PLAN SOURCE MAKE DELIVER RETURN Version 9.0SCOR Overview Supply-Chain Operations Reference-model SCOR is a registered trademark of the Supply-Chain Council in the United States and EuropeSCOR Overview The Supply-Chain Operations Reference-model (SCOR) is the product of the Supply-Chain Council (SCC), an independent, not-for-profit, global corporation with membership open to all companies and organizations interested in applying and advancing the state-of-the-art in supply-chain management systems and practices. The SCOR-model captures the Council’s consensus view of supply chain management. While much of the underlying content of the Model has been used by practitioners for many years, the SCOR-model provides a unique framework that links business process, metrics, best practices and technology features into a unified structure to support communication among supply chain partners and to improve the effectiveness of supply chain management and related supply chain improvement activities. Member companies pay a modest annual fee to support Council activities. All who use the SCOR-model are asked to acknowledge the SCC in all documents describing or depicting the SCOR-model and its use. The complete SCOR-model and other rleated models of the SCC are accessable through the members’ section of the www.supply-chain.org website. SCC members further model development by participating in project development teams-SCOR and other related SCC Models are collaborative ongoing projects that seek to represent current supply chain and related practice. © Copyright 2008 Supply-Chain Council Supply-Chain Operations Reference-model TABLE OF CONTENTS Table of Contents Section One: What is a Process Reference Model? 1 Section Two: Model Scope and Structure 3 Section Three: Applying the Model 15 The Concept of Configurability 15 Modeling with SCOR 16 Business Scope Diagram 17 Geographic Map 18 Thread Diagram 19 Process Models 20 Further information regarding membership, the Council and SCORcan be found at the Council’s web site: www.supply-chain.org.SCOR Overview 1 Capture the “as-is” state of a process and derive the desired “to-be” future state Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results Characterize the management practices and software solutions that result in “best-in-class” performance Capture the “as-is” state of a process and derive the desired “to-be” future state Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results Characterize the management practices and software solutions that result in “best-in-class” performance Business Process Reengineering Benchmarking Best Practices Analysis Process Reference Model What Is a Process Reference Model? Process reference models integrate the well-known concepts of business process reengineering, benchmarking, and process measurement into a cross-functional framework. Section ONE2 SCOR Overview A Process Reference Model Contains: • Standard descriptions of management processes • A framework of relationships among the standard processes • Standard metrics to measure process performance • Management practices that produce best-in-class performance • Standard alignment to features and functionality Once a Complex Management Process is Captured in Standard Process Reference Model Form, It can Be: • Implemented purposefully to achieve competitive advantage • Described unambiguously and communicated • Measured, managed, and controlled • Tuned and re-tuned to a specific purpose A Process Reference Model Becomes a Powerful Tool in the Hands of ManagementSCOR Overview Deliver Source Make Deliver Source Make Deliver Source Make Deliver Source Plan Suppliers’ Supplier Supplier Your Company Customer Customer’s Customer Internal or External Internal or External Return Return Return Return Return Return Return Return Plan Plan Section TWO 3 Model Scope and Structure The Boundaries of Any Model Must Be Carefully Defined “From your supplier’s supplier to your customer’s customer” SCOR spans: • All customer interactions, from order entry through paid invoice • All product (physical material and service) transactions, from your supplier’s supplier to your customer’s customer, including equipment, supplies, spare parts, bulk product, software, etc. • All market interactions, from the understanding of aggregate demand to the fulfillment of each order SCOR does not attempt to describe every business process or activity, including: • Sales and marketing (demand generation) • Research and technology development • Product development • Some elements of post-delivery customer support Links can be made to processes not included within the model’s scope, such as product development, and some are noted in SCOR. SCOR assumes but does not explicitly address: • Training • Quality • Information Technology (IT) • Administration (non SCM)4 SCOR OverviewDemand/Supply Planning and Management Balance resources with requirements and establish/communicate plans for the whole supply chain, including Return, and the execution processes of Source, Make, and Deliver. Management of business rules, supply chain performance, data collection, inventory, capital assets, transportation, planning configuration, regulatory requirements and compliance, and supply chain risk. Align the supply chain unit plan with the financial plan. Sourcing Stocked, Make-to-Order, and Engineer-to-Order Product Schedule deliveries; receive, verify, and transfer product; and authorize supplier payments. Identify and select supply sources when not predetermined, as for engineer-to-order product. Manage business rules, assess supplier performance, and maintain data. Manage inventory, capital assets, incoming product, supplier network, import/export requirements, supplier agreements, and supply chain source risk. Make-to-Stock, Make-to-Order, and Engineer-to-Order Production Execution Schedule production activities, issue product, produce and test, package, stage product, and release product to deliver. With the addition of Green to SCOR, there are now processes specifically for Waste Disposal in MAKE. Finalize engineering for engineer-to-order product. Manage rules, performance, data, in-process products (WIP), equipment and facilities, transportation, production network, regulatory compliance for production, and supply chain make risk. Source Plan Scope of SCOR Processes Make SCOR is Based on Five Distinct Management ProcessesSCOR Overview 5 Order, Warehouse, Transportation, and Installation Management for Stocked, Make-to-Order, and Engineer-to-Order Product All order management steps from processing customer inquiries and quotes to routing shipments and selecting carriers. Warehouse management from receiving and picking product to load and ship product. Receive and verify product at customer site and install, if necessary. Invoicing customer. Manage Deliver business rules, performance, information, finished product inventories, capital assets, transportation, product life cycle, import/export requirements, and supply chain deliver risk. Return of Raw Materials and Receipt of Returns of Finished Goods All Return Defective Product steps from source – identify product condition, disposition product, request product return authorization, schedule product shipment, and return defective product – and deliver – authorized product return, schedule return receipt, receive product, and transfer defective product. All Return Maintenance, Repair, and Overhaul product steps from source – identify product condition, disposition product, request product return authorization, schedule product shipment, and return MRO product – and deliver – authorize product return, schedule return receipt, receive product, and transfer MRO product. All Return Excess Product steps from source – identify product condition, disposition product, request product return authorization, schedule product shipment, and return excess product – and deliver – authorize product return, schedule return receipt, receive product, and transfer excess product. Manage Return business rules, performance, data collection, return inventory, capital assets, transportation, network configuration, regulatory requirements and compliance, and supply chain return risk. Deliver Return6 SCOR Overview A Process Reference Model Differs from Classic Process Decomposition Models Level 1234 Contains: Process Type Process Category Process Category Process Element Process Element Activities Activities Provide a balanced horizontal (cross-process) and vertical (hierarchical) view Designed to be (re)configurable Used to represent many different configurations of a similar process Aggregate a series of hierarchical process models Process decomposition models are developed to address one specific configuration of process elementsSCOR Overview 7 Supply-Chain Operations Reference-model Not in Scope Level 1 defines the scope and content for the Supply Chain Operations Reference-model. Here basis of competition performance targets are set. A company’s supply chain can be “configured-to-order” at Level 2 from core “process categories.” Companies implement their operations strategy through the configuration they choose for their supply chain. Level 3 defines a company’s ability to compete successfully in its chosen markets, and consists of: • Process element definitions • Process element information inputs, and outputs • Process performance metrics attributes and defintions • Best practices definitions Companies “fine tune” their Operations Strategy at Level 3. Companies implement supply-chain management practices that are unique to their organizations at this level. Level 4 and lower defines specific practices to achieve competitive advantage and to adapt to changing business conditions. Top Level (Process Types) Configuration Level (Process Categories) Process Element Level (Decompose Processes) Implementation Level (Decompose Process Elements) P1.1 Identify, Prioritize, and Aggregate Supply-Chain Requirements P1.2 Identify, Assess, and Aggregate Supply-Chain Resources P1.3 Balance Supply-Chain Resources with Supply-Chain Requirements P1.4 Establish and Communicate Supply-Chain Plans Level # Description Schematic Comments 1234 SCOR Contains Three Levels of Process Detail SourcePlanMake Deliver Return Return8 SCOR Overview Process Categories Defined by the Relationship Between a SCOR Process and a Process Type Definitions Processes that balance aggregate demand and supply to develop a course of action which best meets sourcing, production and delivery requirements Processes that procure goods and services to meet planned or actual demand Processes that transform product to a finished state to meet planned or actual demand Processes that provide finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management Processes associated with returning or receiving returned products for any reason. These processes extend into post-delivery customer support Process Type Process Category Planning Execution Enable P1 P2 P3 P4 P5 S1 -S3 M1 -M3 D1 -D4 S/DR1 -S/DR3 EP ES EM ED ER Plan Source Make Deliver Return SCOR Process “SCOR Configuration Toolkit” Level 1 Process Definitions SCOR Is Based on Five Core Management Processes Practitioners select appropriate process categories from the SCOR configuration toolkit to represent their supply-chain configuration(s). SCOR Process Plan Source Make Deliver ReturnSCOR Overview 9 SCOR Process Type Planning Execution Enable A process that aligns expected resources to meet expected demand requirements. Planning processes: • Balance aggregated demand and supply • Consider consistent planning horizon • (Generally) occur at regular, periodic intervals • Can contribute to supply-chain response time A process triggered by planned or actual demand that changes the state of material goods. Execution processes: • Generally involve -• Can contribute to the order fulfillment cycle time 1. Scheduling/sequencing 2. Transforming product, and/or 3. Moving product to the next process A process that prepares, maintains, or manages information orrelationships on which planning and execution processes rely Characteristics At Level 2, Each Process Can Be Further Described by Type Each Execution Process has three different possible capabilities of representing and responding to customer orders. Different supply chain strategy supports corresponding product or service types. These categories also affect PLAN and RETURN processes. Stocked Product (S1, M1, D1) • Inventory Driven (Plan) • Standard Material Orders • High Fill-rate, short turnaround Example: A retail air conditioner which is pulled off the shelf, and restocked based on SKU. Make-to-Order (S2, M2, D2) • Customer Order Driven • Configurable Materials • Longer turn-around times Example: A car is built with a particular combination of colors and features and ordered from a distributor. Engineer-to-Order (S3, M3, D3, D4) • Customer Requirements Driven • Sourcing New Materials • Longest long lead-times, low fill rates Example: An architect and engineer creates a new kitchen for you, with some custom-build and custom-sourced materials. 10 SCOR Overview Enable 1) Establish and Manage Rules 2) Assess Performance 3) Manage Data 4) Manage Inventory 5) Manage Capital Assets 6) Manage Trabsportation 7) Manage Supply Chain Configuration 8) Manage Regulatory Compliance 9) Manage Supply Chain RiskProcess 10) Specific Elements Align SC/Financials Supplier Agreements Suppliers SCOR Version 9.0 Level 2 P2 Plan Source P1 Plan Supply Chain S1 Source Stocked Product S2 Source Maketo-Order Product S3 Source Engineerto-Order Product M1 Make-to-Stock M2 Make-to-Order M3 Engineer-to-Order P3 Plan Make P4 Plan Deliver P5 Plan Return Plan Source Make Deliver Customers D1 Deliver Stocked Product D2 Deliver Made-to-Order Product D3 Deliver Engineeredto-Order Product D4 Deliver Retail Product Source Return SR1 Return Defective Product SR2 Return MRO Product SR3 Return Excess Product Deliver Return DR1 Return Defective Product DR2 Return MRO Product DR3 Return Excess Product Plan Source Make Deliver ReturnSCOR Overview SCOR Level 3 Presents Detailed Process Element Information for Each Level 2 Process Category Process flow Inputs and outputs Source of inputs Output destination SCOR Model Structure A set of standard notation is used throughout the Model. P depicts Plan elements, S depicts Source elements, M depicts Make elements, D depicts Deliver elements, and R depicts Return elements. SR = Source Return and DR = Deliver Return. An E preceding any of the others (e.g., EP) indicates that the process element is an Enable element associated with the Planning or Execution element (in this case, EP would be an Enable Plan element). Every Level 1 Process has Enable Processes associated with it. As indicated in the chart showing the Three Levels of Process Detail, the Model is hierarchical with three levels. Here is a sample of the detailed workflow for S1.2. S1.2 is a notation that indicates a third level process element. In this case, it is a Source (S = Level 1 Source) element that is concerned with sourcing stocked product (S1 = Level 2 Source Stocked Product) and is specific to receiving product (S1.2 = Level 3 Source Stocked Product Receive Product). Though the other S1 processes are shown here to Level 2, the Level 3 detail is only included for S1.2. S1 Source Stocked Product S1.2 Detail S1.5 Authorize Supplier Payment S1.4 Transfer Product Scheduled S1.1 Schedule Receipts Product Deliveries Product Receipt verification Defective Products MRO Products Excess Products Receipt verification Receipt verification Receipt verification Receipt verification To ED.8: Manage Import/Export Requirements in ED Enable Deliver To ES.8: Manage Import/Export Requirements in ES Enable Source To ES.6: Manage Incoming Product in ES Enable Source To ES.1: Manage Sourcing Business Rules in ES Enable To ES.2: Assess Supplier Performance in ES Enable Source S1.2 Receive Product From DR1.4: Transfer Defective Product in DR1 Deliver Return Defective From DR2.4: Transfer MRO Product in DR2 Deliver Return MRO Product From DR3.4: Transfer Excess Product in DR3 Deliver Return Excess Product Receipt Verification Receipt Verification Transferred S1.3 Verify Product Product Supplier 1112 SCOR Overview Examples SCOR Level 3 Standard Process Element Definition, Performance Process Table S1.1 Schedule Product Deliveries Scheduling and managing the execution of the individual deliveries of product against an existing contract or purchase order. The requirements for product releases are determined based on the detailed sourcing plan or other types of product pull signals. Performance Attributes Metric Supply Chain Reliability % Schedules Changed within Supplier’s Lead Time Supply Chain Responsiveness Average Release Cycle of Changes, Average Days per Engineering Change, Schedule Product Deliveries Cycle Time, Average Days per Schedule Change Supply Chain Agility None Identified Supply Chain Costs Cost to Schedule Product Deliveries, Quantity per shipment Supply Chain Asset Management None Identified Best Practices Description/Definition Bundle deliveries Bundle deliveries of different products into single shipment when possible Infrequent product delivery Minimize need for frequent shipments by accurately determining product needs Mechanical (Kanban) Pull Signals Are Used to Notify Suppliers of the Need to Deliver Product Electronic Kanban support Supplier managed inventories with scheduling interfaces to external supplier systems VMI agreements allow suppliers to manage (replenish) inventory Utilize EDI Transactions to Reduce Cycle Time and Costs EDI interface for 830, 850, 856 & 862 transactions Advanced Ship Notices Allow for Tight Synchronization between Source and Make Processes Blanket order support with scheduling interfaces to external supplier systems Consignment Agreements Are Used to Reduce Assets and Cycle Time While Increasing the Availability of Critical Items Consignment inventory managementSCOR Overview 13 D1.15 Invoice D1.14 Receive & Verify Product by Customer D1.13 Install Product D1.12 Ship Product D1.11 Load Product & Generate Shipping Docs D1.10 Pack Product Implementation of Supply-Chain Management Practices within the Company Occurs at Level 4 (and below) Receive Order Enter Order Check Credit Validate Price Process Element -D1.2 Access Credit Screen Contact Accounting Communicate Results to Customer Clear Order Task -D1.2.3 1. Contact customer account rep. 2. Look up customer history 3. If necessary, account rep. calls sales manager to authorize additional credit 4a. Account rep. clears credit issue 4b. Account rep. refuses credit request Level 4 Level 5 Level 6 Tasks Activities Below Level 3, each process element is described by classic hierarchical process decomposition From Source or Make D1.6 Route Shipments D1.8 Receive Product from Source or Make D1.9 Pick Product D1 Deliver Stocked Product Check Credit Availability D1.1 Process Inquiry & Quote D1.5 Build Loads D1.4 Reserve Inventory & Determine Delivery Date D1.3 Consolidate Orders D1.2 Receive, Enter & Validate Order D1.7 Select Carriers & Rate ShipmentsPerformance Attributes and Level 1 Strategic Metrics Level 1 Strategic Metrics are primary, high level measures that may cross multiple SCOR processes. Level 1 Metrics do not necessarily relate to a SCOR Level 1 process (PLAN, SOURCE, MAKE, DELIVER, RETURN). 14 SCOR Overview Level 1 Metrics Perfect Order Fulfillment (RL.1.1) Order Fulfillment Cycle Time (RS.1.1) Upside Supply Chain Flexibility (AG.1.1) Upside Supply Chain Adaptability (AG.1.2) Downside Supply Chain Adaptability (AG.1.3) Supply Chain Management Cost (CO.1.1) Cost of Goods Sold (CO.1.2) Cash-to-Cash Cycle Time (AM.1.1) Return on Supply Chain Fixed Assets (AM.1.2) Return on Working Capital (AM.1.2) Reliabilty Responsiveness Agility Cost Assets Customer-Facing Internal-Facing Performance Attributes The Metrics are used in conjunction with Performance Attributes. The Level 1 Strategic Metrics are the calculations by which an implementing organization can measure how successful they are in achieving their desired positioning within the competitive market space. Many metrics in the Model are hierarchical – just as the process elements are hierarchical. Level 1 Metrics are created from lower level calculations and are primary, high level measures that may cross multiple SCOR processes. Lower level calculations (Level 2 and 3 metrics) are generally associated with a narrower subset of processes. Level 2 and 3 metrics associated with Level 1 metrics are included in the 9.0 Metrics Hierarchy in the Metrics Chapter. Additional metrics that do not “roll up” to Level 1 are needed as diagnostics (used to diagnose variations in performance against plan) and are included in the Metrics Chapter with definitions and process locations listed. SCOR metrics are used in conjunction with Performance Attributes. The Performance Attributes are characteristics of the supply chain that permit it to be analyzed and evaluated against other supply chains with competing strategies. Just as you would describe a physical object like a piece of lumber using standard characteristics (e.g., height, width, depth), a supply chain requires standard characteristics to be described. Without these characteristics it is extremely difficult to compare an organization that chooses to be the lowcost provider against an organization that chooses to compete on reliability and performance. In SCOR 9.0 metrics coding is introduced. This will simplify identification, eliminate confusion for similar-sounding metrics and is particularly beneficial for benchmarking as it is based on the Performance Attributes of the metrics. The format of the metric ID or number is XX.y.z, where: XX = Performance Attribute. The possible values for XX are: • RL = Reliability, _ • RS = Responsiveness, _ • AG = Agility, _ • CO= Cost, and _ • AM = Asset Management. _ y = Level of the metric z = a unique number Examples: The metric ID for Perfect Order Fulfillment is RL.1.1. From this you can derive that Perfect Order Fulfillment is a strategic (Level 1) Reliability metric. An example of a level 2 (diagnostic metric) is RL.2.4: Perfect Condition. Level 3 diagnostic metrics are coded the same way; the unique number has been assigned based on the alphabetical listing. Future metric additions will simply receive an incremental number. An example of a level 3 diagnostic metric is CO.3.141 (Direct Material Cost). ✓ ✓ ✓✓✓ ✓✓ ✓✓✓SCOR Overview 15 Applying the SCOR Model The Concept of “Configurability” A supply-chain configuration is driven by: Plan levels of aggregation and information sources Source locations and products Make production sites and methods Deliver channels, inventory deployment and products Return locations and methods SCOR must accurately reflect how a supply-chain’s configuration impacts management processes and practices. Each intersection of two execution processes (Source-Make-Deliver) is a “link” in the supply chain Execution processes transform or transport materials and/or products Each process is a customer of the previous process and a supplier to the next Planning processes manage these customer-supplier links Planning processes thus “balance” the supply chain Every link “requires” an occurrence of a plan process category Each Basic Supply-Chain is a “Chain” of Source, Make, and Deliver Execution Processes Plan Source Make Deliver Plan Plan Plan Configurability Customer and Supplier Customer and Supplier Customer and Supplier Section THREE16 SCOR Overview Modeling with SCOR Drivers for modeling: Why model? Business opportunities: • Strategy Development • Merger, Acquisition or Divestiture (Companies or Supply Chains) • Process optimization and Re-engineering • Standardization, Streamlining and Management alignment • New business start-up (Company and Supply Chain start-ups) • Benchmarking • Process Outsourcing Technology services: • Software implementation (ERP, PLM, QC) • Workflow & Service Oriented Architecture SCOR recognizes different types of models. Each serves a different purpose: • Business Scope diagram: Set the scope for a project or organization • Geographic Map (a.k.a.Geo Map): Describes material flows in a geographic context; Highlights node* complexity or redundancy • Thread Diagram: Material flow diagram, focused on level 2 process connectivity; Describes high level process complexity or redundancy • Workflow or Process Models: Information, material and work flow diagram at level 3 (or beyond); Highlights information, people and system interaction issues * A node represents a logical or geographic entity in a supply chain. Examples: Warehouse, Factory, StoreSCOR Overview 17 Suppliers Flash, Inc. Retail, Inc. mp3 HQ Battery Ltd. Factory Warehouse Material and information flow Information flow Components mp3, Inc. Customers Service Providers Steps to Create a Business Scope Diagram 1. Create or open the business scope diagram template 2. Identify customers of your organization or project and enter these in the customers column in the scope diagram. 3. Identify and enter the key nodes within your organization or project. A node represents a logical or geographic entity in the supply chain. Consider: Warehouse, Factory, Store, HQ etc. 4. Identify and enter the suppliers of your organization or project 5. Optionally link the nodes to reflect material and/or information flows. Use a different color and/or stroke differentiate material and information flows. Example:18 SCOR Overview Steps to Create a Geographic Map: 1. Create geographic context (a.k.a. the map) 2. Draw and name your customers on the map a. Identify the level 2 processes b. List the level 2 processes in the customer on your map 3. Beginning with your customers, repeat this for every node on the map: a. Identify all supplying nodes (where does material come from) b. Draw and name these supplying nodes on the map c. Identify the level 2 processes d. list these in the node on your map e. Draw the material flows (arrows connecting the nodes) 4. Repeat until you have included all your suppliers/nodes Example: Battery Supplier D1, P1, P4 Drive Supplier D1, P1, P4 Retail, Inc S1, P2 MP3 Factory P3, S1, M1, D1 HQ P1, P2, D2, S2SCOR Overview 19 Steps to Create a SCOR Thread Diagram: 1. Create or open the thread diagram template 2. Repeat these steps for every relevant node on the geographic map: a. Determine the class of the node (Customer, Supplier, etc) and create a column (node) in the appropriate class b. Create process representations for each process listed in the column for this node (D2, M2, S1, etc) c. Create process representations for each process listed in the column for this node (D2, M2, S1, etc) d. Link the processes to the previous node’s processes (partially using the material flow information from the Geographic Map) 3. Repeat until all relevant nodes have been created 4. Optionally add information flows (using different color/stroke) P4 Battery SupplierSuppliers mp3 Incorporated Customers Drive Supplier mp3 Inc HQ mp3 Inc Factory mp3 Inc Warehouse Retail, Inc P4 D1 S2 S1 S1 D1 S1 D1 M1 P2 P3 P2 P1 Example:20 SCOR Overview Steps to Establish SCOR Process Models (Workflows) 1. Obtain generic descriptions (this is what people describe) 2. Map these generic descriptions to SCOR process IDs (normalize) 3. Create swimming lanes to reflect organizational boundaries 4. Create workflow with these SCOR processes 5. Add description to workflows to reflect inputs/outputs of the processes 6. Optionally add other relevant information Retail, Inc. (Amsterdam) mp3 HQ (Cupertino) mp3 Factory (Shenzhen) S1.1 Schedule Prod. Deliveries Customer P.O. C.O. C.O. Delivery Commit Inter-Company P.O. D2.2 Receive, Enter, Validate Order D1.2 Receive, Enter, Validate Order D1.3 Reserve Inv. Calculate Date D2.3 Reserve Inv. Calculate Date S2.1 Schedule Prod. Deliveries C.O. = Customer Order, Inv. = Inventory, P.O. = Purchase Order, Prod. = Product Example:SCOR Overview 21 Next steps to learn Attend Supply-Chain Council Trainings Scheduled Globally. VISIT www.supply-chain.org to find the latest training schedule.22 SCOR Overview NotesSCOR Overview 23 Notes24 SCOR Overview NotesSCOR Overview 25 NotesFor more information: In USA: Supply Chain Council 1400 Eye Street, Suite 1050 Washington DC, 20005 Tel: +1 202-822-4660 Fax: +1 202-822-5286 Email: info@supply-chain.org In Europe: Supply Chain Council 287 Avenue Louise 2nd Floor BE -1050 Brussels Tel: +32 2 627 0160 Fax: +32 2 645 2671 Email: Europe@supply-chain.org www.supply-chain.org