Scor Model Convergence With Lean & Six Sigma

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  • 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 2
  • 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 3
  • 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 4
  • 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 5
  • 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 6
  • 7. © 2006 Matthew Milas SCOR Structure for Convergence 7
  • 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 8
  • 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 9
  • 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 10
  • 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 11
  • 12. © 2006 Matthew Milas Comparison of Methodology Strengths 12
  • 13. © 2006 Matthew Milas Benefits of Convergence Standard framework System’s opportunity identification System visibility S t i ibilit 13
  • 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 14
  • 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 15
  • 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 16
  • 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 17