Using SCOR model in a real Collaborative Sourcing Scenario

Transcription

1 Using SCOR model in a real Collaborative Sourcing Scenario EIPM, Annual conference - Dec Nando Galazzo VP Procurement Borealis

2 Adding value in Procurement: Twist suppliers to the last drop Lopez was wrong! 2

3 Sustained Value Creation and Dialogue are a lot more fun 3

4 Content The strategic framework The players The vision Tools & Methodology Partnership excellence Supply Chain Reference Model (SCOR) The Opportunity The Degussa-Borealis business case What s different? Conclusions A New Dynamic 4

5 Presenting the Players

6 Borealis Degussa Profile 5 B sales 11.7 B sales Products Reach Values Fit Strategic Fit Olefins and Polyolefins( PE/PP) EU/Global Value Creation Through Innovation Responsible-Respect Exceed-Nimblicity Supplier Relationship Management Degussa seen as strategic supplier in 12 supply chains Specialty Chemicals Global Research & Innovation are key elements in our sustainable development growth strategy Solutions to Customer program Borealis seen as key customer for 5 business units Execution Fit SCOR + SRM + Proc Excell. SCOR + CRM + M&S Academy 6

7 Creating a new collaborative vision 7

8 Strategic framework: Sustainable value creation through collaboration Innovation intensity high low The Magic Quadrant low high Competitive advantage 8

9 Goals & objectives: Innovate & differentiate Create visibility on extended SC Opportunities Extract value... and share 9

10 Presenting the Approach Tools and Methodology

11 Why SCOR: If we had mapped processes the classical way: + = - Where is the burning platform? - Where to start? - How to start? SCOR start small & scale fast Easy mapping Quick opportunities identification Commonly used methodology & language 11

12 The Supply Chain Council (SCC) has developed and endorsed the Supply Chain Operations Reference-model (SCOR) as the cross-industry standard for supply chain management The SCC is an independent, not-for for-profit, global corporation with membership open to all companies and organizations interested d in applying and advancing in state-of of-the- art supply chain management systems and practices. Over 1000 Company Members Cross-industry representation Chapters in Australia/New Zealand, Brazil, Europe, Japan, North America, Southern Africa, and South East Asia with petitions for additional chapters pending. 12

13 SCOR: A Reference Model for a Supply Chain: 5 core processes: PLAN Degussa & other Borealis Suppliers SOURCE MAKE DELIVER Degussa & Other Borealis Customer RETURN RETURN RETURN Common Building Block Approach Processes Best Practices Metrics Technology 13

14 Supply chain improvements Borealis Degussa Using SCOR across enterprises Case Study

15 Initial project scope & complexity 3 continents, 8 countries 23 production sites 30 shipping points 27 receiving points 1600 deliveries/year 50,000 Tons shipped 7 major supply chains

16 Common & Simple methodology used Analyze and map common SC Prioritize and select a Pilot Do & Implement Pilot Scale to other areas Share the benefits 16

17 Project milestones: Fast & Furious Kick Off Analyze TO BE Design TO BE Validation Implementation & Improvement SCOR Concept Methodology Project Approach Define Scope Analyze Production, SC- Structure and Processes for Borealis and Degussa supply chains Measure current performance for identified product (high level) Identification of Measurements of Improvements Agree AS IS Select the BU to focus on with further process decomposition Present recommendations Detailed Analysis Level 3 Configuration TO-BE Detailed Improvements Mgt. Team Meeting Define low level KPI s September 29th & targets Define tasks & responsibilities Map changes and define change process Agree detailed design Develop common set of KPI s Visioning workshop Implement & Communicate changes in : Organization, Processes and Performance Management Systems Mgt. Team Meeting Feb 7th Train & Coach the organization Realize & sustain the benefits July 05 Sept 05 Feb 06 17

18 Overview Supply Chain Peroxides Level 2 Empty packaging --> opportunity to value waste? Quit COA and promote SQC ERS or invoicing plan --> potential? OMF growing volume potential for consolidation transportation, for Polycom and Polymere Realize strategic Vision PP%: Strategic Vision Combine shipments to optimize container fill-rate : use of planning calendar? Improved purch. Req. processing (collective by vendor) Peroxide Standard LT could be reduced from 15 days to 8 days LT reduction opp Got --> Sten, in Got. Degussa keeps sales + Buffer some containers, in Sten, Borealis kepts some tons of safety stock. Do we really need GOT storage location? Why not relocate product from US to Pullach plant SC today --> Degussa US (6 weeks LT)--> Pullach --> Bamble Why not : Degussa US --> Bamble. Elements to be considered : Forecasts sent to Malmö & info sent to Pullach Why not to send straight to Pullach? 18

19 Roadmap to improvements 1. Detailed Level 3 Analysis 2. Discussion Production and deliver strategy 3. Quantitative analysis of transportation costs 5. Judgment of benefits and implementation effort 4. Visioning workshop 19

20 Solution portfolio SC Reconfiguration Ease of Implementation high medium low Lead Time reduction SC Reconfiguration VMI Forecasting Process Direct shipment Transport Load Optimization Portfolio & Strategic Development Supply chain delivery performance low medium Impact/ Benefits high 20

21 One set of performance metrics : A novelty aspect DEGUSSA BOREALIS EXTERNAL INTERNAL Supply Chain SCOR-Card (Level 1) Median Best in class Process Industry Overview Metrics SCOR Level 1 Metrics Total BU PE PP Process Industry (02/05) Delivery Performance (Commit date) Supply Chain BOREALIS 95,5% n.c. n.c. 92% 99% Reliability DEGUSSA (per) 72,7% Order Fulfillment Lead Time 18,5 [days] SOURCE (peroxides - MTF) 15 [days] Responsiveness MAKE (MTF) 1 [days] 1 [days] 1 [days] DELIVER 3 [days] 3 [days] 3 [days] Supply-Chain Flexibility 95 [days] 5 [days] SOURCE (per)? [days] Flexibility MAKE 240 [days] 240 [days] 240 [days] DELIVER 0[days] 0 [days] 0 [days] Total Supply Chain Management Cost 9% 11% 7% 10% 2% Cost Cost of Goods Sold 91% 86% 94% 78% n.c. Value-Added Productivity per payroll 2,7 [ ] 3,7 [ ] 3,2 [ ] 2,3 [ ] n.c. Days of coverage (per) 32,7 [days] Inventory Days Of Supply (RM) 3,8 [days] 7,4 [days] 1,8 [days] Inventory Days Of Supply (all) 29,5 [days] 45,9 [days] 19,9 [days] 51,3 [days] [days] 40 Cash Cycle Days of Sales Outstanding 47,7 [days] 70 [days] 33,5 [days] n.c. n.c. Days of Payables 28,8 [days] 51,3 [days] 17,1 [days] n.c. n.c. Cash-To-Cash Cycle Time 48,4 [days] 64,6 [days] 36,3 [days] 55,1 [days] 40 [days] Asset Turns 3,6 turns 2,4 turns 5,3 turns 1,4 turns 4,5 turns Assets COMBINED EXTERNAL INTERNAL Supply Chain SCOR-Card (Level 1) Median Best in class Process Industry Overview Metrics SCOR Level 1 Metrics Total BU PE PP Process Industry (02/05) Delivery Performance (Commit date) Supply Chain BOREALIS 95,5% n.c. n.c. 92% 99% Reliability DEGUSSA (per) 72,7% Order Fulfillment Lead Time 18,5 [days] SOURCE (peroxides - MTF) 15 [days] Responsiveness MAKE (MTF) 1 [days] 1 [days] 1 [days] DELIVER 3 [days] 3 [days] 3 [days] Supply-Chain Flexibility 95 [days] 5 [days] SOURCE (per)? [days] Flexibility MAKE 240 [days] 240 [days] 240 [days] DELIVER 0[days] 0 [days] 0 [days] Total Supply Chain Management Cost 9% 11% 7% 10% 2% Cost Cost of Goods Sold 91% 86% 94% 78% n.c. Value-Added Productivity per payroll 2,7 [ ] 3,7 [ ] 3,2 [ ] 2,3 [ ] n.c. Days of coverage (per) 32,7 [days] Inventory Days Of Supply (RM) 3,8 [days] 7,4 [days] 1,8 [days] Inventory Days Of Supply (all) 29,5 [days] 45,9 [days] 19,9 [days] 51,3 [days] [days] 40 Cash Cycle Days of Sales Outstanding 47,7 [days] 70 [days] 33,5 [days] n.c. n.c. Days of Payables 28,8 [days] 51,3 [days] 17,1 [days] n.c. n.c. Cash-To-Cash Cycle Time 48,4 [days] 64,6 [days] 36,3 [days] 55,1 [days] 40 [days] Asset Turns 3,6 turns 2,4 turns 5,3 turns 1,4 turns 4,5 turns Assets EXTERNAL INTERNAL Overview Metrics Supply Chain Reliability Responsiveness Cash Cycle Degussa - Borealis Supply Chain SCOR-Card (Level 1 & 2) Shared SCOR Level 1 Metrics Actual "As-is" "To-be" (progress) "To-be" (success) Competition Median Process Industry Best in class Process Industry (02/05) Delivery Performance (Requested Del. date) 73% 85% 95% 92% 90% 95% Forecast accuracy 65% 80% 90% 75% n.c n.c Order Fulfillment Lead Time SOURCE (peroxides - MTF) 15 [days] 8 [days] 10 [days] n.c SC Avg 2005 Inventory qty (Tons) - Peroxides SC Avg 2005 Consumption qty (Tons/Month) - Peroxides SC Inv days of supply (days) - Peroxides [days] 10% reduction 20% reduction 21

22 Shared Supply Chain metrics (template) EXTERNAL INTERNAL Overview Metrics Supply Chain Reliability Responsiveness Cash Cycle Shared SCOR Level 1 Metrics Actual "As-is" 2005 Actual "As-is" Q Actual "As-is" Q "To-be" (progress) "To-be" (success) Competition Median Process Industry Best in class Process Industry (02/05) Delivery Performance (Requested Del. date) 65% 66% 69% 85% 90% 90% 95% Forecast accuracy 55% 58% 58% 70% 80% n.c n.c Order Fulfillment Lead Time (days) SOURCE (peroxides - MTF) n.c SC Avg 2005 Inventory qty (Tons) - Peroxides n.c n.c SC Avg 2005 Consumption qty (Tons/Month) - Peroxides product mix n.c n.c SC Inv days of supply (days) - Peroxides Degussa - Borealis Supply Chain SCOR-Card (Level 1 & 2) [days] 40 [days] * Data only for illustration purpose 22

23 Total identified SC savings & origin Plan Borealis Degussa Source Make Deliver Source Make Deliver Return Return Return Return 100 % 23

24 Savings breakdown Overview Metrics SC Value for improvement (K ) Pilot Investment cost (estimated K ) Pilot SC value scaled up to other business line (K ) Supply chain reliability Responsiveness Cash cycle

25 Change management issues in a collaborative scenario Typical barriers: Shared vision feeding mutual need & interest Understanding about business concepts & opportunities Trust & openness between partners while building reliable supply chain operations Change management solutions: Collaborative workshops Common definitions (Reference model) Commonly selected & shared metrics 25

26 Time for conclusion

27 Enhancing partner collaboration is key SCOR 27

28 Conclusions GOALS Create & Share value through SC collaboration A total of 2387 K savings identified Business growth (new prod. devpt.) estimated at 3800 K Foster partnership TOOLS SCOR toolkit applied to the extended SC SRM & CRM PRM PROCESS Collaborative sourcing 28

29 Strategic framework: Landing to The Magic Quadrant Innovation intensity high low The Magic Quadrant low high Competitive advantage 29

30 VIB/ABCAL/PICS SC project of the year : 30

31 Key take away message Procurement is a viable source of value creation Innovation, entrepreneurial spirit and creativity are key attributes for procurement The journey is not always long & difficult Using simple tools & simple methodology boost project management 31