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Supply Chain Performance and SCOR

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  1. 1. Supply Chain Performance and SCOR<br />Kulwant, Ma, Michael and Ramandeep<br />
  2. 2. Contents<br />What is Supply Chain ?<br />Measurement of supply chain performance<br />Importance of SCP measurement<br />Tools of SCP measurement<br />Shortcoming of SCP Measurement<br />Supply Chain Performance Management<br />SCOR model<br />Best Practical Use of SCOR <br />Implementation of SCOR<br />Industry Winner’s<br />Examples of use of SCOR <br />Incorporation with Other Theories <br />Conclusion<br />
  3. 3. Supply Chain<br />“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"<br />
  4. 4. SCP Measurements<br />Supply Chain measurements such as Inventory Turns, Cycle Time, and Fill Rate are used to track Supply Chain performance.<br />These metrics help to understand how the company is operating over a given period of time in areas of<br /> Procurement, Production, Distribution, Warehousing, Inventory, Transportation, Customer Service<br />
  5. 5. Importance of SCP Measurement<br />All companies try to lower the supply chain costs<br />Supply chains of all companies must be streamlined and technology-enabled.<br />Organizations that want to streamline supply chains must first understand what is working well---measuring supply chain performance<br />
  6. 6. SCP Measurement Tools<br />Traditional supply chain performance measurement: <br />Scorecards<br />Dashboards<br />Reports<br />
  7. 7. Shortcoming of SCP Measurement<br />Shortcoming of traditional approaches of measuring supply chain performance:<br /> They are not linked to strategy<br />They have a silo approach<br />They have a flat hierarchy<br />
  8. 8. Supply Chain Performance Management<br />SCPM: management for effective and efficient performance in areas of Procurement, Production, Distribution, Warehousing, Inventory, Transportation, Customer Service<br />SCPM should include three capabilities: <br />an analytics framework<br />a process orientation<br />linkages<br />
  9. 9. Analytics framework<br />Overall supply chain objectives<br />The top-line metrics that affect the objective<br />The description, targets and acceptable range for each metric<br />A list of reports where the metric can be found<br />
  10. 10. Analytics framework<br />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<br />The framework should also allow to import popular hierarchies, such as the SCOR framework from Supply Chain Council<br />
  11. 11. Process Orientation<br />The ideal SCPM system should support a process orientation<br />SCPM should address a process orientation by enabling a user to view all key metrics, current performance and recent trends for a process<br />
  12. 12. Linkages<br />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<br />The system should be able to show linkages of any metric with lower-level metrics within the same department<br />
  13. 13. Supply Chain Operations Reference Model (SCOR) <br />Process reference models integrate the well-known concepts of business process reengineering, benchmarking, and process measurement into a cross-functional framework<br />Best Practices Analysis<br />Process Reference Model<br />Business Process Reengineering<br />Benchmarking<br />Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results<br />Characterize the management practices and software solutions that result in “best-in-class” performance<br />Capture the “as-is” state of a process and derive the desired “to-be” future state<br />Capture the “as-is” state of a process and derive the desired “to-be” future state<br />Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results<br />Characterize the management practices and software solutions that result in “best-in-class” performance<br />
  14. 14. Best Practical Use of SCOR <br />In practical use<br /> SCOR model integrate three basic processes of Business:<br /> reengineering, benchmarking and process measurement into a cross-functional framework<br />It is helpful to determine the week links in the business processes. <br /> It is helpful to implement improvements in the weak areas of performance<br />Improve ultimately performance of Business <br />
  15. 15. Importance of SCOR in business<br />In today’s business world , each company want to be the leader in the industry<br />The company can be a leader by<br /><ul><li> making reduction in costs
  16. 16. Increasing the revenue
  17. 17. Making improvement in their management </li></ul> practice <br />SCOR helps to improve performance by comparing with the best in the industry <br />
  18. 18. Where can SCOR model implemented?<br /> These are the following areas , where it can be implemented<br /><ul><li>establishing a new supply chain
  19. 19. improving planning processes
  20. 20. improving distribution processes
  21. 21. improving curriculum
  22. 22. refining research project
  23. 23. in different Govt. projects</li></li></ul><li>Potential Improvements of SCOR <br />
  24. 24. Industry Winner’s<br />
  25. 25. Examples of SCOR Adoptions<br />Consumer Foods<br />Project Time (Start to Finish) : 3 months<br />Investment : US $50,000 <br />First Year Return: US $4,300,000<br />Electronics<br />Project Time (Start to Finish): US 6 months<br />Investment: US $3-5 Million <br />Projected Return on Investment: US $ 230 Million<br />Software and Planning<br />SAP bases APO key performance indicators (KPIs) on SCOR Model <br />Aerospace and Defense<br />SCOR Benchmarking and use of SCOR metrics to specify performance criteria and provide basis for contracts / purchase orders<br />
  26. 26. SCOR In New York Hospital<br />New York Hospital was able to define and measure its supply chain<br />Determine the weak links in its processes<br />And identify necessary improvements<br />39.8 percent for overall labor costs versus 36.6 percent parity<br />Patient to nurse ratios is 7.2 versus 8<br />
  27. 27. SCOR at Sasol <br />Sasol is an integrated energy and chemicals Company<br /> based on South Africa<br />Jolanda Pretorius, business consultant firm applied SCOR<br /> to optimize Supply chain<br />Result is increase in IRR of 139% over the project life period<br />
  28. 28. Incorporation with Other Theories<br />
  29. 29. Conclusion<br />In any manufacturing company Supply Chain covers about 70-75 % of costs <br />Measurement of Supply Chain is necessary<br />Focus on supply chain performance can lead to rise the company as a winner in the industry <br />SCOR model , is a very important tool to measure the performance of supply chain.<br />
  30. 30. Any Question???<br />
  31. 31. References<br /><br /><br /><br /><br />,294698,sid21_gci1345977,00.html<br />
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