Key Decision Making Alignment = Supply Chain Alignment

Transcription

1 Key Decision Making Alignment = Supply Chain Alignment How SCOR helps your company to align your supply chains Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 1 Copyright Supply Chain Council All rights reserved. The marks SCOR, CCOR, DCOR and SCOR Roadmap are the exclusive property of the Supply Chain Council.

2 Instructor Introduction Herman Estrada CEO at Calafia BMT S de RL de CV, Supply Chain Management Consultant herman.estrada@grupocalafia.com 2 Summary Herman Estrada is a founding member and CEO of Calafia BMT, also participates as consultant in the areas of Supply Chain Management, Six Sigma, and Lean Production, for Global accounts such as Pfizer and DHL, as well as national account such as Grupo Modelo, Fármacos Nacionales and Fabrica de Papel San Francisco. Prior to the founding of the Calafia BMT, Herman was responsible for leading projects of new Business and Operations Development, Inventory Management, Product Data Management and consulting in Industrial Engineering, Six Sigma, Lean Production and Supply Chain Management. Herman publishes articles at CNN Expansion Manufactura, and has been interviewed for opinions in multiple business journals. Specialties Supply Chain Management, Lean, Six Sigma, Process Re-Engineering, Change Management, S&OP (SOP), Planning, Procurement, Production, Distribution, Return Process, Operational Governance Experience CEO at Calafia BMT. May Present Executive Director, The AIT Group Mexico at The AIT Group, Inc Engineering Change Manager at Kenworth Mexicana SA de CV Education Supply Chain Council SCOR Certified Professional, Supply Chain Management, 2004 Supply Chain Council SCOR Certified Instructor, Supply Chain Management, 2010 The AIT Group, Inc.. Black Belt, Lean Six Sigma, Purdue University. MSIE, Operations Research, Supply Chain Management, CETYS Universidad. IE, Industrial Engineering in Production, Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 2

3 About Supply Chain Council 3 Formed in 1996 to create and evolve a standard industry process reference model of the supply chain for the benefit of helping companies rapidly and dramatically improve supply chain operations SCC has established the supply chain world s most widely accepted framework the SCOR process reference model for evaluating and comparing supply chain activities and their performance It can be used to describe supply chains that are very simple or very complex using a common set of definitions and enabling a common understanding It lets companies quickly determine and compare the performance of supply chain and related operations within their company or against other companies SCC continually advances its tools and educates members about how companies are capitalizing on those tools With membership open to all interested organizations Global presence, volunteer driven 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 3

4 Global Scope With Over 800 Member Organizations Member Distribution Geographic North America Australia/New Zealand China South Africa Latin America Southeast Asia Japan Member Affiliation Europe Government SME End User Also developing chapters in India and the Middle East Enabling Technology Consultant Non-Profit/Academic 0% 10% 20% 30% 40% 50% 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 4

5 Supply Chain 5 SCOR defines supply chain as: The processes that plan and execute the acquisition of materials, transformation of materials in sellable products, delivery and return of products and services in support of customer orders Deliver Return Source Return Plan Make Deliver Return Source Return Plan Make Delive r Return Source Return Plan Make Deliver Return Source Return Whether from Cow to Cone, Crude to Car or from Rock to Ring, SCOR is not limited by organizational boundaries SCOR can be applied to supply chains in any industry and to any organization in the chain Suppliers Supplier Internal or External Supplier Your Organization Customers Customer Internal or External Customer 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 5

7 Working Groups Comprised of volunteers from global open industry call under the guidance of Caspar Hunsche, CTO Membership not required open to all SCOR 11.0 DCOR 3.0 CCOR 2.0 Best Practices Sustainability GreenSCOR Risk Management Reverse Logistics SCOR Convergence SCM Skills Now, Supply Chain Talent Academic Initiative 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 7

8 Industry Groups Comprised and managed by volunteers from global open industry call under the guidance of Carolyn Lawrence, Special Programs Administrator Membership not required open to all Aerospace & Defense Industry SCW-NA 5/24 Automotive (OEM/Tiered Supplier Segment) Industry Automotive Aftermarket Industry Association Energy, Oil & Gas Industry Hi Tech & Electronics Industry Software Industry Specialty Equipment Market Association 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 8

9 Industry Association Member Affiliations APICS Institute for Supply Management (ISM) Council of Supply Chain Management Professionals (CSCMP) Automotive Aftermarket Industry Association (AAIA) GS1 globally Specialty Equipment Market Association (SEMA) Material Handling Industry of America (MHIA) Reverse Logistics Association (RLA) Diverse Manufacturing Supply Chain Alliance (DMSCA) Women's Business Enterprise National Council (WBENC) Industry Partners with most industry conference producers & publications The Supply Chain Council Continues to be recognized as the global industry standard for supply chain process definition, reference, and resources Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 9

11 The Song Remains the Same Across Industry: Change and Challenge are Constants Stock Market Volatility, Oil Prices, Labor, Political Instability, Access to Capital Reducing Inventory/ Working Capital/ Asset Management Reducing Total Supply Chain Costs: Leveraging Technology Supply Chain Resiliency & Sustainability: Risk Management (Security/Counterfeiting) & Green (Product/Supply Chain) Providing Superior & Consistent Customer Service While Increasing Revenue & Margin Business as Usual Has Been Cancelled: Change is Inevitable, Growth is Optional! Competing in a Global Market, New Entrants: Foreign & Internet 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 11

12 The New Normal? Managing, Retaining, and Recruiting Talent Is Increasingly More Challenging Lack of Management Process Standards and Cross Training Inhibits Succession and Consistency Lack of Visibility to Cross-Functional Process Requirements and Integration an Inhibitor to Collaboration and Orchestration of Supply Chain Activities Poor Daily Forecast Accuracy Results in Extensive fire fighting to Resolve Variation from Plan Planners and Schedulers Rely More on Custom Spreadsheets than Enterprise Planning Systems Lack of Visibility to Changes Upstream and Downstream Result in Frequent Inventory Imbalances Inability to Share Information with other Functions and Planners Lack of Performance Information and Daily Decision Support Tools Inability to Optimize Resources, Inventory and Operations to Maximize Profitability Effective Supply Chain Management and Operations Excellence are Central Pillars for a Competitive Strategy! 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 12

13 Superior Supply Chain Management (SCM) has Long Been a Source of Competitive Advantage Supply chain management costs per $1,000 revenue $180 $ $160 $140 $120 $100 $80 $81.32 $70.12 $91.49 $80.52 $60 $56.36 $40 $20 $22.86 $29.48 $23.98 $9.75 $24.60 $24.58 $0 Consumer Products/Packaged Goods Electronics Industrial Products Petroleum/Chemical Retail and Wholesale Services Best-in-class Companies Outperform Their Median Competitors with more than a 50% Cost Advantage 14 of AMR s Top 25 are SCC members! Parity (50th Percentile) Superior (90th Percentile) Source: APQC, SCORmark benchmarking database ( Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 13

14 The Ultimate Goal of the Transformation to Operations Excellence is to Increase Shareholder Value The Supply Chain Impacts... All Financial Metrics... & Shareholder Value Improve customer service and response Optimize inventory flow, utilization & productivity Best-in-class customer relationships Differentiated service capabilities Best-in-class strategic supplier partnerships Leverage outsourcing of business processes Unique supply chain models & Asset Utilization 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 14 Liberate Working Capital Reduce Fixed Capital Increase Revenue and Margin Optimize Cost Model Improve Capital Efficiency Increase Profit Increase Shareholder Value (ROIC) Effective Supply Chain Management can increase Return on Invested Capital (ROIC) by 30% and More!

15 SCOR Index of Publicly Traded Company Members Companies with a Focus on Supply Chain Improvement Outperform the Market, Even in Tough Times! 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 15

16 Best Practices Leadership is the Foundation for Profitable Growth to Attain Market Leadership HIGHER MARKET SHARE LEADERSHIP in OPERATIONS EXCELLENCE SUPERIOR FINANCIAL RETURNS GREATER VALUE TO CUSTOMERS REINVEST AT A HIGHER RATE THAN COMPETITORS 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 16 NEW PRODUCTS, SERVICES, COST IMPROVEMENTS Competing in the 21 st Century Requires New Thinking and Operations Excellence; no, Operations Innovation!

17 Sales Sales Sales Sales Traditional Supply Chain Thinking Sourcing Manufacturing Distribution Point of Sale Supplier Manufacturer Distributor Wholesaler Retailer Consumer Time Time Time Time Bullwhipped Demand Signals Little Collaboration Excess Inventory High Execution Costs Stockouts 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 17

18 The Supply Chain is Evolving to a Collaborative Supply Network Suppliers Manufacturers Wholesale Distributors Retailers Internet/ Portals Internet/ Internet/ Portals Portals Customer Demand Contract Manufacturers Virtual Manufacturers 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 18 Logistics Providers Info Goods Companies Must Transform Their Operating Processes To Become Customer Focused, Demand Responsive, Collaborative, & Profitable

19 Technology Drivers of Change Cloud Computing Supply Chain Visibility Software as a Service (SaaS)/On Demand Location Based Technology/Mobility/Telematics Business Intelligence/Decision Support Auto Id/Information Beyond RFID Voice Recognition/Response Intelligent Sensors, Monitors, Devices Robotics Extending from Manufacturing to Logistics Picking, Packing, Putaway Load, Unload Internet Transparency & Social Media for Business LinkedIn, Twitter, Blogging, Search Offers, Location, Orders, Navigation, Behavior The Convergence of Emerging Technologies will lead to New Applications for Integrating Planning & Execution! 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 19

20 A New Paradigm is Emerging: The Smart Supply Network Optimization for Visibility & Global Flow Control Smart Transactions (Telematics/RFID) Convey Information in Real Time Across the Supply Network Paperless! Convergence of Planning & Execution - Basis for Demand Planning/Crossdocking/Outbound Consolidation Optimum Supply Network Material Flow through Collaborative, Synchronized Activity Planning & Scheduling Smart Information Smart Information Companies must Crossdock & Custom define Pack their & supply chain processes, metrics, best practices and Distribution Outbound talent requirements Label to leverage a new Center paradigm in supply chain management to Consolidation gain competitive advantage! Vendor 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 20 Customer

22 Supplier processes What is SCOR? SCOR is a supply chain process reference model containing over 200 process elements, 550 metrics, and 500 best practices including risk and environmental management and HR SEAT Organized around the five primary management processes of Plan, Source, Make, Deliver and Return Developed by the industry for use as an industry open standard - Any interested organization can participate in its continual development Source Return Supply Chain Plan Make Deliver Return Process, arrow indicates material flow direction Process, no material flow Information flow Customer processes 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 22 22

23 About SCOR: A Process Framework 23 Process frameworks deliver the known concepts of business process reengineering, benchmarking, best practices and organizational design in a cross-functional framework Standard processes; Plan, Source, Make, Deliver, Return Standard metrics: Perfect Order Fulfillment, Cash-to- Cash Cycle Time, Cost of Goods Sold,.. Standard practices: EDI, CPFR, S&OP, Cross-Training,.. Standard job skills: Lean, Accounting, Solicitation,.. Pre-defined relationships between metrics, processes, practices and skills 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 23

24 A Process Framework 24 Combining 4 techniques into a single integrated approach Business Process Re-engineering Performance Benchmarking Best Practices Analysis Organizational Design Capture the as-is business activity and design the future to-be state Quantify relative performance of similar supply chains and establish internal targets Identify the practices and software solutions that result in significantly better performance Assess skills and performance needs and align staff and staffing needs to internal targets Processes Process Reference Framework Performance (metrics) Practices People (skills) 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 24

25 Supplier processes About SCOR: Supply Chain 25 Viewing a company as processes (domains) Product/Portfolio Product/Portfolio Management Management Product & Sales & Product Design Sales & Support Process Design Support DCOR CCOR DCOR CCOR Supply Chain SCOR Customer processes 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 25

27 The What and Why of Visualization/Modeling 'Modeling' has two major components: Gathering process knowledge and Presenting process knowledge Using SCOR, Supply Chains can be rapidly defined, processes identified, and metrics set in a common and consistent method across functions Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 27

28 SCOR Supported Model Types Business activity Diagram Type Description Identify Supply Chains Managing supply chains Managing supply chain configurations Definition Matrix Geographic map Thread diagram Identify and Prioritize Supply Chains Standard view for supply chain owners/managers (what is sourced, stored and/or goes where) Level 2 process decisions. Replace, reposition and/or eliminate processes Managing processes Workflow Level 3 and 4 process decisions. Outline process disconnects, missing information 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 28

30 Supply-Chain Definition Supply Chains are the Totality of processes spanning operations from supplier to end-customer, focused on material, work, human, cash and information flow We use a tool called the Supply Chain Definition Matrix to define the supply-chains within an enterprise The Supply Chain Definition (i/o Matrix) Matrix helps determine the number and size of supply chains Columns: Customers (Output) Rows: Products (Input) The intersection of each column and row if the goods or services flow to the customer is a supply chain 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 30

31 The Matrix We now place the customer list as column headings repeating until finished And then the products list as row headings repeating until finished For each product that flows to a customer, we put an X in the cell It s that simple. Group 1 Group 2 Customer A Customer B Customer C Customer D Business 1 Product 1 Product 2 X X X X Business 2 Product 3 Product 4 X X X 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 31

32 SCOR Defines the First 3 Levels of Details Level 1 Level 2 Level 3 Level 4 Level 5 Scope Configuration Activity Workflow Transactions Supply-Chain Source S1 Source Stocked Product S1.2 Receive Product EDI XML Differentiates Business Differentiates Complexity Names Tasks Sequences Steps Links Transactions Defines Scope: The Basis for Competitive Performance Targets are set Differentiates Capabilities: Companies implement their operations strategy based on unique SC configuration Links, Metrics, Tasks and Practices: Companies fine tune their operations strategy Job Details: Defines practices to achieve competitive advantage and to adapt to changing business conditions Details of Automation: Defines process gates and integration points/ requirements Framework Language Framework Language Framework Language Industry or Company Specific Language Technology Specific Language Standard SCOR definitions 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 32 Company/Industry definitions

33 Best Practices Best practice: "A current, structured, proven and repeatable method for making a positive impact on desired operational results." Current Must not be emerging and can not be antiquated Structured Has clearly stated Goal, Scope, Process, and Procedure Proven Success has been demonstrated in a working environment and can be linked to key metrics Repeatable The practice has been proven in multiple environments Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 33

34 P1 Plan Supply Chain Metrics Cash-to-Cash Cycle Time Cost to Plan SC Order Fulfillment Cycle Time Plan Cycle Time Return on SC Fixed Assets Return on Working Capital Best Practices Capability to run What-if simulations Change in Demand signal instantaneously reconfigures Production and Supply Plans CPFR On-line visibility of demand Re-balancing on full-stream supply and demand Supply/Demand Processes are fully integrated S&OP Tools support balanced decision making VMI 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 34

35 Low Return High Return Best Practices What does it take to improve? SCOR contains over 200 best practices today Do you need to implement all 200+ in your company? Low Risk quick wins High Risk sponsor issue How to determine fit? For each best practice Determine risk Determine return Pin in the quadrant nice to have consider carefully Implement a best practice IF it makes sense for your specific processes, business, or industry Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 35

37 Supply Chain Prioritization We use a tool called the Supply Chain Prioritization Matrix to order the supply-chains according to relevance Each supply chain can be ranked by a number of features We suggest: size (revenue, volume, and margin), complexity (# SKUs) strategic importance You can also look at them by Cash Consumption Risk Volume variability Etc Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 37

38 Supply Chain Priority Each supply chain is given a rank in each category The total of the values gives the final overall ranking Weightings and other criteria may apply Revenue Gross Margin % # of SKUs Unit Volume Strategic Value Rank Business Business Business =low 3=high 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 38

39 Supply Chain Strategy We use a tool called the Supply Chain Strategy Matrix to Identify priority strategic features or attributes of supply-chains. Each supply chain strategy is indicated by a collection of ranked features: Reliability On time? Complete? Undamaged? Responsiveness From Customer Request to final acceptance Flexibility How long to scale up? How expensive to scale down? Cost Cost of Processes? Cost of Goods Sold? Assets Working Capital? Return on Investments? 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 39

40 Comparative Ranking We advocate using a simple ranking system for industry comparison Each rank corresponds to a specific percentile in industry performance We do not use averages or other statistical tests Our key ranks: Performance Percentile Choices Interpretation Superior 90 th 1 Top 10 performer Advantage 75 th 2 Top Half performer Parity 50 th 2 Half better/half worse 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 40

41 Internal External Supply-Chain Strategy Matrix Supply-Chain Strategy Matrix Reliability Responsiveness Business 1 Business 2 P P Business 3 S A Each unique combination of ratings defines Your Supply Chain Strategy for the channel Flexibility Cost A A A P Think of the rating as a desired state, NOT where you want to improve the most Assets S P 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 41

42 The SCORcard We use a tool called the Supply Chain SCORcard to Identify performance characteristics of supplychains. Each SCORcard is built from a subset of hundreds of SCOR metrics. For supply-chain benchmarking we generally use only Level 1, 2 and 3 metrics The SCOR Manual provides all necessary definitions 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 42

43 Customer Internal Supply Chain Balanced SCORcard Standard Strategic (Level 1) Metrics Attribute Metric (Strategic) Reliability Perfect Order Fulfillment Responsiveness Order Fulfillment Cycle Time Agility Supply Chain Flexibility Supply Chain Adaptability Cost Supply Chain Management Cost Cost of Goods Sold Assets Cash-to-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital upside and downside adaptability metrics 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 43

45 Benchmark to Identify Process Parity, Advantage, or Superiority Attribute Metric (level 1) Company Parity Adv Superior Parity Gap Req Gap Reliability Perfect Order Fulfillment 98% 92% 96% 98% -6% Responsiveness Order Fulfillment Cycle Time 14 days 8 days 6 days 4 days 6 days 8 days Flexibility Ups. Supply Chain Flexibility 62 days 80 days 62 days 40 days -18 days Cost Supply Chain Mgmt Cost 10.1% 10.8% 10.4% 10.2% -0.7% Assets Cash-to-Cash Cycle Time 22 days 45 days 30 days 20 days -23 days Scoping Identifies one or more targeted metrics for improvement Potential Improvement Opportunity Parity Advantage Superior Median of Statistical Sample Midpoint of Parity and Superior 90 th percentile of population 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 45

46 The SCOR framework a cross-industry open standard The five integrated processes provide a boundary-free view of the true end-to-end Extended Supply Chain Achieve Operations Excellence, Supply Chain Transformation, and Continuous Innovation using Supply Chain Council frameworks & resources Plan Deliver Source Make Deliver Source Make Deliver Source Make Deliver Source Return Return Return Return Return Return Return Return Suppliers Supplier Supplier Your Company Customer Customer s Customer Internal or External Internal or External 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 46

48 A Game Plan for Transformation Why Should We Change? Assess Current Operations Set Objectives Determine Market Benchmarks, Environment & Challenges How Do We Change? Create Strategy and Vision for the Future Map As Is & To Be Business Processes & Systems What is the Value of Changing? Determine Critical Success Factors & Windows of Opportunity Calculate Return on Investment Getting Management Buy In & Investment Present Solution Plan to Management Getting Operations Buy In & Commitment Pilot Implementation Proof of Concept Rapid Results Everyone Jumps on the Band Wagon Deploy Transformation Plan Across the Enterprise The World is Flat: Companies that leverage technology and the SCC s Resources to connect & collaborate will lead the 21 st Century! 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 48

50 Additional Benefits by Mexico & CENAM Chapter Establish & Professionalize the Practice of Supply Chain Management in the Region, locally adapted to situations and language Models Implementation Strategies Training & Events Participate in Best Practices Development Project and other SCC Programs so regional input is included. Host regional meetings for local networking and support. Establish the Basis for competition in the Region. KPI s Benchmarking Establish the Best Practices in Business Management for the Supply Chain area. Membership and training fees will be adjusted for regional economy. Anticipated reduction of 25-40% 2011 Supply Chain Council. ALL RIGHTS RESERVED. SCOR Framework Slide 50 50