1. Supply Chain Operations Reference (SCOR)
Model Convergence with Lean and Six Sigma
Using Supply Chain Architecture to Manage Enterprise
Transformation
SCOR
Matthew J. Milas Converge
SIX
LEAN
SIGMA

2. © 2006 Matthew Milas
Agenda
What is Convergence
How is SCOR Used for Convergence
Comparison of M th d l i
C i f Methodologies
Benefits of Convergence
g
Why Convergence
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3. © 2006 Matthew Milas
Integrated Improvement
… SCOR, Six Sigma and Lean
SCOR, Six Sigma and Lean aim to improve the
business by optimizing system performance,
reducing variation, and eliminating wasteful
activities.
SCOR Six Sigma Lean
Y= f (X 1 , ... , XN )
μ
σ
• Top-Down Analysis • Variation reduction • Speed in the value chain
• End-to-End View • Problem solving methodology • Waste elimination
• Optimizing supply-chain • Stability and accuracy • Value system redesign
as a whole
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4. © 2006 Matthew Milas
Convergence is a Coordinated Approach
SCOR
Combined
Business
Lean 6σ
Strategy
S
Supply Chain Y
SCOR Benchmarking M
B
Supply Chain
I
Assessment
O
Value Stream
Value Stream T
SYNERGISTIC I
Mapping
Mapping
Lean Six C
Six Sigma Projects
Six Projects
Sigma and Kaizen
and Kaizen
Bottom-line
Bottom-line
Results
Results
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5. © 2006 Matthew Milas
The SCOR Framework
SCOR defines supply chain as the integrated processes of Plan,
Source, Make, Deliver and Return, spanning your suppliers’
supplier t your customers’ customer, aligned with O
li to t ’ t li d ith Operational
ti l
Strategy, Material, Work & Information Flows.
Plan
Plan Plan Plan Plan
Deliver Source Make Deliver Source Make Deliver Source Make Deliver Source
Suppliers’ YOUR COMPANY Customer’s
Supplier Customer
Supplier Customer
Internal or External Return Internal or External
Supply Chain Operations Reference Model
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6. © 2006 Matthew Milas
What is a Process Reference Model?
Process reference models integrate the well-known concepts of
business process reengineering benchmarking and process
reengineering, benchmarking,
measurement into a cross-functional framework
Business Process Best Practices Process Reference
Reengineering Benchmarking Analysis Model
Capture the “as-is” Capture the “as-is” state
state of a process of a process and derive
and derive the the desired “to-be” future
to-be
desired “to-be” Quantify the state
future state operational
performance of
similar companies Quantify the operational
and establish performance of similar
internal targets companies and establish
based on “best-in- internal targets based on
class” results Characterize the “best-in-class” results
management
practices and Characterize the
software solutions management
that result in “best- practices and
in-class
in class” software solutions
ft l ti
performance that result in “best-in-
class” performance
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7. © 2006 Matthew Milas
SCOR Structure for Convergence
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8. © 2006 Matthew Milas
Example SCOR Geo Map – Aerospace Mod Kits
Sqdn
Manufacturer
S1, S2, M2, D2
S1, DR1, DR2
S1, DR1, DR2
Supp e
Supplier B
Sqdn
Supplier A
D2
Supplier C D1
D2
Sqdn
S1, DR1, DR2 Distribution
S1, D1, DR1, DR2
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9. © 2006 Matthew Milas
Example Problem Identification
Delivery
Performance
Goal – 90%
Delivery
P Performance P
1 Actual - 66% 1
Supplier
on time delivery P
Actual – 95% 3
P P Candidate for: P
P
2 4
• Level2 3 Process Review
4
D2 S2
• Kaizen
D2 S2 • Lean Event
• Six Sigma
D1 S1 M1 D1 • Process Improvement S1
S1 D1
Suppliers
Manufacturer Distribution center Squadron
S d
Level 1 Level 2
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10. Level 3 SCOR VSM Map
© 2006 Matthew Milas
S 1.4
Exceeding Requirements
Meeting Requirements
Transfer
Missing Requirements Product
Unknown Transportation 0.5 days
Manufacturing
M 2.1 M 2.2 M 2.3 M 2.4 M 2.5 M 2.6
Issue
Release
Schedule Sourced /
Stage Finished
Productio In-
Produce Finished Product
n Process
and Test Package Product to Deliver
Activities Product
I
10 days 5 days 3 days 1 day
30
days
Sales
D 2.1 D 2.2 D 2.4 D 2.5 D 2.6 D 2.7 D 2.8 D 2.9
D 2.3
Reserve
Receive, Resource
Configur Select Receive
s&
Process e, Enter Carriers Product
Determin
Inquiry and Consolid Route & Rate from
e Delivery Pick
and Validate ate Build Shipment Shipment Source or
Date Product
Quote Quote Orders Loads s s Make
I I I I I
25 days 4 days 6 days 15 days 1 day 5 days
10 15 12 5 days 60
days days days days
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11. © 2006 Matthew Milas
Convergence Implementation Approach
Identify
Opportunities
Plan Strategy
& Benchmark SCOR Prioritize
Opportunities
Measure Allocate
Improvement Resources
Lean
Implement Six Sigma Select
Solutions Approach
Discover
Root Causes
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12. © 2006 Matthew Milas
Comparison of Methodology Strengths
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13. © 2006 Matthew Milas
Benefits of Convergence
Standard framework
System’s opportunity identification
System visibility
S t i ibilit
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14. © 2006 Matthew Milas
Benefits of a Standard Framework
Standard process and metrics framework for
organizing enterprise processes and
improvements
– Manage processes across enterprise
– Common processes across “different” products,
programs,
programs & business units
– Measure, track, categorize, and align operational
improvements
– Library of categorized best practices
– Cataloging system for process improvement ideas
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15. © 2006 Matthew Milas
Benefits of Opportunity Identification
High-level system’s process assessment tool
– Identifying, prioritizing, and aligning improvements
• Prioritizing based on alignment to specific strategies, system
g g p g , y
impact, focus area, or other criteria
– Linking business strategy to improvement efforts
• Resource planning and allocation
– Strategic competitive assessment and benchmarking
• Internal processes across enterprise
• External competitive performance with system metrics
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16. © 2006 Matthew Milas
Benefits of System Visibility
A system’s view of processes & performance
– Map the whole system to avoid system sub-
optimization through local optimization
– Identify constraints and critical paths to improve
performance
– Manage multiple projects running concurrently across
g j g y
enterprise
– Identify high-level improvement disconnects and
opportunities
– Collaborate with suppliers and customers to improve
relations
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17. © 2006 Matthew Milas
Why Convergence
Large companies experience disarray implementing
continuous i
ti improvementt
– Lack of “true” leadership and cultural change management
– Lack of architecture for managing enterprise transformation
An Imperfect world is the reality, but we must
continue to compete
p
Convergence instills a structured approach that is
more systematic, manageable, and holistic
y g
– Mitigates imperfections and augments continuous improvement
Convergence bridges the gap between strategic enterprise
planning, continuous improvement, and transformation
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