Supply Chain Council

&
Supply Chain Operations Reference (SCOR)
Model Overview

Scott Stephens
Chief Technology Officer
Supply-Chain Council, Inc.

303 Freeport Road

Pittsburgh, PA 15215 USA

Version 5.0a
www.supply-chain.org
August, 2001
 Supply Chain Management – Changing Times
 Eighteen months ago – “boom”
 Central issues
 Revenue Capture

 Demand forecast

 Speed

 One month ago – “bust”

 Central Issues
 Cost

 Inventory

 Now – Uncertainty
 Emerging Issues
 Just-in-case vs. just-in-time

 Consumer confidence

 Supply chain management is now a watchword in business, Wall Street,

and in the news media

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 Supply Chain Management
&
The Supply Chain Council

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August, 2001
 • The SCC is an 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.
• Over 700 Company Members
• Cross-industry representation
• Chapters in Australia/New Zealand, Europe, Japan, Korea,
Latin America, and South East Asia with petitions for additional
chapters pending.
• Over 30 new members per month
• 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

The SCC was organized in 1996 by Pittiglio Rabin Todd & McGrath (PRTM) and Advanced
Manufacturing Research (AMR), and initially included 69 voluntary member companies
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 SCC Organization - Chapters and Staffing

Seoul, Korea
Pittsburgh,
Korean
PA Bayer
Management
Assoc.
Headquarters
*Executive Amsterdam-
Tokyo, Japan Europe
Director
Hitachi Siemens

Singapore– Mexico City, Latin

SouthEast Asia America
Intel EXEL
Sydney
Australia / New
Zealand – Accantia

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Under Development: Hong Kong, India
August, 2001 5
 Membership
SCC Member Composition SCC Membership by Region

Practitioners

Software Vendors North America

Europe
Consultants Japan
Other
Universities/Gov.
Orgs/Assns.

 700+ SCC members,

 Composition
 40%: Practitioners
 25%: Enabling Technology Providers
 20%: Consultants
 15%: Universities, Associations, Government Organizations

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 Current Technical Committee Structure

Integration Committee
C-Peter Bolstorff –
Pragmatek
V-Larry Gray – Cobre
Plan CommitteeGroup
Make Committee
C-Katie Kaspar -
C -Ed Biancarelli – Washington Group
VC -Oscar Chappel – Tech Connection
VC -Irving Briks – BellSouth
Source Committee
C-Dennis Zagrodnik – Deliver Committee
Daimler/Chrylser
C - Dan Swartwood –Pragmatek
VC -Paul Welch - Nokia
VC - Rick Hughes – Lockheed Martin
Return Committee

C- Major Scott Koster (USMC)

Intel – Siemens Metrics Committee

RosettaNet
George Brown –
INTEL
Version 5.0a Herbert Heinzel -
August, 2001 Siemens 7
 Supply-Chain Operations Reference-model
(SCOR) Overview

Version 5.0a
August, 2001
 What is a process reference model?

 Process reference models integrate the well-known concepts of

business process reengineering, benchmarking, and process
measurement into a cross-functional framework

Business Process Best Practices Process Reference

Reengineering Benchmarking Analysis Model
Capture the “as-is” state
Capture the “as-is” of a process and derive
state of a process the desired “to-be” future
and derive the state
desired “to-be” Quantify the Quantify the operational
future state operational performance of similar
performance of companies and establish
similar companies internal targets based on
and establish “best-in-class” results
internal targets Characterize the
based on “best-in- Characterize the management
class” results management practices and
practices and software solutions
software solutions that result in “best-in-
that result in class” performance
“best-in-class”
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Version 5.0a
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 SCOR is structured around five distinct
management processes
Plan

Deliver Source Make Deliver Source Make Deliver Source Make Deliver Source

Return Return Return Return Return

Return Return Return

Your Company Customer’s

Suppliers’ Supplier Customer
Customer
Supplier
Internal or External Internal or External

SCOR Model

Building Block Approach

Processes Metrics
Best Practice Technology

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 Supply-Chain Operations Reference-model
(SCOR) 5.0 - Processes
Plan P1 Plan Supply Chain

P2 Plan Source P3 Plan Make P4 Plan Deliver P5 Plan Returns

Source Make Deliver

Suppliers

Customers
S1 Source Stocked Products M1 Make-to-Stock D1 Deliver Stocked Products

S2 Source MTO Products D2 Deliver MTO Products

M2 Make-to-Order

S3 Source ETO Products M3 Engineer-to-Order D3 Deliver ETO Products

Return Return
Source Deliver

Enable

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 SCOR Contains 3 Levels of Detail

Level

# Description Schematic Comments

Supply Chain Operations Reference model

Plan
1 Source Make Deliver Level 1 defines the scope and content for the Supply
Top Level Chain Operations Reference model
Return
(Process Types) Return
Here basis of competition performance targets are set

2 A company’s supply chain can be “configured-to-

Configuration order” at Level 2 from approximately 24 core “process
Level categories.”
(Process Companies implement their operations strategy
Categories) through their unique supply chain configuration.

3 Process Level 3 defines a company’s ability to compete

Element Level successfully in its chosen markets and consists of:
(Decompose • Process element definitions
Processes) • Process element information inputs and outputs
• Process
• performance metrics
P3.1

Identify, Prioritize, and Aggregate

• Best practices, where applicable
• System capabilities required to support best
Production Requirements
P3.3 P3.4

P3.2
Balance Production Resources with
Production Requirements
Establish Detailed
Production Plans
practices
Identify, Assess, and Aggregate
•
Production Resources

Companies “fine tune” their Operations Strategy at

Level 3

Companies implement specific supply chain

4 Implementation management practices at this level
Not Level
in (Decompose Level 4 defines practices to achieve competitive
Scope Process advantage and to adapt to changing business
Elements) conditions

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 Mapping material flow

(S1, D1)
(SR1,DR1,DR3)

Manufacturing
Warehouse

(S1, S2, M1, D1)

(SR1,SR3,DR3)
C u s to m e r

C u s to m e r
European Supplier (S1)
(S1) (D2) (SR1,SR3)
(SR1,SR3) (DR1)
Warehouse
(S1, D1) Warehouse
(S1, D1)
(SR1,DR1,DR3) (SR1,DR1,DR3)
Latin American
Other Suppliers Suppliers
(D1) (D1)

C u s to m e r

Warehouse (S1)
(S1)
C u s to m e r

(S1, D1) (SR1,SR3)

(SR1,SR3)
(SR1,DR1,DR3)

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 Mapping the processes

P1 P1 P1

P2 P3

P
4 P
3 P
2
P2 P P
4 4

European
S2 M2 D2
RM Supplier

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

S1

Alpha Regional Consume

RM ALPHA Warehouses Consumer
r
Suppliers

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 Linking Supply Chain Performance Attributes and
Level 1 Metrics
Performance Performance Attribute Definition Level 1 Metric
Attribute

Supply Chain Delivery The performance of the supply chain in Delivery Performance
Reliability delivering: the correct product, to the correct
place, at the correct time, in the correct condition Fill Rates
and packaging, in the correct quantity, with the
Perfect Order Fulfillment
correct documentation, to the correct customer.

Supply Chain The velocity at which a at which a supply chain Order Fulfillment Lead Times
Responsiveness provides products to the customer.
Supply Chain The agility of a supply chain in responding to Supply Chain Response Time
Flexibility marketplace changes to gain or maintain
competitive advantage. Production Flexibility

Supply Chain Costs The costs associated with operating the supply Cost of Goods Sold
chain.
Total Supply Chain Management
Costs

Value-Added Productivity

Warranty / Returns Processing

Costs

Supply Chain Asset The effectiveness of an organization in managing Cash-to-Cash Cycle Time
Management assets to support demand satisfaction. This
Efficiency includes the management of all assets: fixed and Inventory Days of Supply
working capital.
Asset Turns

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 Supply Chain SCORcard & Gap Analysis
NEW Product Line

Supply Chain SCORcard Performance Versus Competitive Population

Overview Metrics SCOR Level 1 Metrics Actual Parity Advantage Superior Value from Improvements
Delivery Performance to
Supply Commit Date 50% 85% 90% 95%
Chain
Reliability
Fill Rates 63% 94% 96% 98%
EXTERNAL

Perfect Order Fulfillment 0% 80% 85% 90% $30M Revenue

Responsiveness Order Fulfillment Lead times 35 days $30M Revenue

7 days 5 days 3 days
Supply Chain Response Key enabler to cost and
Flexibility Time 97 days 82 days 55 days 13 days asset improvements
Production Flexibility 45 days 30 days 25 days 20 days
Total SCM Management
Cost 19% 13% 8% 3% $30M Indirect Cost

Cost NA NA NA NA NA
INTERNAL

Warranty Cost

Value Added Employee

Productivity
NA $156K $306K $460K NA

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

Cash-to-Cash Cycle Time
Assets 196 days 80 days 46 days 28 days $7 M Capital Charge
Net Asset Turns (Working
Capital)
2.2 turns 8 turns 12 turns 19 turns NA

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 Decomposing Metrics Revenue
Accounts Receivable
Cash Flow
Perfect Order
Fulfillment
Cycle Time

Supplier Schedule Perfect Order

on time delivery Achievement Fulfillment

On Time
On Time
Delivery In Full
In Full
Performance
Docs
Docs
European Damage
RM Supplier Damage
S2 M2 D2
Supplier Perfect Order
on time delivery Fulfillment
Key Other S2
RM S1 M1 D1 M1 D1 S1 D1 S1
Suppliers

S1

Alpha Regional Consume

RM ALPHA Warehouses Consumer
r
Suppliers

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 Revenue
Performance Measurement Accounts Receivable
Cash Flow

Perfect Order
Fulfillment
Perfect Order
Cycle Time
Invento Fulfillment
Goal – 95%
ry
Metrics Supplier Schedule Perfect Order
Conflict Supplier
on time delivery
on time delivery
Schedule
Achievement
Achievement
Fulfillment
Perfect Order
Fulfillment Perfect Order
Actual – 85% Actual – 95%
On Time Actual – 90% On TimeFulfillment
Actual - 85%
Delivery In Full
Delivery In Full
Performance
Performance
Docs
Actual – 99% Docs
European Under-
Damage
Damage
RM Supplier S2 M2 D2
performance Supplier Perfect Order
Processon time delivery Fulfillment
Key Other S2
Under-
RM S1 M1 D1 Systems
M1 D1 S1 D1 S1
Suppliers performance
S1 Process
Systems
Alpha Regional Consume
RM Warehouses Consume
RM ALPHA Consumer
Suppliers rr
Suppliers

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 SCOR Project Roadmap

Analyze Basis •Competitive Performance Requirements

Operations •Performance Metrics
of •Supply Chain Scorecard
Strategy
Competition •Scorecard Gap Analysis
•Project Plan
SCOR Level 1

•AS IS Geographic Map

Configure •AS IS Thread Diagram
supply chain Material Flow •Design Specifications
•TO BE Thread Diagram
•TO BE Geographic Map
SCOR Level 2
Align
Performance •AS IS Level 2, 3, and 4 Maps
Levels, Information •Disconnects
Practices, and and Work Flow •Design Specifications SCOR Level 3
Systems •TO BE Level 2, 3, and 4 Maps

Implement Develop, •Organization

supply chain Test, and Roll •Technology
•Process
Processes and Out •People
Systems

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 SCOR Implementations

 Plan, development, and formation of a company to support a new product line

(Complete)
 Re-engineering of supply chain processes for a corporation (138 divisions, 190
countries, 770 sites) (In process)
 Implementation of SCOR processes corporate-wide
 Level 1 Metrics used as executive evaluation criteria
 Re-organization of logistics groups into Plan, Source, Make, Deliver (Complete)
 Multiple organizations
 Collaborative forecasting
 Contracts and purchase orders

Thinking is easy, acting is difficult, and

to put one's thoughts into action is the
most difficult thing in the world. Goethe

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 SCOR Projects – A Wide Range of Adoption

 Consumer Foods
 Project Time (Start to Finish) – 3 months

 Investment - $50,000 US

 1st Year Return - $4,300,000 US

 Electronics
 Project Time (Start to Finish) – 6 months

 Investment - $3-5 Million US

 Projected Return on Investment - $ 230 Million US

 Software and Planning

 SAP bases APO key performance indicators (KPIs) on SCOR Model

 Aerospace and Defense

 SCOR Benchmarking and use of SCOR metrics to specify performance
criteria and provide basis for contracts / purchase orders

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 Supply Chain Council Outreach
 SCOR Workshops (2000)
 Atlanta, January 20-21  Waldorf, Germany (SAP), August 1-2
 Chandler, AZ (Intel), February 8-9  Auckland, NZ, August 3-4
 Fountainbleu, March 9-10  Singapore (SAP), August 8-9
 Oregon (Intel) March 28-29  Chandler, AZ (Intel) August
 Chicago, April 12-13  Amsterdam, September 28-29
 Sydney, May 4-5  Tokyo, October 5-6
 Singapore, June 1-2  Mexico City, October 12-13
 Detroit, June 22-23  St. Louis, October 26-27
 London, July 11-12  Sydney, November 6-16 (3 - public, SAP, CHH)
 Philadelphia (SAP), July 18-19  Hanover, Germany November 9-10
 Oslo, Norway Dec 3-5

Currently working with Intel to develop an instructor training course

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 Supply Chain Council Outreach
 SCOR Workshops (2001)  Events
 Anaheim, January 20-21  Supply-Chain World-Europe – Berlin, Germany,
 Singapore, February 20-21 Oct 1-3, 2001
 Singapore (BASF), February 22-23  Supply-Chain World-Japan – Tokyo, Japan, Nov 1,
 Cancun, Mexico March 7-8 2001
 New Orleans, April 5-6  SCOR Users Seminar – Washington, DC, USA, Nov
 Melbourne (BHP), April 20-22 14, 2001
 Tokyo, April 23-24  SCC Winter Meetings – Charlotte, North Carolina,
 Brussels (Medtronics), May 2-3 USA, Jan 23-24, 2002
 Gohteburg, May 9-10  Senior Supply-Chain Executive Retreat – Phoenix,
 Singapore, May 18-19 Arizona, USA, Feb. 27 – Mar. 1, 2002
 Charlotte, June 18-19  Supply-Chain World-Latin America, Monterrey,
Mexico, March dates TBD
 Albany, GA (USMC) September 6-7
 Supply-Chain World-North America – New Orleans,
 Einhoven (Origin) Sept 19-19
Louisiana, USA, April 22-24, 2002
 Chicago, September 27-28
 Supply-Chain World-South East Asia – Singapore,
 Berlin, October 4-5
May 15-16, 2002
 Frankfurt (BASF), October 23-25
 Washington DC, November 12-13
 Gotheburg, December 4-5

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 2000 - 2001 Technical Accomplishments

 Released Version 5.0

 Completed Return Processes
 Began updating the Model’s best practice (e-business)
 Began metrics restructure and glossary update
 (Note of caution to users previous to SCOR 5.0)

 Research
 Joint APICS research publication
 Continued support of Penn State / Manugistics Research
 Formation of Research Strategies Advisory Board
 Workshop material development and conduct
 5 versions of workshop developed and delivered– Over 500
members have attended SCOR Workshops with companies like
Intel, HP, EDS, US Department of Defense, Compaq Baxter, SAP,
hosting in-house Workshops

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 SCOR Model Timeline - 6.0

 After completing Version 5.0 changes committees began working

Version 6.0 - tentatively scheduled for release in Spring 2002
 Metrics Revision and Decomposition Trees
 Return – Metrics and Best Practice Complete
 Best Practice and e-Business Improvement
 Collaboration

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 SCOR Model Directions

 Changes anticipated to shift from structural issues to implementation

issues
 Product Development
 Customer/Supplier Relationship Management
 Import / Export
 E-business
 Reverse logistics / warranty returns
 Inventory optimization
 Service environment
 Synchronizing advanced planning and business planning
 Special Industry Groups / International Chapters
 Finance and metrics
 Benchmarking regional issues

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 SCC provides the forum - SCOR documents the
learning

 Process Model provides a toolset for rapidly modeling and understanding the
supply chain
 Metrics provide a toolset for evaluating the supply chain and rapidly identifying
high value opportunities
 Best practices and features provide a candidate list of improvement options
 The SCOR Model is the only model of its type that links these elements and
provides a means for assessment of the supply chain outside of the individual
organization
 Council members have demonstrated dramatic implementation successes in
virtually every industry in every region of the world.
 The pace and number of SCOR implementations is accelerating and more and
more organizations are adopting SCOR as the framework for their supply chain
improvements.

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 The Bottom Line -

 Council members have demonstrated dramatic implementation

successes in virtually every industry in every region of the world.
 The pace and number of SCOR implementations is accelerating and
more and more organizations are adopting SCOR as the framework for
their supply chain improvements.

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