Supply Chain Performance and SCOR

1. Supply Chain Performance and SCOR Kulwant, Ma, Michael and Ramandeep

2. Contents What is Supply Chain ? Measurement of supply chain performance Importance of SCP measurement Tools of SCP measurement Shortcoming of SCP Measurement Supply Chain Performance Management SCOR model Best Practical Use of SCOR Implementation of SCOR Industry Winner’s Examples of use of SCOR Incorporation with Other Theories Conclusion

3. Supply Chain “A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer"

4. SCP Measurements Supply Chain measurements such as Inventory Turns, Cycle Time, and Fill Rate are used to track Supply Chain performance. These metrics help to understand how the company is operating over a given period of time in areas of Procurement, Production, Distribution, Warehousing, Inventory, Transportation, Customer Service

5. Importance of SCP Measurement All companies try to lower the supply chain costs Supply chains of all companies must be streamlined and technology-enabled. Organizations that want to streamline supply chains must first understand what is working well---measuring supply chain performance

6. SCP Measurement Tools Traditional supply chain performance measurement: Scorecards Dashboards Reports

7. Shortcoming of SCP Measurement Shortcoming of traditional approaches of measuring supply chain performance: They are not linked to strategy They have a silo approach They have a flat hierarchy

8. Supply Chain Performance Management SCPM: management for effective and efficient performance in areas of Procurement, Production, Distribution, Warehousing, Inventory, Transportation, Customer Service SCPM should include three capabilities: an analytics framework a process orientation linkages

9. Analytics framework Overall supply chain objectives The top-line metrics that affect the objective The description, targets and acceptable range for each metric A list of reports where the metric can be found

10. Analytics framework The framework should allow development of a hierarchy, such that for each Level 1 metric, which is associated with your supply chain objective, you should be able to define associated Level 2 metrics, and for each Level 2 metric, lower-level metrics and so on The framework should also allow to import popular hierarchies, such as the SCOR framework from Supply Chain Council

11. Process Orientation The ideal SCPM system should support a process orientation SCPM should address a process orientation by enabling a user to view all key metrics, current performance and recent trends for a process

12. Linkages An ideal SCPM system should use the analytics framework to define linkages between two metrics that are related to the business process but associated with different departments The system should be able to show linkages of any metric with lower-level metrics within the same department

13. Supply Chain Operations Reference Model (SCOR) Process reference models integrate the well-known concepts of business process reengineering, benchmarking, and process measurement into a cross-functional framework Best Practices Analysis Process Reference Model Business Process Reengineering Benchmarking 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 Capture the “as-is” state of a process and derive the desired “to-be” future state Capture the “as-is” state of a process and derive the desired “to-be” future state 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

14. Best Practical Use of SCOR In practical use SCOR model integrate three basic processes of Business: reengineering, benchmarking and process measurement into a cross-functional framework It is helpful to determine the week links in the business processes. It is helpful to implement improvements in the weak areas of performance Improve ultimately performance of Business

16. Increasing the revenue

17. Making improvement in their management practice SCOR helps to improve performance by comparing with the best in the industry

19. improving planning processes

20. improving distribution processes

21. improving curriculum

22. refining research project

24. Industry Winner’s

25. Examples of SCOR Adoptions Consumer Foods Project Time (Start to Finish) : 3 months Investment : US $50,000 First Year Return: US $4,300,000 Electronics Project Time (Start to Finish): US 6 months Investment: US $3-5 Million Projected Return on Investment: US $ 230 Million 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

26. SCOR In New York Hospital New York Hospital was able to define and measure its supply chain Determine the weak links in its processes And identify necessary improvements 39.8 percent for overall labor costs versus 36.6 percent parity Patient to nurse ratios is 7.2 versus 8

27. SCOR at Sasol Sasol is an integrated energy and chemicals Company based on South Africa Jolanda Pretorius, business consultant firm applied SCOR to optimize Supply chain Result is increase in IRR of 139% over the project life period

28. Incorporation with Other Theories

29. Conclusion In any manufacturing company Supply Chain covers about 70-75 % of costs Measurement of Supply Chain is necessary Focus on supply chain performance can lead to rise the company as a winner in the industry SCOR model , is a very important tool to measure the performance of supply chain.

30. Any Question???

31. References http://emmerson.csc.wilkes.edu:2053/ehost/detail?vid=1&hid=12&sid=f97245a7-bb72-40f8940fdc6a80e50116%40sessionmgr4&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bsh&AN=21545576 http://www.supply-chain.org/papers/list?body=companies+and+SCOR http://www.supply-chain.org/papers/list?body=examples+of+SCOR+use http://en.wikipedia.org/wiki/Supply_chain http://searchsap.techtarget.com/news/column/0,294698,sid21_gci1345977,00.html