Using SCOR Best Practice Webinar

Using SCOR® A Best Practice Case Study of a Typical SCOR® Project

Objective

§  This webinar highlights a best-practice application of SCOR®, and summarizes the key steps to effectively utilize SCOR® in your company’s supply chain improvement initiative.

§  It is appropriate for anyone who is thinking about using the SCOR® framework, or those that are doing so and want exposure to additional expertise.

Copyright SCE Limited 2013 2

Agenda

1.  Principles of SCOR Application

2.  Metrics, Performance, and the Business Case

3.  Process and System – Work and Information

4.  Organizational Learning Plan and Next Steps


Principles of SCOR® Application


§  Roadmap

§  Organization

§  Supply Chain Definition


Roadmap

Phase FOCUS Major Deliverables Challenge

0 BUILD ORGANIZATION SUPPORT

•  Sponsor and Key Stakeholder Support

•  Education

Finding the Tipping Point for Change

1 DEFINE THE PROJECT

•  Business Context Summary •  Supply Chain Definition •  Project Scope and Charter

Planning and Organizing a Supply Chain Excellence Initiative

2 ANALYZE PERFORMANCE

•  Scorecard •  Defect Analysis •  Process Analysis

Defining the Metric and Process Performance Gap

3 DEVELOP THE PROJECT PORTFOLIO

•  Project Portfolio •  Implementation Priority

Developing the Project List and Priority for Implementation

4 IMPLEMENT A PROJECT

•  Development, Pilot, and Implementation of a Portfolio Project

•  Results

Low Risk Implementation of a Project that Demonstrates Results

Organization

§  The Active Executive Sponsor(s)

§  Resource Provider

§  Buck Stops Here

§  Steering Team

§  Review and Approve Recommendations

§  Champion Implementation Projects

§  The Project Leader

§  Manage to Schedule

§  Escalate Issues

§  Design Team

§  Analyze and Recommend

§  Commit the Time


Supply Chain Definition

Retail Markets

Distributor Markets

Direct-to-Consumer Markets

OEM and Key

AccountsGovernment Home

DeliveryInternational

Food Products X X X

Technology Products

X X Developing X X X

Durable Products

X X X

Fowlers North America

Customer/Market Channels


Metrics, Performance, and the Business Case


§  Scorecard

§  Portfolio

§  Priority

§  Benefits

9

Scorecard

Technology Products Group Benchmark Data

2-May-11 Performance Attribute or Category

Level 1 Performance Metrics 2010 Act

Parity 50th

Percentile

Advantage 70th

Percentile

Superior 90th

Percentile Parity Gap Competitive

Gap

Competitive Gap

Analysis Source

External

Supply Chain Delivery Reliability

Perfect Order Fulfillment 30.2% 74.0% 81.0% 88.0% -43.8% -57.8%

$6,750,000

SCORmark

Supply Chain Responsiveness

Order Fulfillment Cycle Time 11.0 10.0 6.50 3.0 -1.0 -4.5 SCORmark

Supply Chain Flexibility Upside Supply Chain Flexibility 91.5 60 45.0 29 -31.5 -46.5 SCORmark

Internal

Supply Chain Cost

Cost of Goods 63.6% 54.7% 44.3% 26.0% -8.9% NA $40,050,000 Hoovers

Supply Chain Management Cost 12.8% 9.5% 6.8% 3.9% -3.3% -3.3% $14,850,000 SCORmark

Supply Chain Asset Management Efficiency

Inventory Days of Supply 60.5 20.4 8.9 0.0 -40.1 -40.1 $31,442,000 Hoovers

Portfolio


Project Number Project Phrase Project Description Revenue ($) Perfect Order

Fulfillment (%)

Order Fulfillment Cycle Time (days)

Upside Supply Chain Flexibility (days)

Total Supply Chain Management Cost ($)

COGS ($) Inventory ($)

$450,000,000 30.2% 11.0 91.5 $57,600,000 $286,200,000 $47,437,000

1

Improve Demand Management and Forecasting

This project will improve poorly defined practices, underutilized modeling techniques, and untrained personnel.

8.0% $1,660,000

Baseline

11

Establish Formal Return Management

This project will define and implement a reverse logistics processes from goods movement to policy to the authorization process.

$1,350,000 $660,000

12

Eliminate Poor Inventory Control Practices

This project will focus on defects that relate to inventory record accuracy, shrinkage, and cycle counting.

2.5% $1,660,000

$4,500,000 64.5% 1.0 35.0 $14,715,540 $16,182,000 $16,900,000$454,500,000 94.7% 10.0 56.5 $42,884,460 $270,018,000 $30,537,000

BenefitProjected Performance Level


Priority

Benefits

§  Average OI improvement of 3% to sales (high 4.5% - low 1.5%)

§  Typical Inventory Turn improvements of 20%

§  30% Faster System Implementations with 30% more Functionality

§  Continuous Improvement Portfolios Refreshed at a Value of 0.5%

§  Mitigation of costs associated with risk management



ROI

Fowlers Project Portfolio

FY 1 FY 2 FY 3100% 25% 40% 100%

1 (250)$ 75$ 120$ 300$ 1.98

2 -$ -$ -$ -$ -

3 (6,500)$ 625$ 1,000$ 2,500$ 0.63

4 -$ -$ -$ -$ -

5 (1,800)$ 1,400$ 2,240$ 5,600$ 5.13

6 (1,100)$ 625$ 1,000$ 2,500$ 3.75

7 (250)$ 1,250$ 2,000$ 5,000$ 33.00

8 (2,200)$ 2,025$ 3,240$ 8,100$ 6.08

9 (2,250)$ 4,375$ 7,000$ 17,500$ 12.83

10 -$ -$ -$ -$ -

11 (750)$ 775$ 1,240$ 3,100$ 6.82

12 (125)$ 75$ 120$ 300$ 3.96

(15,225)$ 11,225$ 17,960$ 44,900$

Improve Supplier Flexibility

Implement Formal Product Life Cycle Management ProcessEngineer an Integrated Tactical Planning Process

Eliminate Poor Inventory Control Practices

Implement Sales and Operations Planning

Improve Efficiency and Effectiveness of the Physical Supply Chain Network

Tighten Up Order Management Discipline

Establish Formal Return Management

Improve Demand Management and Forecasting

Optimize Supply Management Practices

Improve Information Technology Effectiveness

Improve Data Integrity

Ist Year Cost

Investment

3 Year BenefitGross EVA Benefit ($ in 000's) 3 YR ROI

% of Annualized Benefit Achieved

Grand Total


Value

Process and System – Work and Information


§  Staple Yourself to an Order

§  SCOR® Level 3 Process Analysis

§  SCOR® Level 4 Process Development


SCOR®


Hierarchy


Worksheet

Interviewees

Accountable Function

Level 4 Step Description System Module Responsible Event Time

1

Enter the description of each of the process steps; often referred to as Level 4 process steps

Enter the System Module and/or Transaction

Enter the title(s) of those doing the work

This is an effort of the amount of time (often calculated in minutes) and is normalized to one of four transactions, i.e. purchase order, work order, sales order, return authorization, or forecast

2

0

Initials Relative Weight

Interviewee's Initial

This compares the relative impact to the rest of the disconnects in the list

Enter the primary transactional input(s) to this process

Enter the SCOR Level 3 Process element ID and description, i.e., M1.1 Schedule Production Activities

Enter the primary transactional output(s) to this process

Process Steps (>4 and <11)

Total Event Time for Process Steps

Enter the interviewees from the interview planning worksheet.

Enter the title of the ultimate role accountable to the performance of this SCOR Level 3 process.

Primary Input(s) SCOR Element Primary Output(s)

Disconnects causing rework and/or extended wait time

Disconnect Description

Describe major disconnects that cause process steps to be reworked and/or add to process wait time (delay)

Business Rules

Enter the business rules, both formal and informal, that directly or indirectly influence process performance

Process Analysis


S1.1Schedule Product Deliveries

S1.2Receive Product

S1.3Verify Product

S1.5Authorize Supplier Payment

S1.4Transfer Product

Mx.1Schedule Production Activities

Mx.2Issue Product

Mx.3Produce and Test

Mx.4Package

Mx.5Stage Product

Mx.6Release Product to Deliver

Dx.1Process Inquiry & Quote

Dx.2Receive, Enter, & Validate Order

Dx.3Reserve (Resources) Inventory and Determine Delivery Date

Dx.4Consolidate Orders

Dx.5Build Loads

Dx.6Route Shipments

Dx.7Select Carriers and Rate Shipments

Dx.8Receive Product from Source or Make

Dx.9Pick Product

Dx.13Receive & Verify Product by Customer

Dx.12Ship Product

Dx.15Invoice

Dx.11Load Product & Generate Shipping Docs

Dx.10Pack Product

P1Plan Supply Chain

P2Plan Source

P3Plan Make

P4Plan Deliver

Mx.7Waste Disposal

SCOR® Level 4


P3.1.1Complete month end validation

P1.1.1Analyze forecast error and BIAS performance

P1.1.2Generate and validate statistical forecast

P1.1.4Conduct Demand Review and Approve Plan

P1.1.5Update launch and replenishment NPD plans and forecasts

P1.1.7Update promotional event calendar

P1.1.8Update customer account plans

P1.1.6Identify demand shaping opportunities

P1.1.3Conduct Pre-Demand Detailed Review

FINANCE

1

DEMAND PLANNING

2

DEMAND PLANNING

3

DEMAND PLANNING

4

SALES & MARKETING

5

SALES

15

MARKETING

13

MARKETING

10

SUPPLY PLANNING

11

P1.2.3Update Forecast

SUPPLY PLANNING

6

SCOR® P1.1S&OP: Demand Plan

Organizational Learning Plan and Next Steps


§  Organizational Learning

§  Individual Development

§  Next Steps

Organizational Learning

1.  Executive Brief

2.  Using SCOR® Workshop – On Line

3.  Using SCOR® Workshop – On Site

4.  Supply Chain Excellence Project – Pilot 1.  Broad Scope Strategy 2.  Narrow Scope Kaizen Event

5.  Supply Chain Excellence Continuous Improvement


Individual Development

1.  SCOR-P Certification – the Supply Chain Council

2.  SCOR-S Certification – the Supply Chain Council

3.  SCOR® Coach – SCE Limited


Next Steps

§  Identify a sponsor

§  Hold an Executive Brief

§  Conduct an on-site Using SCOR® Workshop

§  Evaluate individual learning requirements


Case Study

25


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