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
SCOR Benchmarking - Presentation
What is a Supply-Chain
Product Design
DCOR
Sales & Support
CCOR
Supply Chain SCOR
SCOR Benchmarking - Presentation
Customer processes
Supplier processes
Product Management
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
Plan
continual development
Deliver
Return
Suppliers
Supplier
Source
Make
Deliver
Return
Return
Supplier
Internal or External
SCOR Benchmarking - Presentation
Source
Make
Return
Deliver
Return
Your Company
Source
Return
Make
Deliver
Source
Return
Return
Customer
Internal or External
Customers
Customer
SCOR Processes
Level 1
Level 2
Level 3
Level 4
Level 5
Scope
Configuration
Activity
Workflow
Transactions
S1
S1
Source
Source
Stocked Product
Product
Stocked
S1.2
S1.2
Receive Product
Product
Receive
Supply-Chain
Supply-Chain
Source
Source
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
EDI
EDI
SCOR Benchmarking - Presentation
Company/Industry definitions
Performance Metrics
Customer
SCOR metrics: Standard Strategic (Level 1)
Metrics
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
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.
SCOR Benchmarking - Presentation
The SCOR Reference Process
Benchmarking
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
SCOR Benchmarking - Presentation
7 Steps of a Benchmarking Program
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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 Design
DCOR
Sales & Support
CCOR
Supply Chain SCOR
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SCOR Benchmarking - Presentation
Customer processes
Supplier processes
Product Management
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
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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:
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Level 1
Level 2
Level 3
Europe, Asia, US
Major Accounts
Same-Day Shipping
Commercial, Retail
Grouped Accounts
Bulk Shipping
Eastern, Western
Region
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:
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Level 1
Level 2
Level 3
Business Divisions
Product Lines
Product Families
Fulfillment Models
Supplier Groups
Parts
Planning Models
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
Its that simple.
Group 1
Customer A
Business 1
Business 2
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Product 1
Group 2
Customer B
Customer C
Customer D
Product 2
Product 3
Product 4
SCOR Benchmarking - Presentation
Example: Air Conditioning Company
Columns are Retail/Commercial, and subsegmented
Rows are the Major Product Lines
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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
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SCOR Benchmarking - Presentation
Example: Air Conditioning Company
Columns are Retail/Commercial, and subsegmented
Rows are the Major Product Lines
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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
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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
Grosscriteria may apply
Weightings and other
# of
Unit
Strategic
Revenue Margin
%
Volume
Value
Rank
Big Air
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Small Air
10
Commercial
1=low
3=high
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SKUs
SCOR Benchmarking - Presentation
Supply Chain Strategy
We use a tool called the Supply Chain Strategy
Matrix to Identify priority strategic features or
attributes of supply-chains.
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?
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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:
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Performance
Percentile
Choices
Interpretation
Superior
90th
Top 10 performer
Advantage
70th
Top Half performer
Parity
50th
Half better/Half worse
SCOR Benchmarking - Presentation
Supply Chain Strategy in 5 Minutes
Build Strategy
Model
Lifecycle
1. Assets
2. Cost
Buy
Make
ETO
1. Reliability
2. Response
BTO
1. Assets
2. Reliability
BTS
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SCOR Benchmarking - Presentation
Likely Priority
Start
1. Flexibility
2. Response
Middle
1. Cost
2. Reliability
Commodity
1. Cost
2. Assets
EOL
1. Assets
2. Cost
Supply-Chain Strategy Matrix
P
P
A
A
S
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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
supply-chains.
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
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SCOR Benchmarking - Presentation
Performance Metrics
Customer
SCOR metrics: Standard Strategic (Level 1)
Metrics
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
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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
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SCOR Benchmarking - Presentation
A Metrics Architecture
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SCOR Benchmarking - Presentation
Metrics Selection
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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
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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
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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
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Attribute
SA
P
Reliability
Metric (level 1)
You
Perfect Order
Fulfillment
97%
Response
Order Fulfillment Cycle
Time
14
days
Flexibility
Ups. Supply Chain
Flexibility
62
days
Cost
Supply Chain Mgmt
Cost
12.2%
Assets
Cash-to-Cash Cycle
Time
35
days
SCOR Benchmarking - Presentation
Parity
Adv
Superio
r
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
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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
Superio
GoalsSA Metric (level 1)
Attribute
You
Parity
Adv
Gap
P
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Reliability
Perfect Order
Fulfillment
97%
92%
95%
98%
1%
Response
Order Fulfillment Cycle
Time
14
days
8 days
6 days
4 days
8
Days
Flexibility
Ups. Supply Chain
Flexibility
62
days
80
days
60
days
40
days
Cost
Supply Chain Mgmt
Cost
12.2%
10.8%
10.4%
10.2%
1.4%
Cash-to-Cash Cycle
35
45
33
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SCOR BenchmarkingA- Presentation
Assets
Planning
Supply-Chain Definition
1-2 Day
workshop
Supply-Chain Prioritization 1 Day Data
Gathering
Supply-Chain Strategy
1 Day
workshop
Supply-Chain Performance 1 Day workshop
Data and Benchmarking
Days/Weeks
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SCOR Benchmarking - Presentation
Supply Chain Excellence Tools
SCOR AND
SUPPLY CHAIN COUNCIL
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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."
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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
Costs2
GM
94%
Ford
Conoc
o
WalMart
Chevr
on
IBM
Exxon
GE
Citi1
AIG1
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
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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 worlds 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
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SCOR Benchmarking - Presentation
Global Operations Supporting Over 800 Member
Organizations
Member Location
Member Affiliation
Also developing
chapters in India and
the Middle East
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SCOR Benchmarking - Presentation
Industry Membership Scope
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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
Improvement in stock market
value
Increase in profitability (between 2x and
6x) with regard to project investment
costs within first 12 months of
implementation1
Increase of available financial
means through improved
investment selection (portfolio
management of initiatives)
Reduction in IT costs through minimizing
system customization and making
better use of standard functionality 1
Optimization of Enterprise
Resource Planning
Continuous actualization of process
change portfolio by continuous
conversion of supply chain
improvements with the objective of
1
1
Poluha
(2007) Application
of the SCOR
Model
Supply
increasing
annual profits
by 1%
toin3%
Chain Management, New York, USA
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SCOR Benchmarking - Presentation
Benefits of SCOR
Increase of profits and margins
Reduction of overall costs
The Value of SCOR
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SCOR Benchmarking - Presentation
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Chain Council benchmarking or
SCORmark,
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