOR?

? How do we use SCOR to improve supplychain performance?

? How does Lean Six Sigma relate to SCOR?

?

What are the most common next steps?


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The Supply Chain Council? The Supply-Chain Council (SCC), www.supply-

chain.org, is an independent not-for-profit

corporation formed in 1996 as a grassroots initiative

to develop a standard supply chain framework.

? Founding companies included Bayer, Compaq,Proctor & Gamble, Lockheed Martin, Nortel,Rockwell Semiconductor, Texas Instruments, 3M,

Cargill, Pittiglio, Rabin, Todd, & McGrath (PRTM),and AMR Research, Inc.


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The Supply Chain Council? The SCC mission is to perpetuate the use of SCOR

through technical development, research, education,

and conference events.

? The SCC has 800 members worldwide, withchapters in Europe, Japan, Korea, Latin America,Australia/New Zealand, and Southeast Asia

? The SCC sponsors six SIG groups: Six Sigma,

Aerospace and Defense, Automotive, Electronics,Retail and Consumer Packaged Goods, andPharmaceuticals


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What is SCOR?? The Supply Chain Operations

Reference (SCOR) combinesstandard supply chainprocesses, metrics, and world-

class benchmarks in onereference document

? SCOR analyzes over 100processes in three categories

? Planning MRP, DRP, MPS,and Forecasting

?

Execution Purchase Orders,Work Orders, Sales Orders,and return authorizations

? Enabling Policy, Master Data(Item), and Teamwork

#

Level

Schematic

1

2

3

4

ConfigurationLevel

(ProcessCategories)

ProcessElement Level

(DecomposeProcesses)

Plan

DeliverMakeSource

ImplementationLevel

(DecomposeProcess

Elements)

S

upplyChainOperationsReferencemodel

Top Level

(Process Types)

Notin

Scope

Description

BalanceProductionResources withProductionRequirements

EstablishDetailedProductionPlans

Identify,Prioritize,and Aggregate

ProductionRequirements

Identify,Assess, andAggregateProductionResources

P3.1

P3.3 P3.4

P3.2

ReturnReturn


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Level One Framework

Supplier

Plan

CustomerCustomers

Customer

Suppliers

Supplier

Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliver

Internal or External Internal or External

YOUR COMPANY

Source

Supply Chain Operations Reference Model

PlanPlanPlanPlan

Return

SCOR defines supply chain as the integrated processes of Plan, Source, Make,Deliver and Return, spanning your suppliers supplier to your customers

customer, aligned with Operational Strategy, Material, Work & InformationFlows.


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S1 Source

Stocked Product

S1.1

Schedule Product

Deliveries

S1.2Receive Product

S1.3

Verify Product

S1.4

Transfer Product

S1.5

Authorize Supplier

Payment

M1

Make-to-Stock

M1.1

Schedule Production

Activities

M1.2Issue Product

M1.3

Produce and Test

M1.4

Package

M1.5

Stage Product

M1.6

Release Product to

Deliver

D1

Deliver Stocked

Product

D1.1

Process Inquiry & Quote

D1.2Receive, Enter, & Validate

Order

D1.3

Reserve Inventory and

Determine Delivery Date

D1.4

Consolidate Orders

D1.5

Plan and Build

Loads

D1.6

Route Shipments

D1.7

Select Carriers and Rate

R1

Return Defective

Product

DR1.1

Authorize Return

DR1.2Schedule Product Return

DR1.3

Receive Defective

Product

SR1.4

Verify Defective Product

SR1.5

Dispositio n Defective

Product

SR1.6

Return Replacement

or Credit

P2

Plan Source

P2.1

Identify, Prioritize, and

Aggregate Product

Requirements

P2.2Identify, Assess, and

Aggregate Product

Resources

P2.3

Balance Product

Resources with Product

Requirements

P2.4

Establish Sourcing Plans

ED

Enable Deliver

ED.1

Manage

Deliver Business Rules

ED.2Assess Delivery

Performance

ED.3

Manage

Deliver Information

ED.4

Manage

Finished Product

Inventories

ED.5

Manage

Deliver Capital

Assets

ED.6

Manage Transportation

ED.7

Ma na e

Level Three Framework


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Standard DefinitionsProcess Element: Schedule Product Deliveries Process Element Number: S1.1Process Element DefinitionScheduling and managing the execution of the individual deliveries of product against an existing contract orpurchase order. The requirements for product releases are determined based on the detailed sourcing plan orother types of product pull signals.

Performance Attributes MetricReliability % Schedules Generated within Suppliers Lead Time

% Schedules Changed within Suppliers Lead Time

Responsiveness Average Release Cycle of ChangesFlexibility Average Days per Schedule ChangeAverage Days per Engineering Change

Cost Product Management and Planning Costs as a % of ProductAcquisitions Costs

Assets None Identified

Best Practices FeaturesUtilize EDI transactions to reduce cycle timeand costs

EDI interface for 830, 850, 856 & 862 transactions

VMI agreements allow suppliers to manage(replenish) inventory

Supplier managed inventories with scheduling interfaces toexternal supplier systems

Mechanical (Kanban) pull signals are used tonotify suppliers of the need to deliver product

Electronic Kanban support

Consignment agreements are used to reduceassets and cycle time while increasing theavailability of critical items

Consignment inventory management

Advanced ship notices allow for tightsynchronization between SOURCE and MAKEprocesses

Blanket order support with scheduling interfaces to externalsupplier systems


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Standard Organizational

MetricsPerformanceAttribute

Performance Attribute Definition Level 1 Metric

Delivery PerformanceFill Rates

Supply ChainDelivery Reliability

The performance of the supply chain indelivering: the correct product, to the correctplace, at the correct time, in the correctcondition and packaging, in the correctquantity, with the correct documentation, tothe correct customer.

Perfect Order Fulfillment

Supply ChainResponsiveness

The velocity at which a supply chainprovides products to the customer.

Order Fulfillment Lead Times

Supply Chain Response TimeSupply ChainFlexibility

The agility of a supply chain in respondingto marketplace changes to gain or maintaincompetitive advantage.

Production Flexibility

Cost of Goods SoldTotal Supply Chain ManagementCostsValue-Added Productivity

Supply Chain Costs The costs associated with operating thesupply chain.

Warranty / Returns ProcessingCostsCash-to-Cash Cycle TimeInventory Days of Supply

Supply Chain AssetManagementEfficiency

The effectiveness of an organization inmanaging assets to support demandsatisfaction. This includes the managementof all assets: fixed and working capital.

Asset Turns


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What have others used SCOR

to accomplish?? Cost Reduction Productivity

Improvement? Direct

? Indirect

? Delivery Performance

Improvement? On Time In Full Perfect Order? Synchronize Lead-time

? Application optimization? Upgrade

? Under Utilization

? Implement Operational Strategy

? Software Selection &Implementation? Business Requirements

? SKU Rationalization? Supply Chain Six Sigma and Lean

Enterprise? Project and Candidate Selection

? Organizational Learning? Continuous Improvement

? Efficient Consumer Response? Forecast Accuracy

? Category Marketing

? Collaborative PlanningForecasting and ReplenishmentCPFR

?

Physical Network Analysis Material Flow Design

? Acquisition? Due Diligence? Integration


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How Do We Use SCOR?? Phase 0 Building Organizational Support for Supply Chain

Improvement

? Phase I Discover the Opportunity? Week One

? Phase II Analyze Basis of Competition? Weeks Two through Four

? Phase III Design Material Flow? Weeks Five through Ten

? Phase IV Design Work and Information Flow? Weeks Eleven through Seventeen

? Phase V Implementation? Lean Projects? DMAIC Projects? Software Implementation Detail Solution Design, Configuration, Test, and

Go Live


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Supply Chain Definition

US Retail

Markets

US Distributor

Markets

US Direct-to-ConsumerMarkets

US OEM - Key

Accounts

US

Government

US Home

DeliveryInternational

FoodProducts

X X X X X

Technology

ProductsX X X

DurableProducts

X X

Geography - Customer or Market Channel

Product

Supply Chain

Definition Matrix


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Total Supply Chain

Management Cost? Order Management Cost

? Customer Service

? FG Warehouse

? Outbound Transportation

?

Material Acquisition? Purchasing

? RM Warehouse

? Inbound Transportation

? Planning Costs

? Demand Planning

? Supply Planning

? IT Cost for Supply Chain

? Inventory Carrying Costs 0

2

4

6

8

10

12

14

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Auto mo t ive

Elect ro nics

A p p l i a n c e &

Indus t rial

C o mp ut e r T el e co m E le c t ro n ic

Co mp o nents

BIC Median

Copyright 2001 Performance Measurement Group LLC and PRTMSupply Chain World Europe 9/25/01


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Material Flow Detail


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SCOR Best Practices


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Transactional ProductivityS1.1 S1.2 S1.3 S1.4 S1.5 Assumptions

Volume

PO 3655 All Purchase Orders 2002Receipts 12560 3.4 Lines per Receipt

QA Record 12560 1 QA Record per Line

Transfers (Lines) 12560 1 Transfer per LineInvoices 12560 1 Invoice per Receipt

Event Time 49 4 5 18 6

Elapsed Time 4510 10 1440 10080 10080Yield 71.0% 97.0% 92.1% 42.4% 46.3%

People Minutes w/ Yield 252246 51793.8 68186.8 533208 162765People Minutes w/o Yield 179095 50240 62800 226080 75360

124800 Minutes = 1 Person @ 1 Year


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The SCOR Business Blue Print

S2.2 -

Receive

Product

S2.1 -

Schedule

Product

Deliveries

S2.3 - Verify

Product

S2.4 -

Transfer

Product

S2.5 -

Authorize

Supplier

Payment

M2.1 -

Schedule

Production

Activities

M2.2 - Issue

Sourced/In-Process

Product

M2.3 -

Produce and

Test

M2.4 -

Package

M2.5 - Stage

Finished

Product

M2.6 -

Release

Finished

Product

DR2.1 -

Authorize

MRO Produc t

Return

DR2.2 -

Schedule

MRO Return

Receipt

DR2.3 -

Receive MRO

Product

DR2.4 -

Transfer MRO

Product

SR2.1 -

Identify MRO

Product

Condition

SR2.2 -Disposition

MRO Produc t

SR2.3 -

Request MRO

Return

Authorization

SR2.4 -

Schedule

MRO

Shipment

SR2.5 -Return MRO

Product

D2.1 -

Process

Inquiry &

Quote

D2.2 -

Receive,

Configure,

Enter &

Validate

Order

D2.3 -

Reserve

Resources &

Determine

Delivery Date

D2.4 -

Consolidate

Orders

D2.5 - Plan &

Build LoadsD2.6 - Route

Shipments

D2.7 - Select

Carriers &

Rate

Shipments

D2.8 - Pick

Staged

Product

D2.9 - Load

Vehicle,

Generate

Shipping

ocumentation,

Verify Credit,

& Ship

Product

D2.10 -

Receive &

Verify

Product at

Customer Site

D2.11 - Test

& Install

Product

In

P

Supplier

Customer


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Phase V: Implementation? Detailed Design

? Pilot

? Rollout

? Six Sigma Environment

? Define

? Measure

? Analyze

? Improve

? Control

? Lean Six SigmaFormalized Integration

? Project Portfolio

? Preliminary Charters

? Metric Definition andOpportunity Analysis

? Project ExecutionMethodology and overallProgram Management


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SCOR Project Portfolio

Description Cost Yr1Benefit

Yr2Benefit

Yr3Benefit

Savings ROI

1 Poor Planning 2,200 3,956 6,330 15,825 26,111 11.92 Supply Management 150 690 1,102 2,757 4,549 30.33 Reactive Logistics Planning

and Execution250 598 956 2,390 3,944 15.8

4 Disparate Systems 6,500 311 498 1,246 2,055 .3

5 Poor Data Integrity 1 533 853 2,134 3,520 35206 Hit-or-Miss Product Life Cycle

Management500 1,110 1,776 4,440 7,326 14.7

7 Undisciplined OrderManagement

250 587 939 2,349 3,875 15.5

8 No Formal ReturnManagement

1,200 9,500 15,200 13,300 38,000 31.6


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Effort ImpactEase Of Implementation

EASY TOUGH

1 8BIG

PAY

OFF

6

2

5 7 3

4

B

usiness

Impac

t

SMALL

P

AY

OFF


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Financial Impact? High Impact, Short Duration, Self-funded Supply Chain Improvement

? Average ROI 4X to 12X Within 12 months

? Average profit improvement as calculated through Economic ValueAdd (EVA) 3% to sales

? Better Utilization of Current Applications Improved ROA? Business Blue Print to Leverage Needed Upgrades Reduce

operational cost for customizations

? Roadmap for Technology Investments Buy the Right Modules

? Framework for Supply Chain Continuous Improvement Six Sigmaand Lean Enterprise; Year on Year Supply Chain Management ofthe project portfolio 1% profit improvement per year


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How does SCOR relate to Six

Sigma?? SCOR provides a top down

analytical approach to yoursupply chain processes

? Standardized Supply Chain

Measures? Material Flow Efficiency

? Work and Information FlowProductivity

? Organized Project Portfolioaimed at overall supplychain continuousimprovement

? Six Sigma Programscombine effectiveleadership infrastructurewith a systematic

education based executionapproach

? Leadership Training

? Project Results Trackingand Management

? Human ResourceDevelopment RewardSystem

? DMAIC DMADV Process Management


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How does SCOR relate to Six

Sigma?? SCOR when implemented under a Six Sigma

program yields bigger savings faster

? Typical Six Sigma project selection brainstorming

exercises may focus resources on the stacks ofpennies versus the dollar bills and potentially sub-optimize processes

? Companies who have focused their Black Beltresources on COGS reduction are now pointing to

the next area of cost Supply Chain and want toleverage project selection lessons learned from thepast


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How does SCOR add value to

Six Sigma?? Supply Chain Definition Program Scope and DMAIC Project

Charters

? SCOR Metrics Operational Definition, CTQ, and COPQ

? Competitive Requirements for Delivery Performance, Flexibility

and Responsiveness, Supply Chain Cost, and AssetManagement Efficiency Customer Requirements

? Standardized Process Definition for Material, Work, andInformation Flow Data Analysis

? Process Mapping Techniques Process Analysis and Generate

Creative Solutions? Organized Project Portfolio Project and Candidate Selection


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Six Sigma Value Adds? Program Infrastructure (Leadership, Training, Formalized

Resource Plan) SCOR Executive Sponsor, Steering Team,Project Leader, and Design Team

? Data Collection Techniques (Stratification, Sampling, Sigma

Calculation, and Yield) SCORcard Gap Analysis? Data Analysis Techniques (Pareto Chart, Run Chart, Histogram,

Fishbone Analysis, FMEA, etc.) Material, Work, andInformation Flow Disconnect Analysis

? Process Analysis Techniques (Process Maps, Value StreamMaps, etc.) Geographic Map and Swim Diagram


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Next Steps

? Learn more about SCOR and Six SigmaIntegration

? Identify candidate supply chains for analysis? Introduce a SC?R Certification process to

select candidates from your Black Beltresource list

? Start the train do review cycle

? Expect Short and Long Term Results


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ProEx SC?R CertificationThe AIT Group www.theaitgroup.com

Executive

Briefing Session 1 Session 2 Session 3

Team

Certifications

On-site & Remote Support On-si te & Remote Support On-site & Remote Support

Train

Apply

Rev iew Tra in

Apply

Review Train

Apply

ReviewPrep

2 weeks 5 days

3 weeks

1 day 4 days

3 weeks

1 day 4 days

3 weeks

1 day

Session 1 - Deliverables Session 2 - Deliverables Session 3 - Deliverables Thought Process Map (TMAP)

Competitive Positioning

Kano Analysis Industry Comparison

Supply Chain Profile Supply Chain Definition Matrix SCOR Charter Level 1 Metrics Definition / NEM

PMG Benchmark Survey SCORcards Requirements Gap Analysis

SCORcard& Gap Analysis Review

Thought Process Map (TMAP)

Geographic Map

Value Stream Map (Material Flow) As-Is Material Flow Map

Level 2 Metrics Definition / NEM Material Flow Performance Summaries Material Flow Disconnect Analysis

?Brainstorming Summary?Cause/Effect Analysis?Failure Modes & Effects Analysis

To-Be Material Flow Map

Disconnect Opportunity Assessment Quick Hit Project Charters Status Review

Thought Process Map (TMAP)

Transactional Analysis

Value Stream Map (Work & Info Flow) As-Is Work & Info Flow Map

As-Is Productivity Summary As-Is Swim Diagrams Level 3 Metrics Definition / NEM Level 3 Baseline Blueprint

To-Be Work & Info Flow Map To-Be Productivity Summaries Project Portfolio & ROI Analysis

Effort / Impact Assessment Portfolio Prioritization Deployment / Resource Plan Certification Review

Business Design & Project SelectionPerformance BaselinePrep

SC? R Champion Certification (12 weeks)

Project Leader

Black

Belt

FinanceProcess

Owners

Project Leader

BlackBelt

FinanceProcessOwners

Project Leader

BlackBelt

FinanceProcessOwners

Supply Chain Thread #1

Supply Chain Thread #2

Demand Chain Thread #3

SC? RDeployment Teams


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Contact Information:

Rod ReckerTelephone: (530) 587-1575Email: [email protected]

scor lean six sigma

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