Mit ARIS Express zum SCOR-Referenzmodell

Transcription

1 Mit ARIS Express zum SCOR-Referenzmodell How To Use The Approach Consultant Paper Arbeitsberichte zur Wirtschaftsinformatik Nummer: 01/2010 Autoren: Peter Mayer, Anne Reiner, Daniel Wittkowsky, Georg Kästle Studiengang Wirtschaftsinformatik DHBW Ravensburg

2 Bibliographische Information der Deutschen Bibliothek Die Deutsche Bibliothek verzeichnet diese Publikation in der Deutschen Nationalbibliografie; detaillierte bibliografische Daten sind im Internet über abrufbar. bei den Autoren, 2010 Herausgeber: Studiengang Wirtschaftsinformatik, DHBW Ravensburg Anschrift: Marienplatz Ravensburg +49 (0) 751 / [email protected] Version: 1.0 ISSN: Diese Publikation ist urheberrechtlich geschützt. Sie darf ohne vorherige Genehmigung der Autoren/Herausgeber nicht vervielfältigt werden.

3 Table of Contents List of Figures... iv 1 Introduction SCOR Overview Supply Chain Council Supply Chain Management and SCOR What does SCOR model provide? What is not included in SCOR model? ARIS Express ARIS Express Overview IDS Scheer, ARIS and SCOR ARIS Express ARIS Express vs. ARIS-Toolset ARIS Express Notation Organisational diagram Process landscape Business process : Extended Event-driven Process Chain (eepc) Data model IT Infrastructure System landscape Free Diagram SCOR Processes Structure of the SCOR Model Levels of SCOR Model SCOR Version 9.0 Table of Contents SCOR notation SCOR Level 1 (Top Level) Level 2 (Configuration Level) Function Structure Description of a process category Level 3 (Process Element Level) Function and Structure Description of a process Element Level 4 (Implementation Level) i

4 4.5.1 Function and Structure Description of a process Inputs/Outputs Best Practices SCOR Metric System Metrics and Benchmarking with SCOR Performance Attributes Levels of SCOR metric system Standard notation Metric data sheet Benchmarking in Supply Chain with Scor Description of the company Bike Shop 3000 GmbH Organization of the Company The IT-Systems in the Company The Infrastructure of the IT The IT-Infrastructure in Ohnewitz The IT-Infrastructure in Schönholz Data of the Company Configuration of the Supply Chain Implementation of a Source Process Overview of SCOR-Source Processes Description of the SCOR-Process Element S Implementation of the SCOR-Process Element Implementation of a Make Process Overview of the SCOR Make Processes Description of the SCOR Process Element Implementation of the SCOR Process Element Overview: How to implement SCOR Initial Phase Phase One Phase Two Phase Three Phase Four Phase Five Value of a SCOR Initiative SCOR & SAP General information mysap Supply Chain Management (mysap SCM) SAP Solution Manager SAP Business ByDesign ii

5 9 Conclusion Bibliography iii

6 List of Figures Figure 1 SCOR: Business process reference model... 4 Figure 2 Organisational Diagram: Notation Figure 3 Process landscape: SCOR structure, Notation Figure 4 Process landscape: SCOR Metric System, Notation Figure 5 eepc: Notation Figure 6 Data model: Notation Figure 7 IT Infrastructure: Notation Figure 8 System landscape: Notation Figure 9 Free Diagram: Available Symbols Figure 10 Levels of SCOR model Figure 11 SCC standard notation Figure 12 SCOR Notation Process Categories M1, M2, M Figure 13 SCOR's five core management processes Figure 14 SCOR Performance Attributes and associated Level 1 Metrics Figure 15 SCOR: metric system notation Figure 16 Hierarchical Structure Metric Level 1 RL Figure 17 Hierarchical Structure Metric Level 2 RL Figure 18 Bike Shop 3000 GmbH Organizational Chart Figure 19 Bike Shop 3000 GmbH System Landscape Figure 20 IT-Infrastructure Ohnewitz Figure 21 IT-Infrastructure Schönholz Figure 22 Bike Shop 3000 GmbH Data Diagram Figure 23 Bike Shop 3000 GmbH Data Model S Figure 24 Bike Shop 3000 GmbH eepc S Figure 25 Bike Shop 3000 GmbH Data Model M Figure 26 Bike Shop 3000 GmbH eepc M Figure 27 Sample Scorecard Figure 28 Sample Geographic Map Figure 29 Sample Thread Diagram Figure 30 Sample Disconnect Analysis Figure 31 Sample Opportunity Analysis Figure 32 SCOR Project Example Overview Figure 33 SCOR Project Example Detail Part Figure 34 SCOR Project Example Detail Part Figure 35 SCOR Index Comparison Figure 36 SCOR framework & IT Figure 38 SAP solution map: SAP SCM Edition Figure 39 SCM based on SAP Figure 40 Components of SCM in SAP Business ByDesign iv

7 1 Introduction "Theory without practice leads to an empty idealism, and action without philosophical reflection leads to mindless activism." This manual is intended to link the two above displayed worlds the theoretical and the practical one regarding the business process reference model SCOR and business process management software ARIS Express. It is intended to give a detailed insight into the SCOR model with the support of figures modelled witch ARIS Express. The theoretical part starts with a short overview about the SCOR model in general, afterwards the BPM platform ARIS and one solution ARIS Express used in the course of this manual will be described. Short information about IDS Scheer and notation in ARIS Express will be given. Fourth chapter deals with SCOR Processes. After a short description of SCOR Model s structure detailed information about level 1 to 4, inputs/outputs and best practices will be given. Next chapter gives information about the SCOR metric system and benchmarking in supply chain with SCOR. In the following chapters theory explained before will be applied on a specified company, Bike Ship 3000 GmbH. That s just level 4 of the SCOR model which is being implemented. After an overview of possibilities how to implement SCOR, especially regarding project management, and benefits resulting from using SCOR in a company last chapter covers software solutions from SAP implementing the SCOR model. Bibliography provides a list of famous technical literature concerning the SCOR model and related topics covered in this manual. 1

8 2 SCOR Overview This sub-chapter is intended to give an overview about the Supply-Chain Operations Reference (SCOR)-Model and related topics, such as Supply Chain Management (SCM) and SCC (Supply Chain Council). 2.1 Supply Chain Council The SCOR model was developed by the Supply Chain Council, a non-profit-organization, to be able to evaluate and compare supply-chain activities and performance. 1 SCC was founded in 1996 in the United States of America by two consultancies, Pittiglio Rabin Todd & McGrath (PRTM) and Advanced Manufacturing Research (AMR). The Supply Chain Council initially included 69 of the world s leading companies, such as Bayer, Compaq or Procter & Gamble. 2 It now has closer to 1,000 corporate members world-wide. This fast growth in the last years led to establishment of international chapters, amongst others in Europe, Australia and Brazil. Because of the ongoing wish to spread SCOR s idea around the world the foundation of additional chapters in other countries, such as India, is planned. 3 The more the SCOR-model will be disseminated the easier software systems and best practice can be developed. 4 There is a platform with lots of information about the SCOR model and related topics provided by the SCC. Interested readers may visit Membership in SCC is open to all companies and organizations with an interest in advancing the state-ofthe-art in supply-chain management systems and practices. 5 As a member of SCC you pay an annual fee to support Council activities on the one hand and get lots of special offers, such as upcoming webinars and events, white papers or template data bases for ARIS or TIBCO to discover SCOR for you and your company on the other hand. Furthermore you can download SCOR s complete up to date version. 2.2 Supply Chain Management and SCOR There are many different approaches to define Supply Chain Management. As Bolstorff recognized well the definition depends on your motivation and interest. While a third-party logistics provider trying to sell its outsourcing capabilities will align SCM with distribution practices, a technology provider trying to sell software might align SCM with the use of advanced planning functionality. 6 SCM has its origin in the early 80s in the United States of America where Anglo-American consultants, such as Oliver and Webber, formed the term. Theoretical elaborations started in late 80s, again in the USA. Pioneers are for example Bothe (1989), Hewitt (1994) or Towill (1996). In Germany, SCM was established both theoretical and practical in the mid 90s. Towill, for example, defined SCM just as linking of systems for order processing. 7 Knolmayer, author of SCM based on SAP systems which was used in chapter SCOR and SAP, describes SCM as follows: 1 SCC Inc. (2008a), Summary Bolstorff, Rosenbaum (2007), p. 2 3 SCC Inc. (2010), 4 SCC Inc. (2008a), Summary SCC Inc. (2008a), Summary Bolstorff, Rosenbaum (2007), p. xiii 7 Werner (2008), p. 3 f. 2

9 Supply Chain Management tries to improve the flow of materials, information and financial resources within the company and among companies collaborating under long- or mediumterm agreements by sharing information, concerted planning and scheduling, coordinated execution, and collaborative monitoring and controlling to improve the competitiveness of the entire supply chain. 8 First of all, the SCOR-Model is highly accepted in SCM. Last but not least, because it provides solutions for problems concerning supply chains. SCOR as a cross-industry standardised model is an objective way to help SCM. 9 As mentioned by Holten and Melchert information technology becomes more and more key to success in SCM. SCM has the intention to create value in a corporate and coordinated way. Managers and practitioners working to optimize Supply Chains want to meet customer needs as efficient as possible and maximize customer supports at the same time. With reference to SCM level of development (published by Bechtel and Jayaram) they describe 4 steps to implement SCM in a company network: Material flow of value-added chain has to be integrated from initial production to endconsumer in other words the elements of chain have to be linked! 2. At this step material flow between companies has to be designed actively to increase in efficiency. For this purpose especially Advanced Planning Systems (APS) are used. 3. A bidirectional flow of information, which both displays material flow along whole value-added chain and follows way backwards too. This can be achieved, for instance, by using the SCOR-Model, which provides metrics for each process at different levels. According to Holten and Melchert this step could be seen as kind of state of technology in Process integration From theirs point of view this step marks next great challenge. SCM has the objective to develop a supply chain with partners, who bring his/her core competences. 8 years after above mentioned book was published it has to be admitted that process integration is in progress and has even led to successful results! 2.3 What does SCOR model provide? The SCOR Model was developed with the aim to standardise actions within a supply chain and be able to describe those actions consistently by all involved partners along the supply chain. 11 Working process resulted in a normative business process reference model which provides a standard methodology to analyze and describe all aspects of a supply chain. In general and as described by SCC, a process reference model differs from classic process decomposition model which address one specific configuration of process elements. 12 In this context, a normative model consists of predefined alternatives and describes how an object of the model should be seen and acts. Due to higher level of abstraction used in normative models modelling becomes much easier. 8 Knolmayer (2009), p. 3 f. 9 Bolstorff, Rosenbaum (2007), p. xiii f. 10 Holten, Melchert (2002), p. 207 f. 11 Werner (2008), p. 48 f. 12 SCC Inc. (2008b), p. 6 3

10 There are following further advantages, which results from standardisation: - Exchange of models beyond company units and organisations is possible. - General problems and metrics can be described. - Industry standards and business practices can be exchanged. 13 SCOR model contains elements of business process reengineering, process (and not functions!) definitions, metrics, benchmarking and best practices; focal point on core processes plan, source, make, deliver and return at all times. 14 These parts combined with the features associated with the execution of a supply chain in a unique format 15 are the characteristics of a business process reference model. SCOR became as powerful and unique as it is because of the combination of the four mentioned elements. See this synthesis visualised in the graphic below. Figure 1 SCOR: Business process reference model With the help of the metric system it is possible to measure particular actions within standardised supply chains. Furthermore concept of SCOR includes requirements for software which supports companies in improving their supply chains. As (business) process reference model SCOR model ranges from source of supply to point of consumption. There are several alternatives to model one process. Actions are configurable. Thereby a standardised language for intern and network communication is provided, which is an important condition for benchmarking between partners. 16 Besides the SCOR model there are also other normative business process reference models, such as ARIS. But special feature of the SCOR model in this context is the concentration on company s supply chains Bolstorff, Rosenbaum, Poluha (2007), p IDS Scheer IV 15 SCC Inc. (2008a), Introduction Werner (2008), p. 48 f. 17 Bolstorff, Rosenbaum, Poluha (2007), p. 17 4

11 2.4 What is not included in SCOR model? As you can see, the SCOR-model provides a basis for improvements in SCM for global projects as well as specific projects. On the one hand, it spans all customer interactions, all physical material and all market interactions, but on the other hand it doesn t have the objective to describe every business process. SCC doesn t intend to give a concrete reference supply chain because degree of freedom would be restricted. Due to the vision to provide a reference model you will not find any process modelled beyond company gateway. Furthermore there are no declarations about marketing, research & development and customer support. According to SCC, the areas human resources or training which are also not mentioned, are implicit in the SCOR model. 5

12 3 ARIS Express Easy Installation - Fast Modeling - Instant Results. BPM on The Fast Track - Join the ARIS Express IDS Scheer V 6

13 3.1 ARIS Express Overview This chapter is intended to give an overview about ARIS Express and related topics, such as ARIS and IDS Scheer IDS Scheer, ARIS and SCOR The well-known and proven method to model business processes ARIS was developed by IDS Scheer. According to information on their website IDS Scheer is the market leader in Business Process Management (BPM) software, solutions and services for corporations and public organizations worldwide. 19 The company was founded in 1984 by Prof. Dr. Dr. August Wilhelm Scheer, who has been working at Institute for Information Systems at University Saarbrücken. Headquarter of IDS Scheer is also in Saarbrücken. 20 Again proudly pronounced by IDS Scheer on the website, they are the worldwide market leader in business process analysis and optimization with its ARIS Software. 21 ARIS is said to be a tool for analyzing, designing, implementing and controlling corporate processes. There are four main modules of ARIS platform which was implemented with the aim to provide tools for every phase of a BPM project: ARIS Strategy Platform ARIS Design Platform ARIS Implementation Platform ARIS Controlling Platform ARIS Platform provides different starting points for companies to adapt SCOR with the help of ARIS. Furthermore IDS Scheer offers various reference models with ARIS Business Performance Edition, amongst others ITIL (Information Technology Infrastructure Library) or SCOR. Consequently, they also keep an eye to ongoing development of the SCOR-Model. 22 Commercial application ARIS EasyScor, which is based on SCOR Version 8.0, provides support with best practices and metrics ARIS Express IDS Scheer published a starter s version in September 2009 called ARIS Express, which can be downloaded for free. ARIS Express is part of ARIS Design Platform. According to IDS Scheer it is the first free business process management (BPM) software to model and optimize business processes. 23 You will have to be registered at ARIS Community (see if you want to use ARIS Express. 19 IDS Scheer II 20 Please visit 21 IDS Scheer III 22 Please visit to get more information about IDS Scheer and provided solutions. 23 IDS Scheer I 7

14 ARIS Community offers lots of helpful things, such as: 24 ARIS Express online-help various video-tutorials user forum to discuss and get quick and competent answers for questions free training material for self-studies Modeling area and diagram types Modeling area of ARIS Express is very similar to commercial ARIS Tools. However, range of the symbols used is limited. Design of the symbols changed. ARIS-Toolset offers a wide range of diagram types. There have been chosen seven out of them for ARIS-Express. See table below with information about available diagram types. Diagram type Organizational diagram Purpose Description of hierarchical structure of an organization Process landscape / value added chain Description of process hierarchies Division of processes into subprocesses Overview about all processes in an organization Business process : Extended Event-driven Process Chain (EPC) chronological and logical sequence of activities Use of additional objects, such as IT systems, organizational units or documents Data model Description of data interrelation on an abstract level IT infrastructure Description of running software and hardware, used network devices System landscape Description of IT systems and their belonging logical units (domains) Free diagram Free modeling with various shapes and possibilities to link objects As all IDS Scheer products are continuously advanced they pronounced recently to integrate BPMN modelling into ARIS Express. For describing SCOR all diagram types listed in the table above will be used. Functionality of ARIS Express There are some innovations implemented in ARIS Express which make modelling easier and faster than in ARIS Toolset, for instance. See table on next page with some examples. All of these functions have even not been implemented in the commercial ARIS-Tool! 24 Allweyer (2009) 8

15 What? How? Benefit Pattern catalogue (amongst others tree and process flow) Create modeling content textual in any text editor and copy to ARIS Express Use existing patterns: Drag & Drop: Choose a pattern and drop into model Create new patterns: drag model extract menu create pattern name pattern Example: Type names of all required activities into text editor copy & paste to ARIS Express (select object type) new object for each inserted line Smart Design idea: kind of wizard to create a new model input into a table automatic layout Just object names and possibly links between objects have to be filled in See above Faster modeling Reduce effort to capture objects and links ARIS Express vs. ARIS-Toolset Furthermore there are some new display options, which are not in available in ARIS either: further text formatting possibilities totally free placement of attribute values On the other hand, there are many missing functionalities in the free version: create own filters and reports export possibilities (only predefined exports in pdf or rtf) multi-user-support (no data base in background as in commercial ARIS Tools, everything is stored in files) links and navigation between models (no data base in background, hyperlink as only possibility in ARIS Express) different copy modes (no data base in background) multilingualism Fortunately, some comfortable functionalities known from ARIS Toolset were taken over to ARIS Express. switch link mode on/off arrange objects (left-aligned, right-aligned, centre horizontally/vertically, space horizontally/vertically etc.) insert graphic objects, such as rectangle, ellipse insert freeform text While models, which were designed in ARIS Express can be imported to the commercial version, the other way around won t work. 9

16 Nevertheless, ARIS and especially ARIS Express have been chosen as modelling language respectively modelling tool/notation in this SCOR project because of the publicity and spreading of ARIS and simplicity and power of ARIS Express. 10

17 3.2 ARIS Express Notation The following overview is intended to describe used ARIS Express elements and their specific notation. For each ARIS Express element benefit is described textually and notation is shown in a figure. Please note: All following explanations concerning ARIS Express are based on ARIS Express version Organisational diagram Benefit This ARIS Express element is used to describe organisational structures, such as relationships between organisational units, roles and persons. Organisational unit Role Person Figure 2 Organisational Diagram: Notation Process landscape Benefit This ARIS Express element is used to describe process hierarchies. An overview about value adding processes in a company can be given. Furthermore, processes can be divided into sub-processes. Team SCOR used given ARIS Express notation to model SCOR model structure (level 1 to 4). Process landscape: SCOR model level 1 to 4 Process Figure 3 Process landscape: SCOR structure, Notation 11

18 According to SCC and SCOR Version 9.0, where SCOR levels 1 to 4 and SCOR metric system is looked at separately, Team SCOR used following self-developed notation to model structure of SCOR metric system. (see figure below) SCOR Metric System Esp. display hierarchy: performance attributes and associated SCOR metrics level 1 Topic Category Performance Attribute Performance attribute Metric Metric code Figure 4 Process landscape: SCOR Metric System, Notation 12

19 3.2.3 Business process : Extended Event-driven Process Chain (eepc) Benefit Event-driven Process Chains in general are used to show the chronological and logical sequence of activities. If additional objects, such as organisational units, documents or IT systems shall be visualised too, ARIS Express offers suitable symbols. Corresponding diagrams, which use in addition to processes and functions various other symbols (documents, IT systems, risk see detailed notation on next page), are called Extended Event-driven Process Chains (eepc). Team SCOR used eepc to model especially SCOR model level 4 for a sample bike company. Event Organisational unit Person Document Activity Roll Entity IT System AND connector Database Product Risk XOR connector OR connector Figure 5 eepc: Notation Data model Benefit ARIS Express Data model can be compared with Entity-Relationship-Model (ERM) which is used for software engineering purposes. Data structures are visualised with the help of entities, their properties and relations. As you can see in the figure on next page there are special notation standards to visualise cardinalities in this ARIS Express element. Team SCOR used Data model to illustrate some central entities of the bike company, which are associated with selected sample processes, such as purchase order and production order. 13

20 Symbols Cardinalities Source Target Entity Primary key Entity Entity Source Cardinality: 1 Target Cardinality: 1 Attribute Foreign key Entity Entity Source Cardinality: 1 Target Cardinality: c Entity Entity Source Cardinality: 1 Target Cardinality: cn Entity Entity Source Cardinality: 1 Target Cardinality: n Entity Entity Source Cardinality: 1 Target Cardinality: 2.. Entity Entity Source and Target Cardinality not specified Figure 6 Data model: Notation IT Infrastructure Benefit An IT infrastructure gives information about following facts: Which software system is running on which hardware? In which network is the hardware located? Which network devices, such as switches or routers, are used for linking existing networks? Team SCOR used this ARIS Express element to make the sample bike company s IT infrastructure clear. IT System Hardware Network Network component Figure 7 IT Infrastructure: Notation 14

21 3.2.6 System landscape Benefit ARIS Express element system landscape shows which IT systems are used in a company. Furthermore IT systems and their corresponding domains can be visualised. As described for last ARIS Express element, Team SCOR used system landscape to describe the bike company concerning their IT systems. Domain IT System Figure 8 System landscape: Notation Free Diagram Team SCOR used free diagrams to make a textually described connection clear. As shown below various symbols are offered by ARIS Express. Please note: There is no connection in syntax (meaning of symbols) between different free diagrams. Figure 9 Free Diagram: Available Symbols 15

22 4 SCOR Processes I put my heart and my soul into my work, and have lost my mind in the process Vincent van Gogh

23 4.1 Structure of the SCOR Model This chapter is intended to describe the levels of the SCOR model on the one hand and structure of the actual SCOR Version 9.0, which was published by SCC in April Last topic covers both table of contents and used process notation applied throughout the entire SCOR model Levels of SCOR Model The SCOR model is a hierarchical model. 26 It consists of 4 levels, but only the first 3 levels are discussed in the SCOR model. Figure 10 Levels of SCOR model 27 Degree of concretion rises over different levels from top level over configuration level and process element level to implementation level. 26 SCC (2008a), Introduction SCC (2008c), p. 1 17

24 In the following characteristics of each level are described. 28 Level 1 Top Level 1 sets the basis of competition performance targets by defining the scope and content for the SCOR-model. There are following five process types: plan, source, make, deliver and return. Level 2 With the help of process categories companies implement their operations strategy at this level by choosing configuration for their supply chain. Level 3 This level give companies the possibility to fine tune their operations strategy. Therefore it decides on company s success and behaviour of competitors. Level 4 This is the point, where companies have to think about their individual operational sequences to achieve competitive advantage. As a result company specific implementation of SCM practices is the main function of this level. As well as level 4 is not in scope of the SCOR-model level 5 and 6, which are even not pictured in the graphic above, would break the definition of SCOR as a normative reference model. Nevertheless, organisations which want to apply SCOR-model successfully, will need to extend the model, at least to level 4. While level 4 contains tasks and level 5 activities which are developed from the tasks, level 6 describes appropriate instructions SCOR Version 9.0 Table of Contents Members of SCC aim to improve continuously their reference model to facilitate the use of the model in practice 29. Actual version 9.0 of the SCOR-model is the eleventh revision since Model s introduction. 30 It consists of 651 pages! After a short introduction, which covers amongst others SCOR-Model structure and SCOR Version 9.0 Changes, section 2 describes SCOR s performance measurement system. Metrics are presented according to their performance attributes (see Chapter Metrics and Benchmarking ). Section 3, which is the most comprehensive part, covers all relevant processes concerning a successful supply chain, from planning to returning products. Firstly, plan processes are described. After this, processes to source material, make and finally deliver products are described. Returning products also belongs to a supply chain these processes are presented afterwards. In the end of this section inputs and outputs are characterized. Another substantial part of the SCOR-Model follows in Section 4 Best Practices. 28 SCC (2008b), p. 7; Werner (2008), p. 49 f. 29 SCC (2008a), Summary SCC (2008a), Summary

25 The launching of the SCOR-Model Version 9.0 brought some changes, such as the new Special Applications section, which is described by SCC as follows: (It) allows special interest groups and project groups to present applications of SCOR that may be under development, not yet generally be accepted, or may require additional case studies or proof points. 31 An actual application is GREEN SCOR. In section 4 SCC presents a set of strategic environmental metrics. SCC follows the objective to provide an environmental accounting framework with the help of the SCOR-Model. Of course, this would have additional benefit SCOR notation SCC uses a consistent notation in their SCOR-model. Each process identification code consists of two parts, which gives information about process type respectively process category and concrete process at the same time. See example below. P: Plan S: Source Process Type Process Category M: Make M2.3 M1: Maketo Stock D: Deliver R: Return Be careful! This is just a sample of process types and process categories! M2: Maketo Order M3: Eng. to Order Figure 11 SCC standard notation The process number (in the example 3 ) indicates the concrete process. (e.g. Produce and Test ) There is also used a schema within each process category plan, source, make, deliver, return, which gives information about the idea of the process. This means that, for example, process M1.3 and M2.3 have the same idea, namely production and testing. They only differ in concrete products which are transformed in the particular process In this context that is M1 process category includes Make-To-Stock products whereas M2 processes deals with Make-To-Order products. 31 SCC (2008a), Introduction

26 Due to special activities belonging to Engineer-To-Order production (M3) process number is not equal to those from M1 and M2. If you take Produce and Test as example again following notation is used: Make-To-Stock M1.3 Make-To-Order M2.3 Engineer-To-Order M3.4 The figure below shows detailed view of process categories M1, M2 and M3. M1 Make To Stock Schedule Production Activities Issue Material Produce and Test Package Stage Product Release Product to Deliver Waste Disposal M1.1 M1.2 M1.3 M1.4 M1.5 M1.6 M1.7 M2 Make to Order Schedule Production Activities Issue Sourced/ In Process Product Produce and Test Package Stage Finished Product Release Finished Product to Deliver Waste Disposal M2.1 M2.2 M2.3 M2.4 M2.5 M2.6 M2.7 M3 Engineer To Order Finalize Production Engineering Schedule Production Activities Issue Sourced/ In Process Product Produce and Test Package Stage Finished Product Release Product to Deliver M3.1 M3.2 M3.3 M3.4 M3.5 M3.6 M3.7 Figure 12 SCOR Notation Process Categories M1, M2, M3 20

27 4.2 SCOR Level 1 (Top Level) First level of SCOR model, also called Top Level, defines both scope and content of a supply chain. Therefore five process categories are specified, which are modelled in the ARIS Express process landscape below. In the following each process category is specified. 32 Plan Source Make Deliver Return Figure 13 SCOR's five core management processes Plan This process type contains processes which balance demand and supply regarding material procurement, product divisions and sales department, such as evaluate supply chains, identify demand requirements, plan inventory or define material. Furthermore the infrastructure of planning has to be defined at this stage, such as decision in terms of makeor-buy or commodity structure. Source All processes that procure goods and services to meet planned or actual demand are of this process type. This includes for example the comparison of alternative sources of supply to assure supply guarantee in companies. Make This process type consists of processes that transform product to a finished state to meet planned or actual demand. Therefore production process has to be adjusted with its interfaces, just because high quality products are essential for highly satisfied customers. Deliver All processes that provide finished goods and services to meet planned or actual demand are of this process type. Order management, transportation management and distribution management is typically included. Again final satisfaction of customer satisfaction plays the major role. Return Whenever goods are returned, either from suppliers or customer point of view, one of the processes out of this process category is needed. This core process covers both return of resources to suppliers and receipt of defective products from customers. Last-mentioned activities are united in the so called process category Deliver Return on SCOR model s level 2, whereas first one belong to process category Source Return. Anyway, administrative activities are as important as logistic ones in particular described area. Furthermore return flow of defective, excessive and MRO (Maintenance, Repair or Overhaul) products are taken into consideration. As you can see, in each process category everything is focused on meeting planned or actual demand. 32 Werner (2008), p. 51 f.; SCOR Version 9.0 Overview booklet, p. 8 21

28 4.3 Level 2 (Configuration Level) Function The aim of Level 2, the Configuration level, is to configure the 5 Process Types of Level 1 to implement the company s operation strategy. It s intended to specify process chains ( for example Where is which process chain executed?) and get a clear understanding about the processes in supply chain, in order to get along with problems such as open interfaces or activities executed doubly. Following diagram gives an example for a configuration of a Supply Chain. For this reason Level 2 offers 26 process categories a company can choose from, to structure the processes being used in the company SCC (2008c) 22

29 4.3.2 Structure The following table shows an overview of the SCOR Structure. Planning Processes Execution Processes Plan Source Make Deliver Return Plan Supply Plan Source Plan Make Plan Deliver Plan Return Chain P1 P2 P3 P4 P5 Source Stocked Product S1 Make to- Stock M1 Deliver Stocked Product D1 Source Defective Product SR1 Return Source Make to Order Product S2 Make Order M2 to Deliver Make Order D2 to Deliver Defective Product DR1 Return Source Engineer-to- Order Product S3 Engineer to Order M3 Deliver Engineer to Order D3 Deliver Retail Product D4 Source Return MRO Product SR2 Deliver Return MRO Product DR2 Source Return Excess Product SR3 Enable Processes Enable Plan EP Enable Source ES Enable Make EM Enable Deliver ED Deliver Return Excess Product DR3 Enable Return ER To structure processes into categories the SCOR Modell determines 5 process types on Top-Level and 3 process types on Configuration Level. As already explained in the previous chapter, the 5 process types on Level 1 describe the 5 core management processes. The 3 process types on Level 2 are intended to describe the purpose of a process. That s why SCOR distinguishes between Planing processes, Execution processes and Enable processes. which describe different aspects of processes appearing in Supply Chain Management: Planning Processes are intended to develop a course of action in order to balance demand and supply. Execution Processes are intended to transform a product in different dimensions (Shape, Place). Enable Processes support planning and execution processes by providing and managing information or relationships. 23

30 Beside of the general structuring by these 2 kinds of process types there are still further subdivisions of the Core Management Processes: Subdivision of Plan Processes Plan Processes are subdivided into following categories: Plan Supply Chain (P1) Plan Source (P2) Plan Make (P3) Plan Deliver (P4) Plan Return (P5) Attached to the other Core Management Processes As you can see from the table these process categories define Planning processes attached to one of the other Core Management processes (P2 P5) on the one hand and to the whole Supply Chain (P1) on the other hand. Subdivision of Source, Make and Deliver Processes The Execution Processes of these Core Management Processes can be subdivided into following Categories: Make-to-Stock: Processes intended to generate specific products continuously. Make-to-Order: Processes intended to generate a specific product caused by an order. Engineer-to-Order: Processes intended to develop and generate a product caused by special customer requirements. In addition to these 3 categories, there is still a special category Retail-product only for Deliver processes. Subdivison of Return Processes Processes of return can be distinguished by the previous activity, either it s a return of a sourced Product (dealing with supplier) or it s a return of a delivered product (dealing with customer). There is also the distinction between the reason for return: Return of defective Products means returning broken products that are not intended to be repaired Return of MRO (Maintenance, Repair, Overhaul) Products means returning products that are intended to get improved. Return of Excess Products means returning working products because of excess. 24

31 4.3.3 Description of a process category Each process category is defined by an unique overview paper, which explains following facts: Process Category description Performance Attributes and Metrics applying to this process category Best Practices for this process category Following table is an example of the overview paper of M2 (Make to Order): 34 Make-to-Order The process of manufacturing in a make-to-order environment adds value to products through mixing, separating, forming, machining, and chemical processes for a specific customer order. Products are completed, built or configured only in response to a customer order, the customer order reference is attached to the production order, attached to or marked on the product upon completion of the make process and referenced when transferring the product to Deliver. The product is identifiable throughout the Make process, as made for a specific customer order. Examples of alternative or related names for Maketo- Order are: Build-to-Order (BTO), Assemble-to-Order (ATO), Configure-to-Order (CTO), and postponement. Performance Attribute Supply Chain Reliability Supply Chain Responsiveness Supply Chain Agility Supply Chain Costs Supply Chain Asset Management Best Practices Accurate and Approved Work Instructions/Process Plans Produce Products to Unique Customer Requirements Accurate and Low Cost Batch/ Configuration Records for Warranty and Regulatory Tracking Postponement 34 SCC (2008a),Processes ff. Metric Yield, Perfect Order Fulfillment Make Cycle Time Downside Make Adaptability, Upside Make Adaptability, Upside Make Flexibility Energy Costs, Cost of Goods Sold, Cost to Make Inventory Days of Supply (WIP), Return on Working Capital, Cash-To-Cash Cycle Time, Return on Supply Chain Fixed Assets Description/Definition Electronic document management that maintains current Standard Operating Procedures (SOP) Order entry specifications linked to manufacturing order Electronic batch recording/configuration Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, 25

32 Provide Continuous Formal Training to Employees Delivery Schedules Are Collaboratively Developed with Customers Paperless Order Tracking and Customer Visibility of Orders Posted Performance Results Organize to Enhance Flexibility: Few Job Classifications, Self- Directed Work Force, Flat Management Structure, Cross- Functional Work Teams Link Individual Performance to Organizational and Divisional Goals Production Level Loading Cellular and Demand Pull Manufacturing to the last possible supply chain location. Examples would be TQM, Six Sigma. Web-based access to plant scheduling status, collaborative data-sharing environment. Electronic dispatch and data collection with external interface to internet. Data warehouse, report writing, real time data base and EI systems Support for modular skills inventory with links to training databases, compensations systems, and operator instructions None identified Capacity planning Support for cellular and demand pull manufacturing execution Furthermore there is an enumeration of Level 3 processes belonging into the specific category, as you can see in the following ARIS process landscape diagram. M2 Make to Order Schedule Production Activities Issue Sourced/ In Process Product Produce and Test Package Stage Finished Product Release Finished Product to Deliver Waste Disposal M2.1 M2.2 M2.3 M2.4 M2.5 M2.6 M2.7 26

33 4.4 Level 3 (Process Element Level) Function and Structure On Level 3, the process element level, a company can rarefy its operation strategy by getting detailed process elements of the process categories determined on Level 2. In Contrast to Level 2 there is no clear structure of each process category, it s just a enumeration of process elements affecting and specifying one process category Description of a process Element Similar to the description of a process category you can find an overview paper, that contains following information about the process element: Process element definition Process performance metrics attributes and definitions Best practices definitions Process element information inputs and outputs The first 3 pieces of information show the hierarchic structure of the SCOR-model. They re intended to break down the same parts of information of the higher level. Additionally to the previous level is the definition of process element information input und outputs. These inputs and outputs display material and information flow in a Supply Chain. That s why the SCOR-Model dedicated a whole chapter defining the various information inputs and outputs appearing on process Element Level. Following table is an example for the process element M2.3 (Produce and Test), which is part of process category M2 (Make to Order) 36 Produce and Test The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. Performance Attribute Supply Chain Reliability Supply Chain Responsiveness Supply Chain Agility Supply Chain Costs Metric Warranty Costs, Yield, Yield Variability Produce and Test Cycle Time, Asset Turns None Identified % of solid waste consisting of packaging material, NPDES permitted water effluent, Energy consumption, Air emissions, Cost to Produce and Test, Waste produced as % of product produced 35 SCC (2008c) 36 SCC (2008a),Processes f. 27

34 Supply Chain Asset Management Best Practices Reduce Chances of Operator Error Reduce Non-Value Added Activities, Including Queue, Move, and Set-Up Times Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Accurate and Low Cost Batch/ Configuration Records for Warranty and Regulatory Tracking Implement pollution prevention program Paperless Production Control Benchmark practices Accurate and Approved Process Plans/Specifications Authorize Each Operation to Assess the Quality of the Previous Operations Maintain Accurate Lot/Batch History Information Just-In-Time Demand Flow Techniques Up-to-Date Shop Packet/ Specifications Provide environmental training Implement an EMS Real Time quality control techniques Real Time Statistical Control Techniques % of production materials reused, Hazardous materials used during production process as a % of all materials, Capacity Utilization, % of products consisting of previously used components Description/Definition Automatic download of production equipment with batch recipes/part programs Use principals of Lean Manufacturing. Machine productivity and downtime monitoring Electronic batch recording/configuration Implement rigorous and comprehensive pollution prevention program and include environmentally preferable purchasing. Electronic dispatch of operations Benchmark practices of other firms Electronic document management None identified Electronic data collection of employee actions and sourced/inprocess product lot used Demand-pull mechanisms Electronic work instructions Provide environmental training to all employees Implement an EMS Electronic collection of quality data and on-line SPC. Electronic collection of defect data and on-line SPC. The following diagram shows the Input and the Output of the process. Input None identified M 2.3 Output Information Feedback M1.1, M2.1, M3.2 28

35 4.5 Level 4 (Implementation Level) Function and Structure By the understanding of SCOR as a normative model, Level 4, the specific implementation of processes, described in general on the higher levels wouldn t be part of the SCOR model in the original sense. 37 That s why it s only mentioned that a company has to develop and implement their processes by itself, to fulfill the individual requirements of processes 38 for the company and its branche such as Traceability (EG178/2002) 39 for food companies Generally spoken, on this level a company defines specific practices in order to achieve competitive advantage and to adapt to changing business conditions. This also applies to the structure, which also has to be determined by the company itself without any constraints or recommendations by the SCOR-Model Description of a process As already indicated in the previous paragraph SCOR s main intention is to describe processes. For the purpose of designing processes there are other reference models, such as ARIS, which includes methods to manage processes and their different aspects. 40 But as you can see there is still a gap between the theoretical dealing with processes (SCOR) and a practical implementation (ARIS), which calls for a concrete connection between these 2 management methods. For this reason there is a whole chapter for a Case Study of a bike shop supposed to give an overview about linking SCOR and ARIS. 37 Poluha (2008) p Becker (2008) p EG 178 (2002) 40 Lehmann (2008) p.23 29

36 4.6 Inputs/Outputs Inputs and Outputs define material- and information flow of processes displayed on Level 3 of the SCOR-Model. Scor dedidcated a whole chapter for 296 Inputs and Outputs 41, which are listed in alphabetical order. For each Input/Output you can find a short definition and the processes it s used on. The following table gives an example for the Input/Output Information Feedback. Input /Output Definition Process Information Feedback The flow of information back into the control system so that actual performance can be compared with M3.4: Produce and Test M3.7: Release Product to Deliver planned performance. M3.6: Stage Finished Product M1.4: Package M2.4: Package M1.3: Produce and Test M3.5: Package M3.3: Issue Sourced/In- Process Product M1.5: Stage Product M2.2: Issue Sourced/In- Process Product M2.6: Release Finished Product to Deliver M3.2: Schedule Production Activities M2.3: Produce and Test M1.1: Schedule Production Activities M2.1: Schedule Production Activities M2.5: Stage Finished Product M1.2: Issue Material M1.6: Release Product to Deliver 41 SCC Inc. (2008a), Metrics 3.6ff 30

37 4.7 Best Practices Best Practices of the SCOR- model are meant to give concrete approaches for the execution of processes that have been set successfully in practice and were collected by the members of the SCC. The Best Practice Section of the SCOR-model can be divided into 3 parts: Best Practices of SCOR in general, Best Practices of Green SCOR and Best Practices of SC-Risk Management, firstly appearing in Version 9.0 of the SCOR-model. 42 Best Practices of SCOR in general These Best Practices are intended to improve the performance in the Supply Chain and the SCOR processes in general. Best Practices of Green SCOR These Best Practices focus the environmental aspect of a Supply Chain. Solutions are offered how to establish ecological processes. Best Practices of Supply Chain Risk Management SCOR responded to the demand for a Supply Chain Risk Management 43 by adding new enable processes and Best Practices in Version 9.0. These highlight how to deal with riscs appearing in a Supply Chain. As already indicated before, each part contains several Best Practices, which are listed in alphabetical order and the processes they can be applied on. Thematically they deal with different ways of improving a process. For example there are suggested complex management methodologies such as Six Sigma, Lean Management and Kanban, technological tools like Electronic Document Management, Customer Relationship, Management and even concrete advises such as Packaging Operation is an Integral Part of the Overall Production Process or Single Point of Contact for All Order Inquiries (including order entry). Following table displays the total number of Best Practices, to get an overview of the depth of Best Practices mentioned in the SCOR-model. Total Number of Best Practices Best Practices of SCOR in General Best Practices of Green SCOR Best Practices of Supply Chain Risk Management 42 SCC (2008a),Best Practices ff. 43 Ziegenbein (2007) p

38 5 SCOR Metric System If you don't measure something, you can't change it Mitt Romney (2007) 32

39 5.1 Metrics and Benchmarking with SCOR SCOR model offers the possibility to configure company procedures. One and the same process can be modeled in different ways. This is a great precondition for performance comparisons. There are special performance indicators to measure performance in standardized supply chains. 45 With the help of the SCOR-model companies can reuse predefined metrics. Main task of a metric system is to be able to define process performance and compare result with the objective Performance Attributes SCC introduced following five performance attributes: Supply Chain Agility (AG) This attribute gives information about if and how fast a supply chain responds to marketplace changes. Supply Chain Responsiveness (RS) It provides information about the speed at which a supply chain provides products to the customer. Supply Chain Asset Management (AM) With the help of this attribute supply chains can be analyzed in terms of effectiveness in managing assets to support demand satisfaction. Supply Chain Cost (CO) All costs which incur along supply chain processes are taken into consideration. Supply Chain Reliablity (RL) This attribute looks at performance in product delivery. Following topics are covered (extract): The correct product? To the correct place? At the correct time? etc. These performance attributes are kind of characteristic of a supply chain. They are needed to be able to compare organizations with different corporate objectives, such as low-cost provider against those who compete on reliability and performance, which are competing strategies. Benchmarking is based on the Performance Attributes of the metrics. 47 According to their corporate strategy a company applying the SCOR-model and especially the metric system / benchmarking has to decide which performance attribute fits most. It will only make sense if companies choose metrics of the selected performance attribute. 45 Poluha (2008), p Becker (2008), p SCC (2008a), Introduction

40 5.1.2 Levels of SCOR metric system Metric system developed by SCC uses three metric levels to organize metrics according to diverse control and information needs. 48 Level 1 Level 1 contains primary, high level strategic metrics. These metrics may cross multiple processes along supply chain described in the SCOR-model, that is they don t necessarily relate to one of the core processes of SCOR level 1. All in all, processes are looked at from a more management point of view. Figure on next page displays SCOR performance attributes described above and their particular associated level 1 metrics. Level 2 Level 2 consists of diagnostic metrics. In general, those metrics describe how a state changes to improve performance. That s why level 2 metrics are suitable for monitoring selected actions and their degree of realization. Level 2 metrics often have a % in their name, such as % of Orders delivered in full (RL.2.1). These metrics are especially important to person responsible for processes. To summarize, performance of configured processes is measured. Level 3 This level contains configuration metrics which express complexity of companies, that is they describe cause and effect. These metrics are more descriptive ones, such as Number of occurrences where excessive inventory is returned and followed (RL.3.40) Level 3 metrics enable SCOR user to define improvement opportunity and follow implementation of identified actions. Actual SCOR Version 9.0 describes altogether 570 metrics. Table below shows exact allocation. Level 1 Level 2 Level 3 Sum RL RS AG CO AM Sum SCC (2008a), Introduction , Becker (2008), p. 181 f. 34

41 Level 1 Strategic Metrics Customer Facing Performance Attributes Internal Facing Performance Attributes Supply Chain Reliability Supply Chain Costs Perfect Order Fulfillment RL.1.1 Supply Chain Management Cost CO.1.1 Supply Chain Responsiveness Cost of Goods Sold CO.1.2 Order Fulfillment Cycle Time Supply Chain Asset Management RS.1.1 Supply Chain Agility Cash To Cash Cycle Time AM.1.1 Upside Supply Chain Flexibility AG.1.1 Upside Supply Chain Adaptability AG.1.3 Return on Supply Chain Fixed Assets AM.1.2 Return on Working Capital AM.1.3 Downside Supply Chain Adaptability AG.1.3 Figure 14 SCOR Performance Attributes and associated Level 1 Metrics 35

42 5.1.3 Standard notation As processes uses a consistent notation metrics also have a coding system. For detailed information see graphic below. AG: Agility RS: Resp.ness Performance Attribute Metric Level AM: Asset mgmt. CO: cost RS Product and Test Cycle Time Level 1 Level 2 RL: Reliability (Unique) number Level 3 Figure 15 SCOR: metric system notation Depending on the metric level metrics are numbered within each attribute in a different way. Both level 1 and level 2 metrics are numbered within each attribute, e.g. RS.1.1 Order Fulfillment Cycle Time. Due to large quantity of level 3 metrics they are just arranged alphabetically. Whenever a new level 3 metric is added it is just added onto the end of the list. Although it may destroy alphabetically order it can be done with less effort than find the correct insert position. See another level 3 example metric: CO Cost to produce and test Metric data sheet As processes are described on a data sheet there is one data sheet for each level 1 and level 2 metric which contains following sections: Identification code, e.g. RS is mentioned in right upper corner (as in whole SCOR-model) Metric name, e.g. Product and Test Cycle Time Short description: What does metric include and how it is calculated Qualitative Relationship Description Quantiative Relationship (optional, if calculable) Calculation Data Collection Discussion Hierarchical metric structure As mentioned in last headword above there are many metrics which are hierarchical. It s the same idea with the process elements. Especially, level 1 metrics are created from level 2 metrics, so called lower level calculations, which are generally associated with a narrower subset of processes. 36

43 Because of this relation hierarchical metric structure of level 1 metrics only takes level 1 and level 2 into consideration. On the other hand, hierarchical metric structure of level 2 metrics include level 1 to 3. Figure below displays metrics RL.1.1 and RL.2.2 in ARIS Express models. Perfect Order Fulfillment Level 1 RL.1.1 % of Orders Delivered in Full Level 2 RL.2.1 Delivery Performance to Customer Commit Date RL.2.2 Documentation Accuracy RL.2.3 Perfect Condition RL.2.4 Figure 16 Hierarchical Structure Metric Level 1 RL.1.1 Level 1 Perfect Order Fulfillment RL.1.1 Delivery Performance to Customer Commit date Level 2 RL.2.2 Customer Commit Date Achievement Level 3 RL.3.32 Delivery Location Accuracy RL.3.34 Figure 17 Hierarchical Structure Metric Level 2 RL.2.2 Level 3 metrics are listed as mentioned above (see Standard notation ) alphabetically after the last level 2 metric of each performance attribute. List contains following columns: Metric ID Metric Name Metric Definition (short description) Process (Process ID and Process Name of each process which contribute to specific metric) 37

44 5.2 Benchmarking in Supply Chain with Scor In order to compare one company s metrics to another company s metrics (Benchmarking), there are institutions specialized on it. One Institution might be PGM 49, a company highly involved in the development of the SCOR-model, which offers a complete Benchmarking of all SCOR metrics in a typical branch. In the following there can be found a little extract of such a PGM benchmarking analyze from , which was made for different branches. The extract is a benchmark of these 2 SCOR Metrics 51 : RL 2.2 Delivery Performance to Customer Commit Date This metric displays the percentage of orders that are fulfilled on the customer s committed date. AM 1.1 Cash-to-Cash Cycle Time This metric displays the amount of time it takes for an investment made to flow back after it has been spent for raw materials. It might be also interesting to see the differences of values of metrics in different branches. For this reason values for IT, industry, telecommunication, chemistry and mail order companies are listed in the following tables. RL 2.2 Delivery Performance to Customer Commit Date Branch Average Best-in-Class IT 74,30% 95,00% Industry 72,00% 97,50% Telecommunication 78,00% 94,80% Chemistry 82,10% 99,00% Mail Order 81,90% 98,80% As can be seen a typical company of the Industry branch delivers 72% of their shipment on the day scheduled, which means that 28% will be delivered later (by the definition of this SCOR metric) AM 1.1 Cash-to-Cash-Cycle Time Branch Average Best-in-Class IT 75,10 days 28,70 days Industry 67,60 days 18,50 days Telecommunication 100,20 days 44,40 days Chemistry days 33,40 days Mail Order 66,60 days 24,70 days These values show that in average bills will be paid after 2 months and more, which leads to opportunity costs and might cause problems with cash flow. 49 PMG 50 Werner (2008) p SCC (2008a), Metrics

45 6 Description of the company Bike Shop 3000 GmbH Bike Shop 300 GmbH, a company founded in 2005, had changed from a local repair shop in Ohnewitz to the biggest shop for bikes in Brandenburg. This successful transformation is caused by the clear vision of the founder Justin Time, who wanted to provide his customer with bikes that fit to their individual needs. This vision led to a company that today offers an Ecommerce solution on their webpage, where people can order individual bikes, which are still assembled in Ohnewitz and delivered to the customer. Because of the rapid expansion of the Bike Shop 3000 GmbH, in 2004 a high bay warehouse for bike parts was built in Schönholz, which is about 3 km away from Ohnewitz. Justin Time s idea was to have a high availability of different bike parts, in order to accelerate customer response and not to waste money on quick orders for missing material. 6.1 Organization of the Company The following organizational chart describes the internal structure of the Bike Power 3000 GmbH. Management Production Purchasing Administration Sales Logistic Research and Development IT Services Arrival Quality Management Human Ressources Goods Issuing Accounting Figure 18 Bike Shop 3000 GmbH Organizational Chart As can be seen 6 departments are put directly under the control of the management. Besides some of these departments are still subdivided. To get a better understanding of the similar department, there is a short description of each department: Management: The management has to have an overview about the whole company and define strategies and plans to help Bike Shop 3000 GmbH grow. In addition to that the management of the Bike Shop 3000 GmbH is responsible for all planning activities of the Supply Chain. Production: The production department is responsible for mounting individual bikes according to the wishes of the customers. Adminstration: The administration is divided into the 3 departments IT Services, Human Ressources and Accounting. IT-Services is responsible for providing a functional Infrastructure. Human Ressources is in charge of recruiting, motivating and managing qualified personal for the Bike Shop 3000 GmbH. 39

46 Accounting takes care of the financial aspects of the company. Sales:The main tasks of the Sales department are dealing with the orders of the customers and Marketing like Banner advertisement for the online shop. Logistic: The Logistic department is subdivided into 2 departments, Arrival and Goods issuing. The Arrival department, located in Schönholz, receives materials (bike components) and returning goods, while Goods Issuing is responsible for delivering the bikes to the customer. Research and Development: Research and Development is in charge of improving production processes and investigating for new components and materials for better products. Because of the great knowledge of this department, the Quality Management department, which checks the produced bikes, is also situated there. 6.2 The IT-Systems in the Company The following System landscape gives an overview about the main systems used in the company. Figure 19 Bike Shop 3000 GmbH System Landscape Enterprise Resource Planning: The ERP-System is the central system in the company delivering applications for all departments in order to support at least all Supply Chain processes. Production Data Acquisition: The PDA System is only used in the production departments. It s intended to collect information about the production process (such as duration, participating employee) and transfers the information to the ERP-System. Online shop: The online shop is the direct interface to the customer. A customer can generate orders and see their status. That s why there is a high exchange between the ERP- System and the online shop. 40

47 6.3 The Infrastructure of the IT It s given insight into the real implementation of the IT-Systems described in the previous chapter. For this reason there are following IT-infrastructure diagrams, which describe the relevant infrastructures of the locations in Ohnewitz and Schönholz The IT-Infrastructure in Ohnewitz System z CompanyNet ERP System Internet PDA System DMZ Firewall Switch Firewall UnixServer Subnet Production Online shop Terminal 1 Terminal 2 Terminal 3 Terminal 4 Figure 20 IT-Infrastructure Ohnewitz Bike Shop 3000 GmbH has a central IT located in Ohnewitz. For this reason the Infrastructure in Ohnewitz is the most complex of Bike Shop 3000 GmbH and consists of following parts: Company Net: The Company Net defines the net of Bike Shop 3000 GmbH. A Unix Server, the ERP and the PDA-Systems run on, is attached to this net. Besides this net consist of several subnets like Subnet Production. Subnet Production: The Subnet Production consists of 4 Terminals for employees in the production department. DMZ: The demilitarized zone consists of a Unix Server, a web server and an online shop run on. It s separated through 2 firewalls and offers services to the Company Net (for example Delivering online shop Orders to the ERP-System) and to the Internet (Providing the online shop). 41

48 6.3.2 The IT-Infrastructure in Schönholz Internet Firewall CompanyNet Switch Subnet Arrival Terminal 1 Terminal 2 Terminal 3 Figure 21 IT-Infrastructure Schönholz As can be seen from the diagram, the IT-infrastructure consists only of one net, which is connected via VPN to the servers in Ohnewitz. Subnet Arrival: The employees can use 3 Terminals for using the ERP-System. 42

49 6.4 Data of the Company Following data diagram gives an extract of central entities of the Bike Shop 3000 GmbH. Figure 22 Bike Shop 3000 GmbH Data Diagram Production Order This entity contains the central Information about a Production of one individual bike. It s attached to several Purchasing Orders and Bike Components. Bike Component This entity describes the type of a particular bike component from a specified producer in a specified size of a specified component type (for example Saddle) Purchase Order This entity contains the central information about a purchase order generated in the purchasing department. It can be attached to several production orders and bike components. 43

50 6.5 Configuration of the Supply Chain As already described, the Configuration Level (Level 2) helps a company to get an overview about the processes in the company and the whole supply chain. The following diagram shows the configuration of the supply chain of the Bike Shop 3000 GmbH. It can be determined, that there are 3 parts: the Supplier Chain, the Bike Shop 3000 GmbH and the Customer Chain. Supplier Chain: The Supplier Chain describes the chain of suppliers of the company, such as Bike Component AG, the direct supplier of Bike Shop 3000 GmbH, and its supplier the Metal Producer. Bike Shop 3000 GmbH: The Bike Shop 3000 GmbH describes the company and its locations in Schönholz and Ohnewitz. Customer Chain: The Customer Chain describes the customers of the company, which are direct Customers. For each of these parts the participants and their attached process categories are shown. For example the Bike Shop 3000 GmbH has a factory in Ohnewitz, where the production of customer specified (Make-to-Order) bikes (M2), Sourcing from the warehouse in Schönholz (S2) and Delivering of these bikes to the Customer (D2) takes place, which also have to be planned with the help of Planning processes (P1 P4) 44

51 6.6 Implementation of a Source Process Overview of SCOR-Source Processes The following process landscape diagram gives an overview about the Source process elements for Make-to-Order Products, specified in the SCOR-model. S2 Source Maketo Order Product Schedule Product Deliveries Receive Product Verify Product Transfer Product Authorize Supplier Payment S2.1 S2.2 S2.3 S2.4 S2.5 The following table gives short definitions for the single process elements: SCOR Process Element shortcut SCOR Process Element Name Definition S2.1 Schedule Product Deliveries Scheduling and managing the execution of the individual deliveries of product against the contract. S2.2 Receive Product The process and associated activities of receiving product to contract requirements. S2.3 Verify Product The process and actions required determining product conformance to requirements and criteria. S2.4 Transfer Product The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring, and stocking product and application of service. S2.5 Authorize Supplier Payment The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. In the following chapters there is an implementation of S

52 6.6.2 Description of the SCOR-Process Element S2.2 In the following you find the official SCOR definitions for the process itself (Essence and Best Practice), the relevant Input and Output of the process and the effect of this Process on special Metrics. Essence and Best Practices of S2.2 The following table shows the process element level definition of Level 3 of the SCOR- Model. Receive Product The process and associated activities of receiving product to contract requirements. Best Practices Description/Definition Bar Coding is Used to Minimize Bar code interface for data collection devices Handling Time and Maximize Data Generate bar coded receiving documents. Accuracy Product serial number used as identifier. RFID Vendor Managed Inventory VMI is a concept for planning and control of inventory, in which the supplier has access to the customer s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels Supplier Certification Programs Are Skip lot/sampling inspection logic Used to Reduce (Skip Lot) or Eliminate Receiving Inspection Deliveries Are Balanced Throughout None identified Each Working Day and Throughout the Week Supplier Delivers Directly to Point of Use Electronic Tag tracking to Point of Use (POU) destination 46

53 Input and Output of S2.2 The following diagram shows the defined Input and Output. Input Defective Products DR1.4 Excess Products DR3.4 MRO Products DR2.4 Product D1.13, D2.13, D3.13 S2.2 Output Receipt Verification ES.1, ES.2, ES.6, ES.8, S1.3, S1.4, S2.3, S2.4, S3.5, S3.6, ED.8 Input /Output Definition Defective Products Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance. Excess Products Material in excess of the current requirements. MRO Products Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance. Receipt Verification Acknowledgement that the product received conforms to specified requirements and criteria. 47

54 Effects of the S2.2 with the help of Metrics Performance Attribute Supply Chain Reliability Supply Chain Responsiveness Supply Chain Agility Supply Chain Costs Supply Chain Asset Management Metric % Orders/ Lines Received On-Time To Demand Requirement, % Orders/ Lines Processed Complete, % Orders/ lines received with correct packaging, % Orders/ Lines Received with Correct Shipping Documents Receiving Product Cycle Time None Identified Cost to Receive Product None Identified Scor Metric ShortCut SCOR Metric Name Definition RL.3.20 % Orders/ Lines Received On- The number of orders / lines that are received on-time to Time To Demand the demand requirements Requirement divided by the total orders / lines for the demand requirements in the RL 3.18 RL 3.22 RL 3.23 % Orders/ Lines Processed Complete % Orders/ lines received with correct packaging % Orders/ Lines Received with Correct Shipping Documents RS Receiving Product Cycle Time CO Cost to Receive Product measurement period The number of orders / lines that are processed complete divided by the total orders / lines processed within the measurement period Percent of orders or lines received that are packaged correctly with the right type and quantity of packaging material. The number of orders / lines that are received on-time with correct shipping documents divided by the total orders/ lines processed in the measurement period Total elapsed time from time product is received to time it is passed to next process The sum of the costs associated with receiving product. 48

55 6.6.3 Implementation of the SCOR-Process Element Selection of Best Practices It has been decided that in order to improve efficiency of the process, deliveries will be balanced throughout the whole week and barcode is used to save handling time. Determination of Inputs and Outputs In the case of Bike Shop 3000 GmbH the Inputs are Bike parts (Products) and defective, MRO and excess bikes (Defective, MRO, Excess Products). The Output is the Delivery Entity generated with the help of the ERP-System. Bike Component Purchase Order Delivery Componentid PuOrderid Delivery ID Component Type Order Date PuOrderID Producer Ship Date Arrival Time Size Terms of Payment Leave Time Terms of Delivery Notification Supplier Employeeid Figure 23 Bike Shop 3000 GmbH Data Model S2.2 49

56 Design of the Process with EPC Supply has arrived Company Truck Driver Sign up for unloading Shipping Documents ERP Purchase Order Janitor Check permission Permission granted Permission denied Truck Driver Janitor Shipping Documents Drive to Warehouse Register Delivery ERP Delivery Arrived at Warehouse Delivery Registered Arrival Check availability of warehouse plattforms Plattform available No Plattform available Arrival Unload Truck Unloaded Figure 24 Bike Shop 3000 GmbH eepc S2.2 50

57 6.7 Implementation of a Make Process Overview of the SCOR Make Processes M2 Make to Order Schedule Production Activities Issue Sourced/ In Process Product Produce and Test Package Stage Finished Product Release Finished Product to Deliver Waste Disposal M2.1 M2.2 M2.3 M2.4 M2.5 M2.6 M2.7 The following table gives short definitions for the single process elements: SCOR shortcut SCOR Name Definition M2.1 Schedule Production Given plans for the production of specific Activities parts, products, or formulations in specific quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these M2.2 IssueSourced/In-Process Product plans. The selection and physical movement of sourced/in-process products (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. M2.3 Produce and Test The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. M2.4 Package The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. M2.5 Stage Finished Product The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The actual move transaction is part of the Deliver process 51

58 M2.6 Release Finished Product to Deliver Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and sign-off by the quality organization. M2.7 Waste Disposal Activities associated with collecting and managing waste produced during the produce and test process including scrap material and non-conforming product. In the following chapters there is an implementation of M Description of the SCOR Process Element In the following you find the official SCOR definitions for the process itself (Essence and Best Practice), the relevant Input and Output of the process and the effect of this Process on special Metrics. Essence and Best Practices of M2.3 The following table shows the Process Element Level Definition of Level 3 of the SCOR- Model. Produce and Test The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. Best Practices Description/Definition Reduce Chances of Operator Error Automatic download of production Reduce Non-Value Added Activities, Including Queue, Move, and Set-Up Times Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Accurate and Low Cost Batch/ Configuration Records for Warranty and Regulatory Tracking Implement pollution prevention program Paperless Production Control Benchmark practices Accurate and Approved Process Plans/Specifications Authorize Each Operation to Assess the Quality of the Previous equipment with batch recipes/part programs Use principals of Lean Manufacturing. Machine productivity and downtime monitoring Electronic batch recording/configuration Implement rigorous and comprehensive pollution prevention program and include environmentally preferable purchasing. Electronic dispatch of operations Benchmark practices of other firms Electronic document management None identified 52

59 Operations Maintain Accurate Lot/Batch History Information Electronic data collection of employee actions and sourced/in-process product lot used Demand-pull mechanisms Just-In-Time Demand Flow Techniques Up-to-Date Shop Packet/ Electronic work instructions Specifications Provide environmental training Provide environmental training to all employees Implement an EMS Implement an EMS Real Time quality control Electronic collection of quality data and online techniques SPC. Real Time Statistical Control Electronic collection of defect data and online Techniques SPC. Input and Output of M2.3 Input None identified M 2.3 Output Information Feedback M1.1, M2.1, M3.2 As you can see there is no Input, but Information Feedback as Output. This Information Feedback can be looked up in the Inputs/Outputs- Reference, in which you can find the description of 298 Inputs/Outputs. Input /Output Information Feedback Definition The flow of information back into the control system so that actual performance can be compared with planned performance. Effects of the M2.3 with the help of Metrics Performance Attribute Supply Chain Reliability Supply Chain Responsiveness Supply Chain Agility Supply Chain Costs Supply Chain Asset Management Metric Warranty Costs, Yield, Yield Variability Produce and Test Cycle Time, Asset Turns None Identified % of solid waste consisting of packaging material, NPDES permitted water effluent, Energy consumption, Air emissions, Cost to Produce and Test, Waste produced as % of product produced % of production materials reused, Hazardous materials used during production process as a % of all materials, Capacity Utilization, % of products consisting of previously used components 53

60 Scor Metric ShortCut SCOR Metric Name Definition RL.3.56 Warranty Costs Warranty costs include materials, labor and problem diagnosis for product defects. RL 3.58 Yield The ratio of usable output from a process to its input. RL 3.59 Yield Variability The condition that occurs when the output of a process is not consistently repeatable either in quantity, quality, or combination of these. RS.3.4 Asset Turns Total gross product revenue Total net assets RS Produce and Test Cycle The average time associated CO.3.8 Time % of solid waste consisting of packaging material with production and test The weight of packaging material waste as a percent of total solid waste generated. CO.3.15 Air emissions The weight of air pollutant emitted per weight of finished good produced CO CO CO CO AM.3.5 AM 3.6 Cost to Produce and Test Energy consumption NPDES permitted water effluent Waste produced as % of product produced % of production materials reused % of products consisting of previously used components The sum of the costs associated with production and test The energy consumed by the Make process per unit produced. The weight of water pollutant emitted per weight of finished good produced The weight of waste (air, liquid and solid) divided by the weight of finished goods product produced. The percent of scrap from production that is immediately reused in the production process the weight of recycled material in the product as a percent of total product weight AM.3.9 Capacity Utilization A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and 54

61 AM.3.14 Hazardous materials used during production process as a % of all materials key components/materials availability. The % of material (by weight) issued for production that is classified as hazardous material Implementation of the SCOR Process Element Selection of Best Practices It was chosen to monitor the productivity of the mounting process by using the PDA. Furthermore to assure good quality every Saturday there is a quality program for all employees of the production. Determination of Inputs and Outputs The Information Feedback was implemented with the help of WorkUnit-entity, where start, end and type (mount or repair) of a work is registered and has to be created in the PDA- System, where all production data is collected and the Quality Report entity, where mistakes are notified, which leads to amendment and more work units. Quality Report Production Order Work Unit Qualityreportid PrOrderid Workunitid Report Date Order Date WorkUnitStartTime Mistake Notification Amount WorkUnitEndTime PrOrderid Ship Date Employee Employeeid Customerid Production Order Type of Work Unit Figure 25 Bike Shop 3000 GmbH Data Model M2.3 55

62 Design of the Process with EPC Production Order available Bike Parts available Production Register Work for Order PDA Work for Order registered Mount Bike Production Order Completed Work of Order Production Confirm Completion of Work PDA Confirmed Completion of Work Quality Management Check Quality Production Order Quality is not ok Quality is ok Quality Management Note mistakes Qualityreport Mistake noted ERP Production Register Repair Order PDA Repair Order registered Do amendment Product Order Quality Protocol Amendment done Confirm Completion of Repair PDA Confirmed Completion of Repair Confirm Completion of Production Order ERP Quality Management Confirmed Completion of Production Order Figure 26 Bike Shop 3000 GmbH eepc M2.3 56

63 7 Overview: How to implement SCOR Why should somebody find out the supply chain of his company? The answer is: If you can define your supply chain then you can measure it, Once you ve measured it, you ll find the opportunities are so big that you won t need any more motivation. You ll want to drive continuous improvement in your supply chain. The potential will be that obvious. 52 The following chapters will answer the How : How to achieve the two principles of SCM - define and measure, and drive performance improvement. Phase Name Deliverable Resolves Initial BUILD Organizational Support Who is the sponsor? I DISCOVER Supply-Chain Definition Supply-Chain Priorities Project Charter What will the program cover? II ANALYZE Scorecard Benchmark Competitive Requirements What are the strategic requirements of your supply-chain? III MATERIAL Geo Map Thread Diagram Disconnect Analysis Initial Analysis where are the problems? IV WORK Transactions Level 3, Level 4 Processes Best Practices Analysis Final Analysis where are the solutions? V IMPLEMENT Opportunity Analysis Project Definition Deployment Organization How to deploy? 53 Peter Bolstorff describes the Supply Chain Excellence approach in his book Supply Chain Excellence, a handbook for dramatic improvement using the SCOR model. There are the following five phases. 52 Bolstorff, Rosenbaum (2007), p Supply Chain Council 57

64 7.1 Initial Phase The initial phase is EDUCATE for support. The main question on this phase is who is the sponsor. In this phase the main task is to educate for support. So basically there are four different personalities who are necessary for a successful implementation of SCOR. The four personalities are: Evangelist The evangelist is the person who has passion, experience, talent to lead a supply chain project. Active execution The active execution is accountable as sponsor of a supply chain project through modeling, influence, and leadership. Core steering team The core steering team has the champion role to review and approve recommendations and ultimately lead the implementation efforts. Design team The design team analyzes supply chain from end to end and assembles recommendations for change. 7.2 Phase One Phase One is named as DISCOVER the opportunity The main question on this phase is what will the program cover. The main task on this phase is to plan and organize the project. This includes the definition and priorities of Supply- Chain as well as the Project Charter. 7.3 Phase Two Phase Two is named as ANALYZE basis of competition. The main question on this phase is what are the strategic requirements of your supplychain. The main task on this phase is to collect data, define metrics, and tally benchmarks. There are five important elements to a data collection plan. Definition of the metrics The central idea is to focus on key metrics that have real meaning to the respective company. It s not worthwhile to get lost in a sea of numbers that don't really mean anything. For this reason the SCOR Model provides a Metric-System, which might be replenished by individual metrics. Examples for meaningful metrics are perfect order fulfillment or cost of goods out of the pool of SCOR-Metrics. Segmentation strategy It is necessary to use a segmentation strategy that will allow for aggregation and desegregation. Segmentation options might be for example location, customer or item. 58

65 Data extract query The data extract query includes specific data tables and fields from either the live system or data warehouse. Sample size of data It s necessary to think about the needed amount of data before starting to collect them. Collecting customer order data for perfect order fulfillment and order fulfillment cycle time may use a sample size of the last three months, whereas total supply chain management cost may use a sample size of the last fiscal year. Identify a data collection team The data team will follow the collection all the way through. Furthermore it is necessary to think about the benchmarking data. It is important to consider the level of detail necessary, comfort level of divulging company data, and effort required to get the data back. Competitive Requirements It s a strategic exercise, focused on how to differentiate against stiff competition in the future. A common tool for phase 2 is the Scorecard. The Scorecard tracks only a limited number of key metrics. The metrics should fit the company s strategic objectives. Following four areas are usually covered: 1) Financial 2) Customer 3) Internal Business 4) Training The figure below displays a score card of the area finance. Figure 27 Sample Scorecard 59

66 7.4 Phase Three Phase Three is named as DESIGN material flow. The main question on this phase is where are the problems. The main task on this phase is to perform an AS IS analysis to identify financial and customer service opportunities. AS IS means simply the status of now. One tool for that is a geographical map. In such a map it s possible to represent on the one side from a macro level how products move using one supplier, one manufacturer, one warehouse and one customer to illustrate material flow. On the other side it is possible to represent product flow for every single supply chain. Based on a geographical map like the one below it is possible to find out the SCOR level two process categories. Figure 28 Sample Geographic Map 54 For illustrating the material flow, material strategy and planning process relationship there is a diagram called thread diagram which is a process view of the geographic map. See figure 29 on next page. Another tool of phase three is the disconnect analysis. A disconnect is any issue or barrier to achieving a desired level of performance. Figure 30 on next page displays a section of a disconnect summary paper. 54 Bolstorff, Rosenbaum (2007), p

67 Figure 29 Sample Thread Diagram 55 Figure 30 Sample Disconnect Analysis Supply Chain Council 56 Bolstorff, Rosenbaum (2007), p

68 7.5 Phase Four Phase Four is named as DESIGN work and information flow. The main question on this phase is where are the solutions. The main task on this phase is to analyze the effectiveness and efficiency of transactions. A transaction is a business deal or action, such as buying or selling something. This means that the design team has to think about how transactions flow should work. It also has to think about Level 3 and Level 4 Processes and Best Practices Analysis. (See 4.4 Level 3 (Process Element Level), 4.5 Level 4 (Implementation Level), 4.7 Best Practices) The result is additive to material flow and together comprise the final project list. 7.6 Phase Five Phase Five is named as IMPLEMENTATION planning and project portfolio development The main question on this phase is How to deploy. The main task on this phase is to discuss the final assembly and sign off the project portfolio. This phase also contains the steps for putting together the implementation plan. The most important goal of phase five is to describe how to save money in the future with help of the SCOR project. One helpful tool for that is the opportunity analysis. See one example on next page. 62

69 Figure 31 Sample Opportunity Analysis Bolstorff, Rosenbaum (2007), p

70 See below an example for a 17 week SCOR project. EDUCATE for support DISCOVER the opportunity ANALYZE basis of competition Design material flow DESIGN work and information flow IMPLEMENTATION planning & project portfolio developm. Which personnel support is required? Do we have any priorization? What are we talking about? what matters most? How effictive and efficient are transactions? What we have done Week 0 build effective organizational support fill the four roles Week 1 planning and organization business context summary supply chain definition matrix project charter prepare kick off meeting Week 2 project kickoff SCOR Metrics kick off the project Week 5 Initiating AS IS material flow finish scor card gap analysis initiate AS IS material flow second steering team meeting Week 12 Staple yourself interview conduct staple yourself interview, document the findings Week 17 Implementation Planning, Program Management paying attantion on critical detail and effective implementation plan Week 3 Benchmark Competitives Requirements Steering Team Review Week 6 Planning Process Matrix Thread Diagram analyze supply chain material flow from view of data and processes Week 13 The AS IS Process, Understanding Functional Responsibility assemble the AS IS process functional are & responsibility diagram using data from week 12 Week 4 Scorecards Review data on Scorecards begin process of calculating assigning financial value to gaps Week 7 Material Flow Disconnect Analysis and Steering Team complete disconnected analysis preparing for third steering team review Week 14 The Process Performance Summary summarize overall process performance introduce SCOR process blueprint Week 8 The Project Portfolio complete disconnected analysis preparing for third steering team review Week 15 The TO BE Work and Information Flow Blueprint Design how the business should work based on SCOR blueprint Week 9 Opportunity Analysis and Steering Team Review Number Four create, refine and prioritize the project opportunity analysis fourth steering team review Week16 Level four process development define high level business requirements complete technology enabled solution configure the software test the software/pilot go live Week 10 To Be material flow "thou shalt not" identifiying change drivers to implement the projects Week 11 Quick Hit Plans, Work and Information Flow Analysis refine quick hit mini chaters initiate analysis of work and information flow Figure 32 SCOR Project Example Overview EDUCATE for support DISCOVER the opportunity ANALYZE basis of competition Which personnel support is required? Do we have any priorization? What are we talking about? Week 0 build effective organizational support fill the four roles Week 1 planning and organization business context summary supply chain definition matrix project charter prepare kick off meeting Week 2 project kickoff SCOR Metrics kick off the project Week 3 Benchmark Competitives Requirements Steering Team Review Week 4 Scorecards Review data on Scorecards begin process of calculating assigning financial value to gaps Figure 33 SCOR Project Example Detail Part1 64

71 Design material flow DESIGN work and information flow IMPLEMENTATION planning & project portfolio developm. what matters most? How effictive and efficient are transactions? What we have done Week 5 Initiating AS IS material flow finish scor card gap analysis initiate AS IS material flow second steering team meeting Week 12 Staple yourself interview conduct staple yourself interview, document the findings Week 17 Implementation Planning, Program Management paying attantion on critical detail and effective implementation plan Week 6 Planning Process Matrix Thread Diagram analyze supply chain material flow from view of data and processes Week 13 The AS IS Process, Understanding Functional Responsibility assemble the AS IS process functional are & responsibility diagram using data from week 12 Week 7 Material Flow Disconnect Analysis and Steering Team complete disconnected analysis preparing for third steering team review Week 14 The Process Performance Summary summarize overall process performance introduce SCOR process blueprint Week 8 The Project Portfolio complete disconnected analysis preparing for third steering team review Week 15 The TO BE Work and Information Flow Blueprint Design how the business should work based on SCOR blueprint Week 9 Opportunity Analysis and Steering Team Review Number Four create, refine and prioritize the project opportunity analysis fourth steering team review Week16 Level four process development define high level business requirements complete technology enabled solution configure the software test the software/pilot go live Week 10 To Be material flow "thou shalt not" identifiying change drivers to implement the projects Week 11 Quick Hit Plans, Work and Information Flow Analysis refine quick hit mini chaters initiate analysis of work and information flow Figure 34 SCOR Project Example Detail Part2 65

72 7.7 Value of a SCOR Initiative The following benefits are to assume by implementing a SCOR project. 58 Operating income improvement, from cost reduction and service improvements in the initial SCOR project portfolio, averaging 3 percent of total sales; depending on how your company compares with benchmark data, it could be as high as 4.5 percent or as low as 1.5 percent. Return on investment of two to six times within twelve months often with cost neutral quick-hit projects under way on a six-month timeframe. Full leverage of capital investment in systems, improving return on assets for fixed-asset technology investments. Reduced information technology operating expenses through reduced need for customization and improved use of standard system functions. Ongoing profit improvement of 0.5 percent to 1 percent per year, using continuous supply chain improvement. The figure below displays the previous described effects. 59 Figure 35 SCOR Index Comparison 58 Bolstorff, Rosenbaum (2007), p SCC Inc. 66

73 8 SCOR & SAP Due to success and spread of SCOR model SAP and other software vendors have begun to incorporate SCOR flows and metrics into their supply chain software packages. 60 This chapter is intended to look at opportunities to conjunct SCOR and SAP, who has been a loyal member of SCC since After a short general information part, SAP s best known solution SAP SCM is described. This sub-chapter starts with a short explanation of SAP solution map for SAP Supply Chain Management. Afterwards one possible SAP solution for SCM and SAP APO is written on. Furthermore, characteristics of the SAP Solution Manager with reference to SCOR are described. Finally, a newer SAP solution which also provides SCM and SCOR elements SAP Business ByDesign is presented. 8.1 General information SCOR model provides a framework to professional users to find the way from business objectives to concrete implementation in information technology. 61 Business Objectives Operational Objectives Information Technology Figure 36 SCOR framework & IT Business process management tool ARIS is today offered as part of SAP s NetWeaver infrastructure. 62 Please note the difference between two terms SAP SCM and mysap SCM: SAP SCM just specifies the product whereas mysap SCM describes the SCM processes which are in the scope of the SAP or partner solutions. Therefore it is linked with the idea of SAP solution map for SCM. 8.2 mysap Supply Chain Management (mysap SCM) SAP Solution Maps SAP publishes solution maps which are global maps to display business processes in a company. They are built both with the help of customer and industry analysts input and SAP s technical expertise. If you look on a solution map you will see how various processes are covered by SAP respectively SAP partner solutions. 63 See an extract of the SAP solution map for SAP SCM modelled with ARIS Express. Please note: Due to wide range of supported business processes by SAP there are only 2 sample processes for each level 1 process given in below figure Davenport (2005), p Gould 62 Knolmayer (2009), p SAP AG (2008), p

74 Afterwards a short explanation is given for the first two categories. SAP SCM Solution Map Demand and Supply Planning Procurement Manufacturing Warehousing Order Fulfillment Transportation Demand Planning & Forecasting Purchase Order Processing Production Planning & Detailed Scheduling Outbound Processing Sales Order Processing Freight Management Safety Stock Planning Invoicing Manufacturing Visibility & Execution & Collaboration Outdocking Billing Planning & Dispatching Real World Awareness Supply Chain Visibility Supply Network Collaboration Supply Chain Management with Duet Supply Chain Event Management Supply Chain Analytics Supplier Collaboration Demand Planning in MS Excel Demand and Supply Planning Figure 37 SAP solution map: SAP SCM Edition 2008 With mysap SCM it is possible to plan the supply chain from strategic to operational level. Demand Planning & Forecasting, for instance, as starting point of supply chain planning process delivers customer demand, consists of tools for statistical forecasting, promotion planning or calculation tools. Safety stock defined as quantity of additional stock procured is helpful to minimize safety stock, but also assure reliable delivery. Procurement There is an own SAP solution called mysap Supplier Relationship Management which covers procurement in a supply chain. Referring to SCOR model this covers solutions to manage the core process source. In Purchase Order Processing SAP offers, for instance, possibilities to transfer procurement requirements from demands to purchase orders. Other business processes covered are confirmation and monitoring purchasing activities or procurement visibility. Invoicing contains business processes, such as receiving an incoming invoice or releasing of blocked ones. On the one hand there are some processes, such as product design activities, which are out of SAP s system scope, but on the other hand SAP SCM even goes beyond scope of the SCOR model. Take category Real World Awareness as example it becomes clear that recognition and reaction to unplanned events in the supply chain is not covered by the actual SCOR model. The same is true for category Supply Chain Visibility, which provides for example the possibility to perform strategic and tactical business planning with SAP 64 Please visit 70F6F87.htm&CloseLabel=Fenster%20schliessen for more information. 68

75 solutions. Of course, some strategic planning tasks are really difficult to support by IT systems. 65 SAP SCM and SAP APO Figure below, which is explained in the following, visualises one possible SAP solution to implement a supply chain management system. mysap SCM (mysap Supply Chain Mangement) operative activities (such as logistics) any SAP module (such as SAP MM/SD, SAP PP) SAP SCM (SAP Supply Chain Management) SAP BW (SAP Business Information Warehouse) KPI Supply Chain Collaboration APO COL Transportation Planning and Vehicle Scheduling APO TP/VS SAP APO (SAP Advanced Planner & Optimizer) Planning logicstic Demand Planning Maintenance and Service Planning APO DP APO MSP Supply Network Planning Production Planning and Detailed Scheduling APO SNP APO PP/DS Global Available to Promise APO ATP Figure 38 SCM based on SAP SAP implemented their own Supply Chain Management System SAP SCM, current version 5.0, which runs on SAP NetWeaver technology platform. It enables collaboration, planning, execution and coordination of the whole supply chain. Traditional supply chains can be transformed from sequential steps into a high performing company network. 66 mysap SCM is integrated within the mysap Business Suite, which contains amongst others the solutions SAP Customer Relationship Mangement (CRM) or SAP Supplier Relationship Mangement (SRM), again run on SAP NetWeaver platform. Thereby it is possible to complete the range of SCM processes within mysap SCM. 67 mysap SCM contains the following application systems: 68 (short description for each application system is given) SAP Advanced Planning and Optimization (SAP APO): Planning internal supply chain and collaboration with external supply chain partners SAP Supply Network Collaboration (SAPSCN): Collaboration with suppliers and customers 65 Knolmayer (2009), p SAP AG (2008), p Knolmayer (2009), p. 59 f. 68 Knolmayer (2009), p

76 SAP Forecasting and Replenishment (SAP F&R): Replenishment planning in high volume retail industry SAP Event Management (SAP EM): Tracking and tracing orders and order chains SAP Extended Warehouse Management (SAP EWM): Management of Warehouses (mostly decentralised) SAP Advanced Planner & Optimizer (SAP APO) as key component of mysap SCM solution and first SCM application system shall be focused in this elaboration. SAP APO was launched in December Supply chain processes can be optimized at the strategic, tactical and operational planning level with APO. According to general SCM philosophy APO differentiate between Planning and Execution Part. Following modules, which are also displayed in figure above, are provided: 69 (short description for each module is given) Demand planning: Planning Customer demand can be planned and forecasted Supply network planning: Rough-cut production planning, distribution planning can be done. Production planning and Detailed Scheduling: Advanced planning and scheduling at plant level are provided. Supply Chain Collaboration: Collaborative processes with external supply chain partners can be worked on with. Global Available to Promise: Demands can be confirmed and sourced. (mostly customer ones) Maintenance and Service Planning: Focus is set on airline industry. Transportation Planning and Vehicle Scheduling: Transports, for instance, are scheduled and tendered. SAP APO is not a stand alone application. It requires a backend ERP system, such as SAP NetWeaver and SAP module SD/MM, where operative activities can be done. Furthermore it is useful to set up a data warehouse, such as SAP BW, to be able to measure processes and do controlling. SAP SCM provides more than 300 Key Performance Indicators (KPI) which were developed according to the SCOR model. That s why they contain some SCOR metrics and some metrics which were developed by SAP. The data is stored in SAP BW. 70 Of course, there are many data bases in one data warehouse in the figure above is just pictured one sample data bases where KPIs are stored. 8.3 SAP Solution Manager SAP Solution Manager is a centralised toolset of the SAP NetWeaver platform for solution administration. It enables to implement, run, monitor and support SAP solutions in companies. Technical implementation in distributed systems is made easier by using SAP Solution Manager. 71 So far it doesn't have an obvious linking with SCOR. If a company uses SAP Solution Manager together with a SAP ERP, SAP SCM system and a SAP BI application, the data from ERP and operative activities will deposit automatically into SAP s BI applications, where the plan-source-make-deliver KPIs will be calculated. Afterwards these KPIs will be sent to SAP s management cockpit, where they can be analyzed according to specifications in the SCOR model. 69 Knolmayer (2009), p. 74 f. 70 SAP Library, Knolmayer (2009), p SAP Deutschland 70

77 8.4 SAP Business ByDesign Recently SAP launched with their new hosted solution SAP Business ByDesign a softwareas-a-service. This comprehensive software solution for midsize companies contains amongst others applications for SCM, CRM, HRM or PM. 72 Functionality which is usually, as described above, spread to specialized application types such as ERP systems, Advanced Planning Systems (APS) or BI is united in one solution. Due to model-based approach which is followed by SAP Business ByDesign system configuration can be done very easily. There are only two steps necessary to run the system - Business Configuration and Fine Tuning. 73 Figure above shows components of SCM in SAP Business ByDesign, but without references to other applications, such as CRM. Figure 39 Components of SCM in SAP Business ByDesign 74 Planning process starts in the component Demand Planning. Results from this step, such as statistical forecasts, are released to the next component Supply Chain Planning & Control (SCPC), where forecast is matched with actual demand. Other activities in this step are to find the source of supply for external demand or availability check, but main step is the generation of production or purchasing proposals, again according to total demand. Finally, the component Warehousing & Manufacturing Execution is responsible for detailed planning and control level of SCM Knolmayer (2009), p. 189ff. 73 Please visit for more information. 74 Knolmayer (2009), p Knolmayer (2008), p

78 9 Conclusion This manual provided both theoretical and practical insight into the SCOR model itself and modelling with ARIS Express. After reading this manual skilled labours of the supply chain management have a basic understanding of the SCOR model. At the beginning a detailed insight into the SCOR model was given. With the help of the overview given in the chapter How to implement SCOR and solutions provided by SAP they are now able to decide if they apply it to their company. The SCOR Model can be evaluated by SCM specialists. Furthermore more people get to know the business process reference model, just as SCC s desire. 72

79 10 Bibliography Allweyer, Thomas (2009): ARIS Expres: Intuitives Modellieren - wenig Navigation, (published on 12 October 2009, called on 21 February 2010) Bartsch, Helmut; Bickenbach, Peter (2002): Supply Chain Management mit SAP APO - Supply-Chain-Modelle mit dem Advanced Planner & Optimizer 3.1, 2nd updated and extended edition, Bonn (Galileo Press) Becker, Torsten (2008): Prozesse in Produktion und Supply Chain optimieren, 2nd new edited and extended edition, Heidelberg (Springer-Verlag) Bolstorff, Peter; Rosenbaum, Robert (2007): Supply Chain Excellence - A Handbook for Dramatic Improvement Using the SCOR Model, 2nd edition, New York (Amacom) Bolstorff, Peter A.; Rosenbaum, Robert G.; Poluha, Rolf G. (2007): Spitzenleistungen im Supply Chain Management - Ein Praxishandbuch zur Optimierung mit SCOR, Heidelberg (Springer-Verlag) Davenport, Thomas H. (2005): The Coming Commodization of Processes, in: Harvard Business Review, June 2008, p. 1-9 EG 178 (2002): Europäische Gemeinschaft: Verordnung EG Nr. 178/2002 des Europäischen Parlaments und des Rates vom 28. Januar 2002 zur Festlegung der allgemeinen Grundsätze und Anforderungen des Lebensmittelrechts, zur Errichtung der Europäischen Behörde für Lebensmittelsicherheit und zur Festlegung von Verfahren zur Lebensmittelsicherheit, Amtsblatt der Europäischen Gemeinschaften Nr. L 31/1 vom Gould, Larry: What you need to know about Supply Chain Management, (called on 27 February 2010) Holten, Roland; Melchert, Florian (2002): Das Supply Chain Operations Reference (SCOR)-Modell, in: Becker, Jörg; Knackstedt, Ralf (Hrsg.) (2002): Wissensmanagement mit Referenzmodellen, Heidelberg (Physica-Verlag), S IDS Scheer I: The First Free Business Process Management (BPM) Software from the Market Leader, (called on 23 February 2010) IDS Scheer II: Delivering Business Process Excellence for Over 20 Years, (called on 19 February 2010) IDS Scheer III: IDS Scheer Home, (called on 19 February 2010) IDS Scheer IV: SCOR, (called on ) IDS Scheer V: ARIS Platform, (called on 19 February 2010) 73

80 Knolmayer, Gerhard F. et.al (2009): Supply Chain Management Based on SAP Systems - Architecture and Planning Processes, Heidelberg (Springer-Verlag) Lehmann, Frank R. (2008): Integrierte Prozessmodellierung mit ARIS, Heidelberg (dpunkt) Poluha, Rolf G. (2008): Anwendung des SCOR-Modells zur Analyse der Supply Chain, 4th revised edition, Köln (Joseph Eul Verlag) PMG: Performance Measurement Group, (called on 01 March 2010) SAP AG (2008): SAP Supply Chain Management - SAP Solution Overview SAP Deutschland: Komponenten und Werkzeuge - SAP Solution Manager, (called on 9 March 2010) SAP Library: The SCOR Model, et.htm (called on 2nd march 2010) SCC Inc. (2008a): SCOR Version 9.0 SCC Inc. (2008b): Supply-Chain Operations Reference-model Overview 9.0 SCC Inc. (2008c): SCOR Quick Reference Version 9.0 SCC Inc. (2010): About Supply Chain Council, (called 19 February 2010) and other information provided in SCC member area published by SCC Schulte, Christof(2009): Logistik- Wege zur Optimierung der Supply Chain, München (Vahlen) Schrenk, Gerhard (2008): ERP-Einführung mit SCOR, Ein Leitfaden zur Implementierung von Unternehmenssoftware mit Hilfe des Supply Chain Operations Reference Modells, Saarbrücken (VDM Verlag Dr. Müller) Schönsleben, Paul (Ed.) (2007): Supply Chain Risiken: Identifikation, Bewertung und Steuerung, Zürich (Vdf Hochschulverlag) Techt, Uwe; Lörz, Holger (2007): Critical Chain - Beschleunigen Sie Ihr Projektmanagement, München (Haufe) Werner, Hartmut (2008): Supply Chain Management - Grundlagen, Strategien, Instrumente und Controlling, 3rd completely revised and extended edition, Wiesbaden (Gabler Verlag) Ziegenbein, Arne(2007): Supply Chain Risiken- Identifikation, Bewertung und Steuerung, Zürich (vdf Hochschulverlag). 74