Benchmarking your Supply Chain
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Benchmarking your Supply Chain

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  • Welcome to Keeping SCOR in your Supply Chain <br /> This presentation is on Benchmarking. <br /> I am Joseph Francis, Executive Director of Supply Chain Council, and I am your Narrator. <br />
  • To understand benchmarking, and in particular Benchmarking with SCOR, I need to give you a little introduction to SCOR itself. <br /> You&apos;ll see some of what SCOR has to offer around standards for processes (which are what we ultimately benchmark), Metrics, which are key to quantitative benchmarking, and best practices which are key to qualitative benchmarking <br /> I&apos;ll lead you through the seven steps of a supply chain benchmarking program and then finish with information about Supply Chain Council, and how you can take the results of benchmarking and develop an ongoing performance improvement program for your supply chains. <br />
  • A supply chain is a group of processes (not organizations or functions) which span interactions with suppliers up to interactions with customers primarily focused on fulfilment of the customer order. Essentially wherever there are materials or services flowing to an end customer (or from a customer in a return cycle), the processes involved are supply chain processes. <br />   <br /> There is interaction with suppliers for product design, but that does not involve material flows to end customers. <br />   <br /> There is interaction with customers for sales to support the selection of materials and services, but it does not directly involve flow of materials to end customers. <br />   <br /> When we speak of benchmarking, we are measuring the performance of all the processes between the supply “input” and the customer “output”. SCOR provides very clear start and stop points. <br />
  • SCOR is an open industry standard used to classify and improve supply chains and supply chain processes. <br />   <br /> Because SCOR does not represent organizations, but represents processes activities, it is &apos;boundaryless&apos;. When we speak of benchmarking – we are benchmarking a supply chain, not just an organization (or function). SCOR looks and describes business operations from the Supplier&apos;s Supplier all the way to the Customer&apos;s Customer. <br /> You can think about this as the way SCOR looks from “Cow to Cone” for Ice Cream – imagine looking at processes for producing raw materials like milk, sugar, and flavors on the left hand of this slide, how they combine into ice cream in the center, and then through distribution you get the ice cream cone in the customer&apos;s hands on the right. <br /> SCOR organizes around the five key management processes of <br /> “Plan” or alignment of resources to demand <br /> “Make” or conversion or value-add within a supply chain operation <br /> “Source” which corresponds to buying or acquiring materials or services <br /> “Deliver” which handles all customer interaction, from receiving order to final delivery and installation <br /> “Return” in which you find all processes which reverse material or service flows away from the customer backwards through the supply chain. <br /> With each category, SCOR supplies <br /> Standard names <br /> Standard interconnects <br /> Boundaries only defined by process start/stop points <br /> This framework was developed over the last 12-13 years by a large volunteer team to define, and refine information in supply chain management in order to create a universal standard. <br />
  • SCOR is also a hierarchical framework, so both business activities, metrics, and practices can be looked at from a high level, or very detailed level. <br /> Level 1: Scope - definition of business lines, business strategy, complete supply chains <br /> Level 2: Configuration – defines specific planning models like build to order or build to stock- basically process strategies <br /> Level 3: Activity – specific tasks within the supply chain. This layer focuses on describing what people actually do. <br /> Level 4: Workflow – includes the best practices, job details or workflow of an activity <br /> Level 5: Transaction - this layer gets down to specific detail transactions to perform a job step <br />   <br />
  • SCOR metrics are also organized in layers, and with five key strategic attributes. <br />   <br /> Reliability: The ability to deliver, on-time, complete, in the right condition, packaging and documentation to the right customer <br /> Responsiveness The speed at which products and services are provided <br /> Agility (Flexibility): The ability to change (the supply-chain) in order to support changing (market) conditions <br /> Cost:The cost associated with operating the supply chain <br /> Assets: The effectiveness in managing assets in support of demand satisfaction <br />   <br /> This forms the basis of the SCOR quantitative benchmarking system. <br />
  • Lastly, SCOR has an encyclopedia of best practices. <br /> These are specific features or in general, patterns of organization of workflows within processes. <br /> Exists al all levels within the supply chain frameowork, e.g. ERP at Level 1, vs EDI at level 3. <br /> SCOR best practices are used to look at how mature a process or system of processes in a supply chain are. They are generally used for solving problems with known approaches, or for performing qualitative benchmarking – comparing how mature two or more organizations are against a reference. <br />
  • You may have some questions from the prior brief survey of SCOR, and I would encourage you to look for other tutorials we publish in process, metrics, and practices, or attend our trainings on the subject. <br /> For now, we will look at how to use the SCOR reference process for Benchmarking. <br />
  • Benchmarking is a process of comparison, looking at two or more things – in this case supply chains or processes – and seeing the differences between them. When you choose a ‘benchmark’, or reference standard, you can then compare those things against the standard and begin to understand if (for instance) you want to become “as good as” the standard, what you need to change. <br /> There are two major types of benchmarking comparisons done. <br /> First is Qualitative benchmarking. Qualitative benchmarking for supply chains focus mostly on best practices and comparisons of those practices among organizations – how many practices do you have, what are those practices, and how fuly are they used. Many benchmarks use best practices alone, and frequently organizations benchmark their practices to maintain a high level of maturity. Usually, the more practices an organization has that are considered industry best practice, the more mature the organization or process is considered. <br /> Second is Quantitative benchmarking. Quantitative Benchmarking focuses on measurements of standard performance indicators, and comparisons among organizations. This process is very familiar – comparisons among schools for graduation rates may be one, or the Gross Domestic Product (or GDP) within a set of countries may be another. Benchmarks are used all the time. As qualitative benchmarking is used to assess maturity, quantitative benchmarking is used to assess where there are gaps in performance, for instance one school which has significantly lower graduation rates than another, or one country which has significantly higher GDP growth. <br /> In this presentation we will focus on Competitive benchmarking, a subset of Quantitative Benchmarking. In it, we focus on benchmarking among a set of companies, so that we can identify superior relative performance among the companies for a set of key indicators. What superior is, what indicators are chosen, and the technique involved is the bulk of the work for the remainder of this tutorial. <br />
  • To perform a benchmark, you will find that you always go through roughly seven steps. <br /> First, you must define what you are actually benchmarking in such a way that the benchmark data can be gathered, and that they have real meaning. This is a scoping process, or supply chain definition process. <br /> Second, if you have a very large number of supply chains defined, we go through a prioritization process so you can focus on the most important supply chains to benchmark the most quickly. <br /> Third, in order to understand what performance levels you expect, you have to ensure that the strategy of the supply chain is well defined, and can be translated into numbers or performance indicators. <br /> With that, we then (fourth) take the defined, prioritized, and strategized supply chain and select the performance indicators or metrics to use for benchmarking. <br /> Fifth the data are sourced for the benchmark and <br /> Sixth, consolidated into a balance SCORcard™ <br /> And Finally the benchmark itself is performed – the inter-company comparison. <br /> I’ll end up the presentation with walking through how to interpret the benchmark results. <br />
  • We saw this picture a few minutes ago, and I want to re-emphasize what it is we are benchmarking. We’re not benchmarking a whole company, we’re benchmarking a supply chain. <br /> A supply chain is essentially a block of all processes between materials or services from a supplier, and products or services given to a customer. Input on one side, output on the other. In any company that may be a few processes, hundreds, or thousands of processes making up a group of supply chains. <br /> Not all inputs, all supplier materials or services go to all customers. <br /> Each unique stream from supplier to customer is what we would consider an independent supply chain. <br /> This leads us to the first step in the benchmarking process. <br />
  • Often when companies approach benchmarking, they have the feeling that they have “one” supply chain. The only company that had one supply chain that I am aware of also made a car you could have in any color as long as it was black – the Ford Company, and the model T. They had a very complete horizontally integrated supply chain with one set of customers and one product. <br />   <br /> All other companies have more than one supply chain. Some are different products, some have different planning characteristics – like build to order, or build to stock, some have radically different customer segments like commercial or retail. <br />   <br /> In supply chain definition, we identify each unique combination of materials or services that run to a given customer. Sometimes this exercise is called “path to market”, Supply Chain Definition, or simply scoping. <br />   <br /> There is a very easy way to perform supply chain definition. We set up a matrix or grid The columns of the matrix – the headings – are simply the customers, however you like to identify them, that supply chains flow TO. The Rows of the matrix, are simply the products or suppliers or business lines that supply chains flow FROM. <br />    <br /> Once you construct this matrix, then for each row that flows to a customer (column) we can identify that as where a supply chain exists. The following page will illustrate this with an example. <br />
  • The customer information – channels, or segments – is best gotten from your Sales or Marketing teams. After all, they ‘own’ those sales groups, and are very interested in making sure they know exactly how they are achieving their business targets. <br /> Consider looking at regions of the world, or regions of the country to start with, then within those regions, customer groups. <br /> If you have different ways of fulfiling a single customer, for example express shipment customers versus milk run, you may end up creating two customer segments. <br /> In general when you make your list, you can go to any level of detail you want, all the way down to individual orders, but most of the time you will stop at major customer groups. <br />
  • The product information – materials, locations, suppliers – is best gotten from your business line managers who manage the product groups. A very easy place to get this information is in ERP product hierarchy files, catalogues, or other product-related information. <br /> Sometimes companies have the same product but managed different ways – spare parts are kept on inventory, but normal ordering is handled “build on order”. Create two different products in those cases. <br /> In general when you make your list, you can go to any level of detail you want, all the way down to individual part numbers, but most of the time you will stop at major product families. <br />
  • At this point, you will create your matrix. First, you’ll set up all the columns in the grid filling them out with all the customer groups for your company until finished. <br /> Then, fill in all the row headings for your company until finished. <br /> Don’t worry if you’re not happy with the result yet, you can redo this step as often as you need until it makes sense. <br /> Finally when done, put an ‘X’ in each box where the product for the row flows to the customer in the column. Don’t try to second guess – to filter out situations where a shipment has only occurred a few times, or that you think is not important. Put everything in now. You will filter out unimportant supply chains later. <br /> Each “X” now represents a supply chain for your company. <br />
  • Let us look at an air conditioning company (we’ll we’ll use this example company a couple of times). <br /> We gathered information on this company’s customers, and this company’s products. For simplicity sake, we only looked at a small set of air conditioners. <br /> The company has six customer groups within two major blocks, retail – where air conditioners are sold to general public via stores, and commercial – air conditioners are sold to other businesses. In Retail, we sell to big-box stores like Home Depot, or Do-it-Yourself centers in Europe which buy air conditioners by the truckload; we sell via internet where the air conditioner is delivered to someone’s home directly and are sold in quantities of one; and third we sell in small hardware stores where we also sell in quantities of one. <br /> In Commercial world we sell to builders who place air conditioners with new homes or buildings; we sell to major accounts, like property management companies; and we also sell to distributors, who may be building suppliers for smaller builders. <br /> We have four major types of air conditioners. Big Air conditioners which are for a house, but not a business – generally they have significant installation. We sell Small Airconditioners – window type air conditioners. We sell Custom Industrial air conditioners which are build to suit specific very large commercial building requirements, and we also sell standard industrial air conditioners, which are uniform in size and capacity. <br /> You can now guess what the X’s mean. We don’t sell big air conditioners through stores, only through internet. Home builders and Suppliers may also buy these units. We sell window air conditioners to all retail outlets, but never to commercial builders who never use them. <br /> We sell Customer industrial Air conditioning to builders and some distributors. We sell standard Air Conditioners to builders and Major accounts. <br /> This means that while we had the “possibility” of 40 supply chains, we realistically had 10 supply chains we manage. Ten is still a lot, and you may end up with hundreds. <br /> Next I want to walk you through how to simplify this matrix. <br />
  • If you sell roughly the same material, manufactured the same way, distributed the same way, and managed the same way to two different customer groups, you should consider combing the supply chains for the purposes of measurement and benchmarking. This is how we create ‘logical’ supply chains out of the supply chain definition matrix, and how we simplify going forward. <br /> What are the rules for combining supply chains? This list gives some key reasons not to combine. <br /> Make/Buy strategy – whether you even have manufacturing or not. You can’t combine two supply chains with different build strategies because they have different performance – inventory, cycle time, and so forth. That’s fairly easy. <br /> Model – You would never try to measure inventory-less models like ETO or BTO the same way as Inventory-Rich models – BTS – and combining them provides problems of setting strategy and process performance goals. Keep different planning or inventory models separate. <br /> Lifecycle – where the product is in its lifecycle has dramatic impacts on supply chain strategy; less important to understand which lifecycle a material is in than to understand that two supply chains have materials in different lifecycles. When you introduce new materials your big concern is to ramp up production. When you have end-of-life, your concern is getting rid of inventory. You will manage these supply chains in very different ways. <br /> Lastly, what I would call other – differentiators which create different strategy or characteristic performance metrics. Two substantially different regions, say North America and Asia, will have very different performance, you can’t combine. Tax Regimes can create different burdens on management. Different Logistics strategy – one supply chain may involve large centralized distribution center, another not, or perhaps may involve merge-in-transit. Don’t combine them. Customs/Duty issues are similar to Tax issues, and if you have completely separate ERP systems, that’s another reason to keep them separate. <br /> Let me finalize the example air conditioner company so you can see how this works. <br />
  • As an example <br />   <br /> I sell Big Air-conditioners with special shipping requirements via internet, and there’s no other equivalent. <br /> but to Builders and distributers I’m less sensitive to how the shipping occurs. I can’t combine them. <br />   <br /> I sell small window air conditioners in pallet quantities to big-box retailers, but I sell in minimum-order-quantity one via internet and to small stores. I can combine the MOQ (Minimum Order Quantity) one supply chains together, but not with big-box. <br />   <br /> My shipments of Big Airconditioners (which I build to stock) for Builders and Distributors is the same as with Standard Industrial Air Conditioners, and roughly the same materials. Fine, I’ll combine them. <br />   <br /> The Custom industrial is all build-to-order and special handling. I’ll only be able to combine part of them. <br />   <br /> I’ve now reduced the complexity of my supply chain now from 10 down to five for management purposes. <br />   <br /> Try this matrix with your own organization – products/customers, then combining supply chains to simplify. <br />   <br /> Next, I’ll talk about what we do with too many supply chains. <br />
  • Not all supply chains are valuable. Sometimes you end up with a few supply chains that you do need to manage, but their volume or revenue are so small, or their strategic value is so small that you don’t want to focus on benchmarking them. <br /> Conversely, you may not recognize that a few supply chains are absolutely vital to your business, but have been side-tracked by others which may have more problems or their management more vocal, but are not heavy hitters in terms of your markets. <br /> We go through an optional phase here of prioritizing your supply chains using a forced ranking. The normal ways we look at your supply chains at this stage are by size – usually taken as some combination of revenue, volume in terms of orders, or profit margin. Next by complexity – usually you can consider the total number of different parts shipped as complexity. And then finally we add a “fudge factor” of strategic value, perhaps everything is relatively small in a supply chain but it will be growing quickly or it is provided to hold in key customers who spend more on other products. The strategic value. <br /> For non-profits and governmental organizations, revenue or margin is not an issue. You probably want to look at a variable like cash consumption. Other organizations focus sometimes on looking at high-risk supply chains to improve performance or reduce risk. Another issue might be supply chains that have high volume variability. This issue is not so much to choose exactly the right category, but that with a set of categories the prioritization is applied absolutely consistently across all the supply chains in your matrix. <br />
  • In our air conditioner example, we chose revenue, margin, sku’s, volume, and strategic value. We only looked at three supply-chains. You can see now that with the forced ranking, “Big Air” becomes the most significant group to focus on, even though “commercial” might have high strategic value”. <br /> You may be tempted simply to grab a few supply chains to benchmark at this stage, but I do recommend if you’ve not done it before to perform the due diligence of going through these steps. Time and time again organizations that believed something as a given, which were the important supply chains, had big surprises when they actually balanced viewing all key features of a supply chain. <br /> I think almost everyone has gone through some kind of prioritization or ranking exercise before, so I won’t dwell to much on this step. <br />
  • At this point our focus is to define a supply chain strategy. Frequently business have very vague strategy goals – e.g. “ we want a world class supply chain” or “best customer experience”. The goal here is to explicitly identify a strategy, define it in a standard, regular way which we can use for comparative purposes, and to use it to drive or differentiate decisions at a later stage by being able to measure the outcome of the strategy. <br /> I worked with Carly Fiorina many years ago at HP, and one thing she said to me that stuck was that “Strategy is just another name for prioritizing investments.” If your strategy is to be “best customer experience”, that really means that all your efforts, your investments in driving your supply chain will be prioritized towards “best customer experience”. Simple really. The problem is how do you define a strategy in such a way that you can always prioritize, and then measure to know you’re actually accomplishing something? <br /> SCOR provides five standard features of a supply chain which, in my experience, can be used to identify virtually any realistic strategy for a supply chain. <br /> Reliability is a feature of a supply chain, from a customer perspective, that it delivers on-time, complete, and so on. We all understand a feeling of reliability. <br /> Responsiveness asks a question, from a customer perspective, how long does it take to fulfill my needs? <br /> Flexibility looks at the ability scale up or down a supply chain. <br /> Cost looks at internal supply chain costs, which may nor may not translate to product cost. <br /> Lastly assets look at how much captial investment it takes to make my supply chain operate. <br /> So lets look at a few strategic statements: “Best Customer Experience” – you’re probably going to immediately focus on reliability or responsiveness. <br /> “Price leader” – you will almost immediately focus on the supply chain component of price, the cost. Best “shareholder return” always goes straight to assets. Try this yourself and see if you can name a supply chain strategy, and see how it takes one or more features and says that they are the most important. <br />
  • Assuming that you’ve now understood which features are most important in your supply chain, we’ll attach some more information to it. You can prioritize a feature by saying that you want your supply chain to be superior in that feature, advantage, or parity in that feature. This will mean, for our benchmarking purposes, that if you are superior in, say, reliability, you’ll perform in the top 90th percentile of your industry. If there are 100 supply chains in your industry you’re comparing to, you will be in the top 10. If you are advantage, you will be in the top half, so let’s set that at around 70th percentile. If you are at Parity, that means you’re smack in the middle. <br /> Important here is that these are all relative. There are no absolutes in benchmarking, you’re looking at comparitive competivie positioning. When you say we want to be “best customer experience” and you translate that to “superior reliability”, this means that you perform in the 90th percentile. It doesn’t say you have 100% percent reliability. It says that if your leading competitors are up to, say, 80% reliable, you will also be around 80%. This is important because the relative advantage is why customers choose you. If you’re better than your competitors – remember we’re doing competitive benchmarking – then you’ll get chosen in a rational world. You don’t have to be much better, just better. <br /> So think of this as where you are superior, you’re better than 90% of your competitors. If you are at “advantage”, you are better than around 70% of your competitors. At Parity, you are better than half your competitors. <br /> Make sense? The problem now still is – how do I choose a strategy? <br />
  • We can use something called heuristics to determine what a business strategy is likely to be based on business patterns in the SCOR framework. <br /> Let me walk you through some decisions. <br /> First Buy vs Make – Buy strategies usually focus on outsourced production, including possibly outsourced inventory management (or no inventory). It can be combined with the different models (BTS, late lifecycle). If you buy materials your priority has already been assets, in most cases because you don’t want to own inventory or manufacturing plants or equipment. If Build strategy is not relevant, proceed to model strategy. <br /> Model strategy – Engineer to Order, Build to Order, Build to Stock – each have a different purpose and focus within the supply chain organization, and have distinct strategic purposes. If you are an ETO – Engineeer to Order environment, cost, assets and flexibility are generally not a competitive issue at all, leaving Reliability and response. If you are Build-to-Order then you may have made a decision to “build on order” so you are holding little or no inventory. Realiability is paramount usually in these circumstances. <br /> Within the BTS strategy, consider the lifecycle of the material, to understand how the final planning strategy is influenced by degree of material in place. If you are at the lifecycle start of a material, the major issue is usually growing quickly, or flexibility. If your product has competitors in the market, you will slowly shift to having the best cost model, or being most reliable supplier. Late phase products which are commodity start to have intense focus on cost and assets because the reliability, responsiveness and flexibilty are fairly even across suppliers. Lastly, EOL products start to prioritize holding little or no assets, and your’e back to a “Make Buy” decision again. <br /> So take a group of supply chains or products and see if you can walk through these questions and see how likely your strategy agrees with the priority here. <br />
  • We now arrive at the strategy matrix. For each supply chain (verticals) we look at which feature we want as “Superior”, which as “Advantage” and “Parity”. Experience has shown that you need only have one “S”, and then a balance between “A” an “P”. I want to emphasize that this is a judgement process, and getting even finer in ranking, say five priorities, may be fine, but three are usually adequate for most businesses. <br /> In this example, Our Commercial air conditioners had “S – Superior” in their Reliability (not the air conditioner, but the supply chain) because it’s critically important to deliver that custom air conditioner to the agreed site exactly on time. Otherwise, the builder will be standing there with a huge installation crew, and no other work on the building can be done until the air conditioner is installed. Missing the date once will be enough to cause you in some circumstances to never be selected again as a supplier, regardless of price or flexibility. <br /> Let’s walk through small air-conditioners. They are commodity products, and for us are a “Buy” product coming out of Asia. We know from the prior page, without even deeply understanding the market, that the priority is probably going to be on Assets, then probably cost. The toss up is between flexibility and responsiveness and reliability for advantage/parity, but we know air-conditioners are seasonal for the most part, so flexibility is probably more of an issue than reliability and responsiveness which then end up with “P – Parity”. <br /> Frequently people are tempted to put in two or three or even all components as “S – Superior”. That’s not a good idea. There is never a need to be superior in all facets of operations. Customers simply don’t buy that way. Products and markets generally focus on one area at a time, and as competitors become level in performance in that feature, the market shifts. Don’t fall into that trap. <br />
  • The next step is to generate a “SCORcard”. Because we’re focus on operations and not, for example employees, this is not a balanced scorecard or (BSC) as you may know, but a SCOR card made up exclusively of SCOR metrics. You should get a copy of the SCOR manual, or the SCOR Metrics Handbook at this stage and become familiar – there are hundreds of metrics, but we’re going to focus only on metrics which tend to span the entire supply chain, or major components – remember plan, make source, deliver return? <br /> We start with “Level 1” or Strategic metrics, which have child or “diagnostic” metrics, and then down like a tree. We build a scorecard with Level-1 level-2 and level-3 metrics. We generally only benchmark with Level-1 and Level-2 metrics. <br /> The most frequent question the council gets on metrics is “Which ones should I use”. You’ve identified, your supply chains, you’ve prioritized them, set up a strategy, now let’s use all that to select your metrics at this stage. <br />
  • So remember this diagram? You’ve chosen your strategy – really prioritized some strategic attributes of a supply chain – and with SCOR we know exactly how to measure each attribute. At “Level 1”, or the strategic level, you only have a couple (or only one) metric for each Attribute. This makes life very simple. You can choose at least one metric, and at most all metrics at this level. <br /> You have then “instrumented” your strategy. You can unambiguously measure each component of your strategy and see if it goes up or down over time. You have a working scorcard started. What do you do with the other 540 metrics? <br /> Let me show you another easy algorithm to select metrics. <br />
  • Think about the problem – we have to select metrics. <br /> Where a feature is very important – we need “Superior” performance, we probably want to have the most management data. <br /> Where a feature is less important – we need “Parity” performance, we probably need only minimal management data. So that makes the process very simple. <br /> For each “S”, we will choose at least one “Level 1” metric from SCOR, and then for each Level 1 we choose all relevant Level-2 and Level-3 metrics. <br /> For each “A”, we will choose at least one “Level 1” metric from SCOR, and then for each Level 1 we chooose only releveant Level-2 metrics. <br /> For each “P”, we will choose at least one “Level 1” metric, and that’s it. <br /> You have more data where you need it, and less date where it’s least valuable. It also has another nice feature. You always get around 25 metrics in a SCORcard, which is generally a good number to manage. <br /> This way of selecting metrics is most valuable if you have never set up SCOR based scorecards. If you know your supply chains very well, you may already have good scorecards in place. And if you have a feature where you have severe problems, regardless of strategic priority, you may need to expand to level-2 and/or level-3 anyway. <br /> What does the resulting scorecard look like? <br />
  • Here’s an example. <br /> Reliability – Superior. <br /> We use “perfect order fulfilment”. It has four level-2 metric “children” in SCOR. We then choose most of the level-3 children of the level-2 metrics. You don’t need to choose all of the level-2 or level-3 metrics. For instance, SCOR says that you have, for accurate document, “Conformance Documentation Accuracy” as well as “Customs Documentation Accuracy” among others. We don’t have Conformance – for instance, what you might need with chemicals. We only ship within the US, so we don’t need Customs Documentation. <br /> If the metric is not relevant, you don’t put it in the SCORcard. <br /> We now have 12 metrics in the summary. Let’s keep going. <br />
  • Responsiveness was an “A for Advantage”, so we choose an advantage metric, and only level-2 metrics under it. <br /> Flexibility was “P for Parity”, so we chose upside flexibility, and then stopped. You can see the pattern. <br /> We now have 22 metrics in total in our scorecard – perfect. We have more data where we need the best performance, and the least data (but not no data) where it’s less strategic. <br /> Get a copy of SCOR, and and try this. It’s very easy. <br />
  • The next stage is you have to set up plans to get data and calculate the metrics. I’ve summarized here some sources of data for your benchmarking, and just want to highlight a few key concepts. <br /> First, SCOR itself, in metrics definitions, can point you to at least the processes where you need to gather transactional data. <br /> Second, if you have financial data, you must have a finance administrator, preferably a controller, sign off on it. I’ve been witness to far too many situations where a benchmarking sponsor asked, when at this stage, if “John” or “Jane” the controller has signed off on the data. If the answer was no, the team had to halt the program and go back to John or Jane. <br /> Third, Customer and IT systems are great repositories of data. IT systems don’t complain when you ask them so they are easier to deal with, in general. If you absolutely cannot get data, say you have a level-2 metric that’s very difficult to get, then skip it. It’s more valuable to get valid data and perform the benchmark then to have each and every data point be perfect. <br /> Last, think about working with data experts – finance people, or six-sigma teams. They know how to gather, calculate, and do statistical controls of data to make it as valuable as possible. <br />
  • Data gathering is the longest process in benchmarking, and as such, the more planning you do, the faster and more successful you will be in your benchmark. <br /> You should consider creating a detail data gathering plan to organize, and alert organizations that you will be gathering data. Frequently organizations take a lot of early organizing to gather data, particularly where it may be a manual activity, or one that requires work with other organizations. <br /> SCOR provides, for each metric, a specific set of processes which hold transactional data that could be used to calculate the metric. In turn, each process should have a process owner where you can gather those transactions. <br /> By alerting those process owners that you will need transactional data supporting each specific metric, they can make sure the right resources are available to help you meet the planned finish date of this benchmarking phase. <br />
  • So here is a somewhat simplified scorecard, but you see now how we organize – attribte, priority, metric, and your internal performance. These are hopefully not single-point samples but are aggregate – averaged – samples over a period of time. I want to re-emphasize that you should use six-sigma resources to do the calculations – determine sample set size, the validity of the data (are there too many errors), and so on. <br /> On the right hand of this grid, you’ll see many empty cells, organized around the priorities you identified earlier – parity, advantage, and superior. That’s what we now do with getting benchmark data. <br />
  • With SCORmark, you’ll submit your own company data to the benchmarking database, after selecting features like demographics (size, region, industry) of your supply chain. The data is validated for statistical accuracy – whether the values make sense or not in light of all other submissions. If something is odd, or far away from other norms, you may be contacted to verify how you calculated the data. <br /> Once submitted and accepted within days or weeks, you should receive initial benchmarking reports back telling you how your supply chains perform against competitors in your demographic, and up to three alternate demographic sets per metric (for instance, you may compare chemical industry to pharmaceutical, or perhaps computer manufacturing to electronics as a whole). <br /> Once you have the data back, the final report, you have in fact completed the benchmarking process. Congratulations! Now you only need to solve problems! <br />
  • Here’s a sample of a report. How do we read it? <br /> Let’s start with Reliability. In it, we were at 97% performance Our goal was to be Superior, which our benchmark says is at 98%. Therefore: <br /> To reach our strategic goal of superior reliability, we have to improve our supply chain performance by 1%. <br /> Easy, and very specific. I’ve so often heard supply chain improvement programs which focus on numbers like 5%, 10%, 25% - it’s always a multiple of five somehow – of some metric; benchmarking gives you a fairly scientific point of focus with a reasonably exact number. <br /> Let’s look at “Response”. In it we were at 14 days. Our strategic goal was was to be Advantage, which was 6 days. That’s a pretty big gap, of 8 days. Take a look at “Parity”, we’re even below that, we’re in the bottom half of performance in the industry. <br /> To reach our strategic goal of advantage Response, we have to improve our supply chain performance by 8 days. To even reach parity performance we must improve our supply chain performance by 6 days. Let me give a rule of thumb. If you’re in the bottom half, and you need to be in the top half, plan for year one to achieve party, and year to to get to advantage. You’ve got a lot of work to do! <br /> Let’s look at “Flexibility”. We are at 62 days. Our Strategic goal was 80 days. There is nothing we have to do to improve here. Now, the downside of this is: if there are any supply chain programs (investments – remember Carly) to improve flexibility, we should stop them and reprioritize to the other issues. That’s not always easy to swallow. <br /> Looking at Cost, you should see immediately we’re in the bottom half, and looking at Advantage and Superior – there are a very narrow range of values – we have a lot of work to do. <br /> Finishing up with Assets, We are at 35 days. Our strategic goal is 33 days. Our gap is 2 days, but notice. We are around 5% away from our goal, but we’re definitely in the top half of performers. You may not want to focus too heavily on getting the extra percent here. <br /> In any case, your benchmarking has come to an end, and now figuring out how to bridge all those performance gaps becomes the problem. I’ll speak a little about the timing of the benchmarking and then talk a little about how keeping SCOR in yorur supply chain has helped companies bridgg these gaps. <br />
  • Assuming you can herd your business management in a room to work together, here are some rough estimates for the time it takes to perform a benchmark. For those of you who have done custom benchmarking instead of using standard metrics like scor, this should look breathtakingly fast. <br /> One day or so for the Definition and prioritization, it usually takes good long discussion around the strategy to get agreement. Setting up the scorecards is relatively easy. The majority of time spent is in the data gathering and forming calculations phase, and depending on how metrics-focused your organization is, it can take days or weeks. <br /> When we first started testing the SCORmark process, we had a huge range of times. Once company which already used SCOR for daily operations was able to complete the process up to submission in 6 hours or so. A Second company which used SCOR but not for operations took a few days. A third took a week – they had metrics, but not standardized ones, a fourth had few metrics, and non-standardized, took a month. Unfortunately, one company gave up entirely. I believe they ended up spending around 6 months to organize to have standard performance scorecarding. <br /> I hope you got a lot out of this tutorial. What’s next? <br />
  • Benchmarking is, roughly speaking, the first two stages of a long-term supply chain excellence program, what the Supply Chain Council calls “Implementation”. Let me talk about the Council and it’s value for membership for a moment. <br />
  • This was a long tutorial, and sometimes we get the question, “why do we do this”. So I’ll start with a criminal. You may have heard of Slick Willie Sutton, the bank robber. It’s part of US lore that, when asked why he robbed banks, he replied “That’s where the money is”. Supply chains are where the money is in large companies, and is one of the biggest drivers of financial performance there is. <br />
  • It’s all about cash. <br /> Supply Chain in most companies is accountable for the vast majority of costs within companies. <br /> Here are a sampling of Fortune-10 companies (not in any order), and an estimate of cost for the companies including total supply chain management cost (from benchmark data). Even in GE, when you remove the GE Capital division jumps up to 85-90% range of costs in supply chain. <br /> With IT costs in the 1.5% - 2% of revenue range, a 2% improvement in 2% of revenue (.04% cost improvement) – contrast that to a 2% improvement in supply chain costs where supply chain is 90% of cost. The value of the supply chain improvement is 4500% greater. <br /> You really have to ask a question of why you would ever focus on anything else. <br />
  • Around 13 years ago, a group of forward thinking companies got together and decided to put their best resources together to look at the best ways to teach, understand and manage supply chains, and out of their common work they came up with the SCOR reference model, managed by the supply chain council. <br /> The council is more than SCOR, it’s benchmarking, improvement programs, training certification, research, skills management, networking – but anchored in the fundamentals of plan, make, source, deliver and return – the SCOR model. It is a non-for-profit, operating in 8 world regions, within training and research in six languages. And SCOR, and its metrics are the de-facto standard used in over 3300 research programs in supply chain, and 550 books. <br /> As our European Chair in 2007 put it – it is a given that it needs to be understood by all serious supply chain professionals. <br />
  • Supply Chain Council supports groups worldwide, with a majority of membership in North America, Europe, and Japan. We also have heavy support in developing economies in South Africa, Southeast Asia, Australia/New Zealand and China, and a rapidly expanding focus in Latin America, primarily in Argentina, Columbia and Brazil. <br /> While the majority of our members are what we call “End User” companies, ones which perform primarily manufacturing, we also have a heavy presence with Academic, Research, and Non-profit institutions worldwide including governmental bodies, and as well Technology suppliers, Analysts, and Consultants. <br />
  • Our industry scope is vast – SCOR was designed to be industry neutral, but at the same time relevant and accessable. Whether it’s in consumer packaged goods, Oil and Gas, Pharmeceuticals, High-Tech manufacturing, Automotive, Computers, Chemicals, or Food and Beverage, Industrials, or the biggest names in supply chain management consulting, and the worlds most prestigous academic institutions, we count them as our membership, our volunteer base, and the focus of our benefits. <br />
  • Unlike many other supply chain improvement organizations, for us it’s been very easy to quantify and follow the value that SCOR accrues to our member organizations, and academics have been studying improvements delivered using SCOR for more than a decade – thousands of reseach papers and articles. In general, companies which use SCOR to align performance to strategy and focus on continuous improvement have the best performance of annual profits, best leverage of assets, and the best in the industry customer performance. <br />
  • Though the stock market has taken a beating in 2008, our SCORindex of companies in the US have maintained their share value even with Dow Jones, and S&P indices have tanked. We started tracking the aggregate share value of our member companies in 2003, for Fortune 1000 industrials, and you can see how, on the green line within a few years their aggregate performance outpaced the leading industrial indicators, and even with the downturn they maintain their value above water, and over a 25 point margin against the best in class. <br />
  • In closing, feel free free to visit our public site supply-chain.org, and if your company is a member, visit scorlabs.org for information, discussion, networking and further education on supply chain and the use of the SCOR model to provide dramatic improvements to operations. <br /> I hope you have enjoyed this tutorial on benchmarking, and hope that you will look to others in our series in the near future. <br /> This has been Joseph Francis, the Executive Director of Supply Chain Council, your narrator. <br />

Benchmarking your Supply Chain Benchmarking your Supply Chain Presentation Transcript

  • Keeping SCOR® in your Supply Chain Benchmarking Joseph Francis Executive Director Supply-Chain Council
  • SCOR Benchmarking • Understand the Context of SCOR – Process – Metrics – Best Practices • Understand the 7 Steps of a Benchmarking Program • Supply Chain Council – History – Value 2 SCOR Benchmarking - Presentation
  • What is a Supply-Chain Product Management s ess ec o p r el ppu S r i 3 SCOR Benchmarking - Presentation Sales & Support CCOR™ Supply Chain SCOR™ Customer processes Product Design DCOR™
  • The SCOR® model – an industry open standard • SCOR is a supply chain process reference model containing over 200 process elements, 550 metrics, and 500 best practices including risk and environmental management • Organized around the five primary management processes of Plan, Source, Make, Deliver and Return • Any interested organization can participate in its continual development Plan Deliver Return Suppliers’ Supplier Source Make Return Deliver Return Supplier Internal or External 4 SCOR Benchmarking - Presentation Source Make Return Deliver Return Your Company Source Return Make Deliver Source Return Return Customer Internal or External Customer’s Customer
  • SCOR Processes Level 1 Level 2 Level 3 Level 4 Level 5 Scope Configuration Activity Workflow Transactions S1 S1 Source Source Stocked Product Stocked Product S1.2 S1.2 Receive Product Receive Product Supply-Chain Supply-Chain Source Source EDI EDI XML XML Differentiates Business Differentiates Complexity Names Tasks Sequences Steps Links Transactions Defines Scope Differentiates Capabilities Links, Metrics, Tasks and Practices Job Details Details of Automation Framework Language Framework Language Framework Language Industry or Technology Company Specific Specific Language Language Standard SCOR definitions 5 SCOR Benchmarking - Presentation Company/Industry definitions
  • Performance Metrics • SCOR metrics: Standard Strategic (Level 1) Metrics Customer Attribute Metric (Strategic) Reliability Perfect Order Fulfillment Responsiveness Order Fulfillment Cycle Time Agility Supply Chain Flexibility Supply Chain Adaptability† Internal Cost Supply Chain Management Cost Cost of Goods Sold Assets Cash-to-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital † upside and downside adaptability metrics 6 SCOR Benchmarking - Presentation
  • Best Practices • Best practice: "A current, structured, proven and repeatable method for making a positive impact on desired operational results." – Current Must not be emerging and can not be antiquated – Structured Has clearly stated Goal, Scope, Process, and Procedure – Proven Success has been demonstrated in a working environment and can be linked to key metrics – Repeatable The practice has been proven in multiple environments. 7 SCOR Benchmarking - Presentation
  • The SCOR Reference Process Benchmarking 8 SCOR Benchmarking - Presentation
  • What is Benchmarking • Qualitative Benchmarking – Comparing best practices among organizations – Maturity Assessments • Quantitative Benchmarking – Comparing levels of measured performance – Assessment of Performance Gaps • Competitive Benchmarking – Quantitative Benchmarking between companies – Identifies superior relative performance 9 SCOR Benchmarking - Presentation
  • 7 Steps of a Benchmarking Program • • • • • • • 10 Supply Chain Definition Supply Chain Prioritization Supply Chain Strategy Selecting Metrics Sourcing Data Creating a Balanced SCORcard™ Performing Benchmark SCOR Benchmarking - Presentation
  • What is a Supply-Chain Product Management s ess ec o p r el ppu S r i 11 SCOR Benchmarking - Presentation Sales & Support CCOR™ Supply Chain SCOR™ Customer processes Product Design DCOR™
  • Supply-Chain Definition • Supply Chains are the Totality of processes spanning operations from supplier to end-customer, focused on material, work and information flow • We use a tool called the Supply Chain Definition Matrix to define the supply-chains within an enterprise • The Supply Chain Definition (i/o Matrix) Matrix helps determine the number and size of supply chains • Columns: Customers (Output) • Rows: Products (Input) • The intersection of each column and row – if the goods or services flow to the customer – is a supply chain 12 SCOR Benchmarking - Presentation
  • Column Definition • The columns in the matrix are focused on demand e.g. channels or segments or customers – start with making a list of customer groups, level by level. • Ask your Sales or Marketing functions for customer segmentation information • Where you have one customer base with different fulfillment models create two customer segments one for each model • In general you can go to any level of detail you want but be sensible. Examples: Level 1 Level 3 Europe, Asia, US Major Accounts Same-Day Shipping Commercial, Retail Grouped Accounts Bulk Shipping Eastern, Western Region 13 Level 2 One-Time Buyer MOQ 1 Ordering SCOR Benchmarking - Presentation
  • Row Definition • The rows in the matrix are focused on supply e.g. business lines or products or locations or suppliers – start by making a list of products, level by level • Ask product divisions for product hierarchy data • If you have the same product that may be build two different create two different products. • In general you can go to any level of detail you want but be sensible. Examples: Level 1 Level 3 Business Divisions Product Lines Product Families Fulfillment Models Supplier Groups Parts Planning Models 14 Level 2 Warehouses SCOR Benchmarking - Presentation
  • The Matrix • We now place the customer list as column headings repeating until finished • And then the products list as row headings repeating until finished • For each product that flows to a customer, we put an “X” in the cell • It’s that simple. Group 1 Customer A Business 1 Business 2 15 Product 1 Group 2 Customer B Customer C Customer D X X Product 2 X X Product 3 X X Product 4 SCOR Benchmarking - Presentation X
  • Example: Air Conditioning Company • Columns are Retail/Commercial, and sub-segmented • Rows are the Major Product Lines 16 SCOR Benchmarking - Presentation
  • Logical Supply Chain • Some supply-chains are not unique, group supply chains together where they have common management and goals • Each group is considered a logical supply chain • Key Differentiators: Build Strategy Model Lifecycle Other Make BTO Introduction Region Buy BTS Mid-Life Tax Regime ETO Commodity Logistics Strategy EOL Customs/Duty ERP System 17 SCOR Benchmarking - Presentation
  • Example: Air Conditioning Company • Columns are Retail/Commercial, and sub-segmented • Rows are the Major Product Lines 18 SCOR Benchmarking - Presentation
  • Supply Chain Prioritization • We use a tool called the Supply Chain Prioritization Matrix to order the supply-chains according to relevance • Each supply chain can be ranked by a number of features • We suggest: – size (revenue, volume, and margin), – complexity (# SKUs) – strategic importance • You can also look at them by – – – – 19 Cash Consumption Risk Volume variability Etc. SCOR Benchmarking - Presentation
  • Supply Chain Priority • Each supply chain is given a rank in each category • The total of the values gives the final overall ranking • Weightings and other criteria may apply Revenue Gross Margin % # of SKUs Unit Volume Strategic Value Rank Big Air 3 2 2 2 2 11 Small Air 2 1 3 3 1 10 Commercial 1 3 1 1 3 9 1=low 3=high 20 SCOR Benchmarking - Presentation
  • Supply Chain Strategy • We use a tool called the Supply Chain Strategy Matrix to Identify priority strategic features or attributes of supplychains. • Each supply chain strategy is indicated by a collection of ranked features: Reliability On time? Complete? Undamaged? Responsiveness From Customer Request to final acceptance Flexibility How long to scale up? How expensive to scale down? Cost Cost of Processes? Cost of Goods Sold? Assets Working Capital? Return on Investments? 21 SCOR Benchmarking - Presentation
  • Comparative Ranking • We advocate using a simple ranking system for industry comparison • Each rank corresponds to a specific percentile in industry performance • We do not use averages or other statistical tests • Our key ranks: Performance Choices Interpretation Superior 90th 1 “Top 10” performer Advantage 70th 2 “Top Half” performer Parity 22 Percentile 50th 2 “Half better/Half worse” SCOR Benchmarking - Presentation
  • Supply Chain Strategy in 5 Minutes Build Strategy Model Lifecycle Likely Priority 1. Assets 2. Cost Buy ETO 1. Reliability 2. Response BTO Make 1. Assets 2. Reliability Start 1. Flexibility 2. Response Middle BTS 1. Cost 2. Reliability Commodity EOL 23 SCOR Benchmarking - Presentation 1. Cost 2. Assets 1. Assets 2. Cost
  • Supply-Chain Strategy Matrix P P A A S 24 SCOR Benchmarking - Presentation • Each unique combination of ratings defines Your Supply Chain Strategy for the channel • Think of the rating as a desired state, NOT where you want to improve the most
  • The SCORcard • We use a tool called the Supply Chain SCORcard™ to Identify performance characteristics of supplychains. • Each SCORcard™ is built from a subset of hundreds of SCOR metrics. • For supply-chain benchmarking we generally use only Level 1, 2 and 3 metrics • The SCOR Manual provides all necessary definitions 25 SCOR Benchmarking - Presentation
  • Performance Metrics • SCOR metrics: Standard Strategic (Level 1) Metrics Customer Attribute Metric (Strategic) Reliability Perfect Order Fulfillment Responsiveness Order Fulfillment Cycle Time Agility Supply Chain Flexibility Supply Chain Adaptability† Internal Cost Supply Chain Management Cost Cost of Goods Sold Assets Cash-to-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital † upside and downside adaptability metrics 26 SCOR Benchmarking - Presentation
  • SCORcards in 5 Minutes Philosophy • You need to have the most data where performance is most critical • You need to have least data where performance is least critical For Every Superior Advantage Parity Select Level 1 Metric Level 1 Metric Level 1 Metric and Level 2 Metric Level 2 Metric and Level 3 Metric 27 SCOR Benchmarking - Presentation
  • A Metrics Architecture 28 SCOR Benchmarking - Presentation
  • Metrics Selection 29 SCOR Benchmarking - Presentation
  • Planning Data Gathering: Sources of Data • Financial Data – 10-K data, Company Annual Reports, Cost Center Reports – Must be Verified by Financial Team (Controller) • Non-Financial Data – Customers • Delivery Performance • Total Cycle-Time Performance – IT Systems • Process-to-Process Transactions • Planning System Parameters (Lead Times) – Suppliers – 3PL Providers 30 SCOR Benchmarking - Presentation
  • Data Gathering Plan • • • • • Look at who owns the data Consider where the transactions may be Organize to alert data owners to gather data Collect and assess Data Quality Use SCOR Metrics Definition as a guide Metric Process Owner Due Date Status On-Time Delivery D1.16 Logistics 2/2/2008 Complete Undamaged D1.17 3PL Provider 2/15/2008 50% Collected Order Fulfillment Cycle Time D1.1 – D1.17 Deliver Team 2/22/2008 Not started Etc… 31 SCOR Benchmarking - Presentation
  • The Create the SCORcard • Based on average data averaged over many samples • Comes from root transactions, not aggregates • Six-Sigma team support a big help Attribute Reliability Metric (level 1) You S Perfect Order Fulfillment 97% Response A Order Fulfillment Cycle Time 14 days Flexibility P Ups. Supply Chain Flexibility 62 days Cost P Supply Chain Mgmt Cost 12.2% Assets 32 SAP A Cash-to-Cash Cycle Time 35 days SCOR Benchmarking - Presentation Parity Adv Superior Gap
  • SCORmark™ • Once the SCORcard is defined, and data for most metrics are gathered • Data are submitted electronically to the SCORmark™ system • With days or weeks, an electronic report is returned with the results of comparison against selected demographic groups • The principal function of the Benchmark is to determine the gap between actual performance and performance corresponding to desired strategic positioning. • The Benchmark is a component of Phase I and II of the SCOR Implementation Roadmap 33 SCOR Benchmarking - Presentation
  • Interpreting the Data • Used for choosing target performance • Critical to understand Performance in a particular Demographic • Can be “internal” (competing against other supply chains in same company) • Aligns Strategy, Performance, and Performance Goals Attribute Reliability Metric (level 1) You Parity Adv Superior Gap S Perfect Order Fulfillment 97% 92% 95% 98% 1% Response A Order Fulfillment Cycle Time 14 days 8 days 6 days 4 days 8 Days Flexibility P Ups. Supply Chain Flexibility 62 days 80 days 60 days 40 days 0 Cost P Supply Chain Mgmt Cost 12.2% 10.8% 10.4% 10.2% 1.4% Assets 34 SAP A Cash-to-Cash Cycle Time 35 days 45 days 33 days 20 days 2 Days SCOR Benchmarking - Presentation
  • Planning • • • • • 35 Supply-Chain Definition 1-2 Day workshop Supply-Chain Prioritization1 Day Data Gathering Supply-Chain Strategy 1 Day workshop Supply-Chain Performance1 Day workshop Data and Benchmarking Days/Weeks SCOR Benchmarking - Presentation
  • Supply Chain Excellence Tools SCOR™ AND SUPPLY CHAIN COUNCIL 36 SCOR Benchmarking - Presentation
  • A Bit of History: 1930-1950 • Bank Robber “Slick Willie” Sutton • When asked why he robbed banks, Sutton simply replied • "Because that's where the money is." 37 SCOR Benchmarking - Presentation
  • Where the Money Is • Supply-chain generally accounts for between 60% and 90% of all company costs1 • A 2% improvement in process efficiency for supply-chain processes has 3000% - 5000% the impact of a 2% improvement in efficiency for… IT, HR, Finance1… Sales… • Any surprise most Process Methodologies or techniques had their origin primarily in Supply-Chain Management? – Six-Sigma Lean BPR ERP ISO MRP-II TQM… Fortune-10 Company Supply-Chain Cost % Total Costs 2 GM Ford Conoco Wal-Mart Chevron IBM Exxon GE Citi1 AIG1 94% 93% 90% 90% 88% 77% 75% 63% 0% 0% 1 Exclusive of Financial Services companies 2 Source: Hoovers 2006 Financial Data, Supply-Chain Council 2006 SCM Benchmark data on SCM cost for discrete & process industries 38 SCOR Benchmarking - Presentation
  • SCC: An independent, non-profit global association • Formed in 1996 to create and evolve a standard industry process reference model of the supply chain for the benefit of helping companies rapidly and dramatically improve supply chain operations • SCC has established the supply chain world’s most widely accepted framework – the SCOR® process reference model – for evaluating and comparing supply chain activities and their performance – It can be used to describe supply chains that are very simple or very complex using a common set of definitions and enabling a common understanding – It lets companies quickly determine and compare the performance of supply chain and related operations within their company or against other companies • SCC continually advances its tools and educates members about how companies are capitalizing on those tools – With membership open to all interested organizations 39 SCOR Benchmarking - Presentation
  • Global Operations Supporting Over 800 Member Organizations Member Location Member Affiliation Also developing chapters in India and the Middle East 40 SCOR Benchmarking - Presentation
  • Industry Membership Scope 41 SCOR Benchmarking - Presentation
  • SCOR has proven to improve operating results many ways • Improvement of operating results of an average of 3% in the initial SCOR implementation phase by means of cost reduction and improvement in customer service1 • Increase in profitability (between 2x and 6x) with regard to project investment costs within first 12 months of implementation1 • Reduction in IT costs through minimizing system customization and making better use of standard functionality1 • Continuous actualization of process change portfolio by continuous conversion of supply chain improvements with the objective of increasing annual profits by 1% to 3%1 Poluha (2007) Application of the SCOR Model in Supply Chain Management, New York, USA 1 42 SCOR Benchmarking - Presentation Benefits of SCOR •Improvement in stock market value •Increase of profits and margins •Increase of available financial means through improved investment selection (portfolio management of initiatives) •Reduction of overall costs •Optimization of Enterprise Resource Planning
  • The Value of SCOR 43 SCOR Benchmarking - Presentation
  • supply-chain.org scorlabs.org For additional questions on Supply Chain Council benchmarking or SCORmark, please contact: info@supply-chain.org