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Scor model

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SCORE MODEL---OPERATION MANAGEMENT

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Scor model

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  4. 4. Objective Of SCC through SCOR To develop a standard supply-chain process reference model that enables effective communication and integration among the supply chain partners, by - Using standard terminology to better communicate and learn the supply chain issues -Using standard metrics to compare , benchmark and measure their performances that is applicable in every type of industry 2 Boston-based consulting firms: Pit t iglio R abin Todd & McGrat h & A MR R esearch d e c i d e d t o d e v e l o p a s t a n d a r d a p p r o a c h t o a n a l y z i n g a n d d e s c r i b i n g a l l t h e a s p e c t s o f s u p p l y c h a i n p r o c e s s e s . SC C f ormed – Independent Global N on - Pr ofit Or ganiz ation founded in 1 9 9 6 by a c ons or tium of 69 member volunteer or ganiz ations ; now c los e to 1000 SCOR Framework developed by the Supply Chain Council (SCC) 4
  5. 5. 5 SCOR-A Process Reference Model Level 1- Process Type Level 2- Configuration Level Level 3- Process Element Level Level 4- Implement Level
  6. 6. R a p i d A s s e s s m e n t o f S u p p l y C h a i n P e r f o r m a n c e C l e a r i d e n t i f i c a t i o n o f p e r f o r m a n c e g a p s E f f i c i e n t s u p p l y c h a i n n e t w o r k r e d e s i g n a n d o p t i m i z a t i o n E n h a n c e d o p e r a t i o n a l c o n t r o l S t r e a m l i n e d m a n a g e m e n t r e p o r t i n g & o r g a n i z a t i o n a l s t r u c t u r e A l i g n e d s u p p l y c h a i n t e a m s k i l l s w i t h s t r a t e g i c o b j e c t i v e s D e t a i l e d g a m e p l a n f o r l a u n c h i n g n e w b u s i n e s s e s & p r o d u c t s S y s t e m a t i c s u p p l y c h a i n m e r g e r s c a p t u r i n g p r o j e c t e d s a v i n g s 6
  7. 7. Superior Customer Service Cost Control Planning & Risk ManagementSupplier/ Partner Relationship Management Talent SCOR DELIVERS VALUE ! 7
  8. 8. Characterize the management practices and software solutions that result in “best-in- class” performance Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results Capture the “as- is” state of a process and derive the desired “to-be” future state How SCOR Works? It’sall aboutintegration& buildingrelationships  Integrates Business Process Reengineering, Benchmarking, and Process Measurement into a cross-functional framework.  SCOR is one of the best known guidelines used by companies to examine the configuration of their supply chains, identify and measure metrics in the chain, determine weak links and achieve best practices Benchmarking Best Practices Analysis Process Reference Model Business Process Reengineering Capture the “as-is” state of a process and derive the desired “to-be” future state Quantify the operational performance of similar companies and establish internal targets based on “best- in-class” results Characterize the management practices and software solutions that result in “best- in-class” performance 8
  9. 9. SCOR MODEL – SCOPE/ BOUNDARIESSCORcovers: • All customer interactions, from order entrythroughpaid invoice. • All product (physical material and service) transactions, from supplier’s supplier to customer’s customer, including equipment, supplies, spare parts, bulk product, software, etc. • All marketinteractions, from the understanding of aggregate demand to the fulfillment of each order SCORdoes not attempt to describe every businessprocessoractivity, including: • Sales and marketing(demand generation) • Research and technology development • Product development • Some elements of post-delivery customer support 9
  10. 10. SCORcontains 4P’s: Performance Measurement: Standardattributes & metrics tomeasure process performance Processes: Standarddescriptions ofmanagement processes anda framework ofprocess relationships Practices: Management practices that produce best-in-class performance People:Training and skills requirements aligned with processes, best practices, andmetrics E n a b l e s c o m p a n i e s t o :  E v a l u a t e a n d c o m p a r e t h e i r p e r f o r m a n c e s w i t h o t h e r c o m p a n i e s e f f e c t i v e l y ( b e n c h m a r k & a d o p t b e s t i n - c l a s s p r a c t i c e s )  I d e n t i f y a n d p u r s u e s p e c i f i c c o m p e t i t i v e a d v a n t a g e s  I d e n t i f y s o f t w a r e t o o l s b e s t s u i t e d t o t h e i r s p e c i f i c p r o c e s s r e q u i r e m e n t s PROCESSESPERFORMANCE MEASUREMENT PRACTICES PEOPLE 10
  11. 11. A metric is a standard for measurement of the performance of a process. SCOR metrics are diagnostic metrics. SCOR recognizes three levels of predefined metrics: • LEVEL 1 metrics are diagnostics for the overall health of the supply chain. These metrics are also known as strategic metrics and key performance indicators (KPIs). Benchmarking level 1 metrics helps establish realistic targets that support strategic objectives. • LEVEL 2 metrics serve as diagnostics for the level 1 metrics. The diagnostic relationship helps to identify the root cause or causes of a performance gap for a level 1 metric. • LEVEL 3 metrics serve as diagnostics for level 2 metrics. The analysis of performance of metrics from level 1 through 3 is referred to as decomposition. Many metrics in the SCOR model are hierarchical, just as the process elements are hierarchical. Decomposition helps identify the processes that need to be studied further. (Processes are linked to level 1 and level 2 metrics.) Supply Chain Council recommends that supply chain scorecards contain at least one metric for each performance attribute to ensure balanced decision making and governance. Performance Metrics 11
  12. 12. Performance Attributes Relationship Between Attributes And Metrics 12
  13. 13. Performance Attributes Relationship Between Attributes And Metrics 13
  14. 14. Return Level Description Schematic Comments Top Level (Process Types) Level 1 defines the scope and content for the Supply chain Operations Reference-model. Here basis of competition performance targets are set.Source Make Deliver Plan 1 # Configuration Level (Process Categories) A company’s supply chain can be “configured- to-order” at Level 2 from the core “process categories.” Companies implement their operations strategy through the configuration they choose for their supply chain. 2 Process Element Level (Decompose Processes) Level 3 defines a company’s ability to compete successfully in its chosen markets, and consists of: Process element definitions Process element information inputs, and outputs Process performance metrics Best practices, where applicable System capabilities required to support best practices Systems/tools 3 P1.1 Identify, Prioritize, and Aggregate Supply-Chain Requirements P1.2 Identify, Assess, and Aggregate Supply-Chain Requirements P1.3 Balance Production Resources with Supply-Chain Requirements P1.4 Establish and Communicate Supply-Chain Plans Implementation Level (Decompose Process Elements) 4 Not in Scope Return Three Levels of Process Detail Companies implement specific supply-chain management practices at this level. Level 4 defines practices to achieve competitive advantage and to adapt to changing business conditions. SupplyChainOperationsReferenceModel SCOR: PROCESSES 5 26 185 14
  15. 15. BASIC BUSINESS PROCESSES 15
  16. 16. PLAN(P) (Processesthat balance aggregate demand and supply) • Forecasting • SensitivityAnalysis • Balanceresourceswith requirements • Establish/communicate plansforthewhole supply chain SOURCE(S) (Processesthat procure goods and services to meet planned or actual demand) • Scheduledeliveries(receive, verify,transfer) MAKE(M) (Processesthat transform product toa finished state tomeetplanned or actual demand) • Scheduleproduction DELIVER(D) (Processesthatprovide finished goodsand servicesto meet plannedor actualdemand, typically includingorder management,transportation management,anddistribution management) Warehousemanagementfrom receivingandpickingproducttoload andshipproduct. LEVEL 1 -KEY PROCESSES EXPLAINED….. RETURN (R) (Processes associated with returning or receiving returned products)– ReverseLogistics ManageReturnbusiness rules 16
  17. 17. LEVEL 2 - PROCESS TYPES AND DEFINITIONS PLANNING A process that aligns expected resourcesto meet expected demand requirements. Balance aggregated demand and supply Consider consistent planning horizon (Generally) occurat regular,periodic intervals EXECUTION A process triggered by planned or actual demand that changesthe state of material goods. Scheduling/sequencing Transformingproduct Moving product to the next process ENABLE A process that prepares, maintains, or manages information orrelationships on which planningand execution processes rely 17
  18. 18. Level 2 Process Categories  P 1 : P l a n S u p p l y C h a i n  P 2 - P 5 : P l a n S C O R P r o c e s s  S 1 : S o u r c e S t o c k e d P r o d u c t  S 3 : S o u r c e E n g i n e e r - t o - O r d e r P r o d u c t  S 2 : S o u r c e M a k e - t o - O r d e r P r o d u c t  M 1 : M a k e - t o - S t o c k  M 2 : M a k e - t o - O r d e r  M 3 : E n g i n e e r - t o - O r d e r  D 1 : D e l i v e r S t o c k e d P r o d u c t  D 2 : D e l i v e r M a k e - t o - O r d e r P r o d u c t  D 3 : D e l i v e r E n g i n e e r - t o - O r d e r P r o d u c t  D 4 : D e l i v e r R e t a i l P r o d u c t  S R 1 / D R 1 : R e t u r n D e f e c t i v e P r o d u c t ( S o u r c e R e t u r n / D e l i v e r R e t u r n )  S R 2 : S o u r c e R e t u r n M R O P r o d u c t ( M a i n t e n a n c e , R e p a i r a n d O v e r h a u l )  D R 2 : D e l i v e r R e t u r n M R O P r o d u c t  S R 3 / D R 3 : R e t u r n E x c e s s P r o d u c t ( S o u r c e R e t u r n / D e l i v e r R e t u r n )  E P , E S , E M , E D , E R : E n a b l e c o r r e s p o n d i n g S C O R P r o c e s s e s 18
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  21. 21. SCOR:BestPractices 21
  22. 22. 1. SCOR Supply Chain Risk Management The systematic identification, assessment, and mitigation of potential disruptions (both within and outside the supply chain) in logistics networks with the objective toreduce their negative impact on the logistics network’s performance. T h e R e l a t e d S C O R P r o c e s s e s E P. 9 , E S . 9 , E M . 9 , E D . 9 & E R . 9 PROCESS SCOR:BestPractices 22
  23. 23. SCOR:BestPractices 2. 23
  24. 24. SCOR:People 1.Novice 2. Experienced Beginner 3.Competent 4. Proficient 5. Expert 24
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  26. 26. WHY DOES IKEA USE SCORMODEL? Legitimacy & Common Terminology (Integration) in supply chain for better communication Sustainable Supplier Relationship Management Designing Performance Measurement A framework for guidance & control More holistic view for co-workers – I-people need to become T-people Designed by practitioners Neutral No need to invent the wheel 26
  27. 27. Supplier Raw Material Warehouse Factory Finished Goods Warehouse IKEA Distribution Center The Customer IKEA Store 27
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  36. 36. IKEA INVENTORY PLANNING & FORECASTING Cost-Per-TouchInventoryTactic In-Store Logistics Maximum/Minimum Settings As Proprietary System Usage Of High-Flow& Low-Flow Warehouse Facilities Do-It-Yourself Assembly Lowers Packaging Costs 36
  37. 37. SOURCING AT IKEA 37
  38. 38. SOURCING AT IKEA 38
  39. 39. IKEA MANUFACTURING & DISTRIBUTION NETWORK 39
  40. 40. Designs for furniture, lamps, kitchen equipment and beds are logistically formed The packaging also is designed to squeeze as many units as possible into trucks delivering inventory to the stores. “Air out, product-in” – Loading Ledge technology Once a product is designed and manufactured, it can be checked for quality by an independent firm whose location is as proximate to the manufacturer as possible. Example, Intertek in China MANUFACTURING AT IKEA 40
  41. 41. IKEA LOGISTICS - WAREHOUSING I K E A h a s a b o u t 4 0 d i s t r i b u t i o n c e n t e r s w o r l d w i d e i n 1 6 d i f f e r e n t c o u n t r i e s C r o s s - D o c k i n g m e t h o d u s e d A s t r o W M S a d o p t e d b y I K E A i n 2 0 1 0 i n c r e a s e s a n d i m p r o v e s e f f i c i e n c y i n t h e i r d i s t r i b u t i o n c e n t r e . A s t r o i s a n a u t o ma t e d w a r e h o u s e m a n a g e m e n t s y s t e m t h a t a l l o w s f o r o r d e r i n g f u l f i l l m e n t a u t o m a t i c a l l y s o r e d u c i n g m a n u a l c o s t w i t h a u t o m a t e d r e - o r d e r i n g p u r c h a s e o r d e r s b e i n g s e n t t o s u p p l i e r s w h e n s t o c k l e v e l s a r e l o w . 41
  42. 42. IKEAproductsaretransportedby road,railandsea betweensuppliers,distributioncentersandIKEA stores,andfromthestoresto customers. IKEAtransportserviceprovidersmustcomplywiththerequirementsinthesuppliercodeof conduct IWAY,includingindustry-specificrequirements. IKEA LOGISTICS - DELIVERY 42
  43. 43. IKEA –RETURNPOLICY IKEA takes returned products seriously. Customers have atleast 30daysto bring backpurchased productsfor a full refund regardless of the reason for the return Recovery team present ateach store Afternecessary repairs, they offer them to customers in store space tagged “As Is,” More damaged products are broken down to their components and recycled. Every return and complaint is systematically documented so that IKEA can analyze reasons for returns and take action throughout the value chain when needed. 43
  44. 44. It launched a code of conduct called ‘IWAY’ as corporate sustainability standards through the practice of following environmental responsibility in relation to customers, co-workers and suppliers Offer solutions and know-how that help customers live a more sustainable life Use natural resources in a sustainable manner within the entire supply chain ; careful waste management Minimize the carbon footprint from all IKEA related operations Be transparent to all stakeholders and communicate more to customers and co- workers IKEA’s sustainability effort, successfully spans across all major supply chain processes from Source to Make, Deliver and Return, which demonstrates long-term management commitment. IKEA BEST PRACTICES 44
  45. 45. IKEA SUSTAINABILITY SCORECARD 45
  46. 46.  Rigorous safety alarm procedures  Every IKEA store and national Service Office has dedicated resources working with safety alarm procedures, and they receive regular training.  Proactive risk assessment and extensive testing  Special focus on children’s safety  Using the safest possible chemicals 46
  47. 47. “Our co-workers are our most valuable resource – when they grow, IKEA grows.” V a l u e s - I K E A e m b r a c e s h u m a n r i g h t s a n d r e s p e c t f o r t h e i n d i v i d u a l , a n d t h e w a y w e w o r k i s b a s e d o n a s t r o n g a n d l i v i n g c o m p a n y c u l t u r e . L i s t e n i n g t o o u r c o - w o r k e r s I K E A u s e s “ V O I C E ” – a c o m p a n y - wi d e s u r v e y – t o m o n i t o r h o w c o w o r k e r s v i e w v a r i o u s a s p e c t s o f t h e i r e m p l o y m e n t a t I K E A . S a f e a n d h e a l t h y w o r k i n g c o n d i t i o n s K e e p i n g c o - w o r k e r s i n v o l v e d D i a l o g u e w i t h u n i o n s S u p p o r t i n g w o r k - l i f e b a l a n c e IKEA MANAGING PEOPLE 47
  48. 48. IKEA MANAGING PEOPLE 48
  49. 49. IKEA MANAGING PEOPLE 49
  50. 50. IKEA MANAGING PEOPLE 50
  51. 51. IKEA MANAGING PEOPLE 51
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  53. 53. SCOR could be extended into a complete business process architecture, or even into a complete process-centric enterprise architecture (HOLISTIC/ SYSTEM VIEW) 53
  54. 54. HOW DOES IT ALL COME TOGETHER AT IKEA? 54
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