Patrick Kaligis - Raymond Harris - Riska Azkia Muharram

1. DEVELOP AN
END-TO-END
PROCESS
ARCHITECTURE
CHAPTER 2
MAGISTER MANAJEMEN UNIVERSITAS TRISAKTI
OPERATIONS & SUPPLY CHAIN MANAGEMENT
Prepared & Presented by:
• Patrick Kaligis
• Raymond Harris
• Riska Muharram
Lecturer: Dr. Dadang Surjasa, S.Si., MT

2. BOOK REFERENCE
2

3. CONTENT
1. Abstract
2. Four Tests of Supply Chain Architecture
3. Architectural Toolkits
4. Top Three Levels of SCOR Model
5. Five Processes for End-to-End Supply Chain Management
6. Next-Generation Processes
7. Case Study: AVON - Calling on Customers Cost-Effectively
3

4. ABSTRACT
The Introduction of Supply Chain Architecture
1

5. ▸ Supply chain improvement needs a blueprint to
succeed like any major construction project
because blueprint able to envision how the
many pieces fit together within the existing
infrastructure to form an integrated whole,
encounter delays, rework, and escalating costs.
5
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

6. ▸ Companies with supply chain architectures in
sync with business goals have better business
performance, easier to implement and operate
and most importantly, reconfigure quickly as
business needs change.
6
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

7. FOUR TESTS OF
SUPPLY CHAIN
ARCHITECTURE
2

8. ▸ The test of strategic fit.
The company’s overall supply chain strategy
must drive the choices you make in your supply
chain architecture truly support the basis of
competition.
8
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

9. ▸ The test of end-to-end focus.
Supply chain processes must ensure end-to-
end management. This requires having an
architecture that provides an end-to-end vision
of the supply chain and a set of shared
objectives that orchestrates the work of each
player in your supply chain.
9
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

10. ▸ The simplicity test.
A good supply chain architecture is made up of
simple, streamlined processes that minimize
the complexity that adds cost and reduces
manageability. Processes should be clear and
easily understood by those who use them.
10
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

11. ▸ The integrity test.
The company’s architecture must be highly
reliable, ensuring coherent and robust links
among processes, data, and information
systems.
11
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

12. ARCHITECTURAL
TOOLKITS
2

13. ▸ Recognizing the need for a true cross-industry
standard, in 1995 PRTM joined forces with AMR
Research, an independent research firm
committed to providing unbiased analysis of
the enterprise software sector.
13
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

14. ▸ Together, PRTM and AMR founded the Supply-Chain
Council (SCC), which initially included 69 member
companies. Over the course of a year, the three
organizations further developed and refined this standard,
called the Supply-Chain Operations Reference-model
(SCOR) that defined best practices, performance metrics,
and software functionality requirements for each core
supply chain process, sub process, and activity.
14
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

15. TOP THREE
LEVELS OF
SCOR MODEL
4

16. “
The SCOR model provides
a supply chain scorecard
for setting and managing
supply chain performance
targets across the
organization.
16

17. 17
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of
SCOR Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

18. FIVE PROCESSES
FOR END-TO-END
SUPPLY CHAIN
MANAGEMENT
5

19. THE CONCEPT
These processes enable better decision
making and guides all supply chain
activities related to the execution
processes —
Plan, Source, Make, Deliver, And Return.
19

20. ▸ Plan
Every supply chain process has inputs and outputs. Plan’s
input is information on demand, supply, and supply chain
resources.
For example, plan source and plan make outline the raw
materials needed, the source of those materials, and the
quantities of inventory to be produced. Plan deliver
provides the information needed to commit to customer
orders. And plan return provides the information needed to
schedule returns and replacement orders.
20
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

21. Planning excellence has five key principles:
1. Use timely, accurate information.
2. Focus resources on business priorities.
3. Aim for simplicity.
4. Integrate all supply chain requirements.
5. Create explicit actions and accountabilities.
21
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

22. ▸ Source
Using the plan generated by plan source, the supply chain
source process procures all needed materials and services,
performing the operational activities of purchasing,
scheduling, receiving, inspecting, and authorizing supplier
payment. The source activity also involves supplier
selection and relationship management.
22
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

23. Process excellence in source is built on four key
principles:
1. Aim for the lowest total cost of ownership
(TCO).
2. Set procurement strategies according to
category.
3. Maintain an enterprise wide focus.
4. Measure and manage performance.
23
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

24. ▸ Make
The supply chain make process transforms the
resources procured by source into goods and
services according to agreed-on specifications and
any regulatory requirements.
24
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

25. There are four principles for process excellence in
make:
1. Focus on business priorities.
2. Aim for speed and flexibility, not just low
costs.
3. Set and monitor quality standards.
4. Synchronize all manufacturing activities.
25
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

26. “
For the supply chain to
operate effectively, make
must be integrated with
the plan, source, deliver,
and return processes.
26

27. ▸ Deliver
The deliver process starts with the receipt of a
customer order and includes all the activities needed
to complete that order, from providing a price quote to
collecting payment from the customer.
▸ Deliver makes the order visible to source and make for
execution, ensuring that customer requirements are
communicated clearly. Deliver also includes all
warehousing, transportation, and distribution
activities.
27
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

28. Here are the four recommended principles for
deliver process excellence:
1. Balance service with the cost to serve.
2. Cut costs and time with straight-through
processing.
3. Set up end-to-end tracking and traceability.
4. Manage data for ongoing accuracy and
timeliness.
28
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

29. ▸ Return
The return process ensures that previously sold products
are supported, collected, and disposition according to
business policies and customer agreements and covers all
activities from return authorization to financial settlement.
▸ The primary drivers behind return differ by industry but
typically include the return of defective, wrong, or
unsatisfactory products; maintenance, repair, and overhaul
(MRO) based on service agreements; excess channel
inventory returns; and recycling/refurbishment/reuse.
Different activities may be associated with each of these
return “types.”
29
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

30. “
Return is a reverse supply
chain process and has
specific requirements
and characteristics that
differ from the forward
supply chain.
30

31. For return process excellence, follow these four key
principles:
1. Create a distinct supply chain for return.
2. Feed back return information quickly.
3. Base return policies on total cost of returns.
4. Maximize revenue opportunities.
31
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

32. NEXT-GENERATION
PROCESSES6

33. “
In the next generation of
process architecture,
companies will be able to
rapidly translate
strategies into new
supply chains.
33

34. ▸ In the next generation of process architecture, companies
will be able to rapidly translate strategies into new supply
chains.
▸ These architectures will seamlessly integrate business
processes and information systems. And they’ll include the
key performance indicators needed to ensure value
creation and ongoing management.
▸ Besides providing a unified view of the internal supply
chain, the next generation of process architecture will
define the integration points among suppliers, customers,
and partners.
34
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-
Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-Effectively

35. CASE STUDY
AVON
CALLING ON CUSTOMERS
COST-EFFECTIVELY
7

36. AVON
Calling on Customers
Cost-Effectively
What do you do when you have an
enormous growth opportunity but
can’t capitalize on it with your
existing supply chain? If you’re Avon,
you embark on a radical
transformation—a high-risk venture
with no guaranteed returns.
36

37. ▸ Avon is the world’s leading direct seller of beauty and
related products, with $6.2 billion in annual revenue.
▸ In addition to its cosmetics, skin care products, fragrances,
and personal care products, the company offers a wide
range of gift items, including jewelry, lingerie, and fashion
accessories.
▸ Avon sells to customers in 145 countries through 3.9 million
independent sales representatives, providing an earnings
opportunity to women throughout the world.
37
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-
Effectively

38. 38
A GROWING BUSINESS—
AND GROWING
PROBLEMS
Fundamental mismatch
between the company’s
selling cycle and its
supply chain cycle.
In most European
markets, Avon begins a
new sales campaign
every three weeks.
1
MAKING THE
BUSINESS CASE
AND MOVING
FORWARD
It required a lengthy,
detailed analysis to
prove that Avon’s
supply chain
wouldn’t be able to
handle the projected
growth of the
business.
2
RETHINKING
THE SUPPLY
CHAIN
Avon put in place a
regional planning
group empowered to
make decisions about
service levels,
inventory, and costs.
3
END-TO-END
VISIBILITY
Avon created a
centralized inventory
hub in Poland to
service the
company’s branches
throughout Europe.
4
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-
Effectively

39. 39
COLLABORATING WITH
SUPPLIERS
Avon had to change its
own approach so that
suppliers could
manufacture its
products more cost-
effectively.
5
MAKING THE
BUSINESS CASE
AND MOVING
FORWARD
It required a lengthy,
detailed analysis to
prove that Avon’s
supply chain
wouldn’t be able to
handle the projected
growth of the
business.
6
BUILDING ON
SUCCESS:
COLLABORA
TIVE DESIGN
The company recently
conducted a
collaborative design
workshop that
included suppliers, a
design firm, and
representatives from
marketing and the
supply chain
7
REORGANIZATION
AND THE CHANGE-
MANAGEMENT
CHALLENGE
Avon was very clear
on the fact that its
supply chain
transformation
would be process-
driven, not systems-
driven.
8
ABSTRACT
Four Tests of
Supply Chain
Architecture
Architectural
Toolkits
Top Three
Levels of SCOR
Model
Five Processes
for End-to-End
Supply Chain
Management
Next-Generation
Processes
Case Study:
AVON - Calling
on Customers
Cost-
Effectively

40. 40
THANKS!