SCORModelconf IITA

SCOR Modeling in Supply Chain performance analysis
Kampan Mukherjee
Professor (Dept of Management Studies) & Dean (Academic) Indian School of Mines, Dhanbad
Int Conf on Management and Information Security at IIIT Allahabad, 21 - 24 January, 2010
Supply Chain Performance indicators some basic issues

Objective customer satisfaction at low costs ensuring longterm competitive capability To refine a competitive business strategy Indicators should be easy to define, simple to apply and easy to comprehend, so that managers can react quickly and suitably Performance both for reflecting outcome of operating procedures externally and financial potentials as internal performance Focus on defined corporate objectives and strategies
Business Process Methodology

1st generation: BPR, Six Sigma etc, A business process treated as a unique one. Sub-processes and the measurement metrics for assessing the performance vary from process to process or business to business. 2nd generation: More efficient analysis (by providing a common vocabulary) More effective improvement plan by using a set of standard measurement units. SCOR model: A second Generation Business Process Methodology, a process focused and framework based approach.
SCOR methodology concepts

Business Process Reengineering analysis of existing
process and redesign improvement). for improvement (or process
Benchmarking measurement, comparison with best

practices and improvement.
Process Reference Model use of a general and

standardized framework for process analysis.
Phases of SCOR Project Roadmap

SCOR Project Roadmap comprises five phases and SCOR model implementation may be treated as a project. 0. 1. 2. 3. 4. 5. Review Corporate Strategy Define Supply Chain Process Determine the performance of the existing supply chain Establish your supply chain Strategy, Goals and Priorities Redesign the supply chain Enable the redesign and implement
Review Corporate Strategy

Review of companys supply chain strategy to consider whether the supply chain demands improvement. Set up and training of a project team for SCOR implementation. This initial phase, in fact, stands outside SCOR project.
Define Supply Chain Process

Objectives
to decompose the supply chain process using some common vocabulary to depict it as a standardized graphical model.
Two aspects of process representation.

Depiction/ definition of the supply chain as a multi level combination of 5 standard processes Plan, Source, Make, Deliver and Return. Representation of the relationships among processes as Geography Map (As- Is Map in Phase I) and Thread Diagram.
SCOR model
Comprises four levels. Level 4 is beyond the scope of model.
Basic operational processes

Source, Make, Deliver and Return. In addition SCC defines a Plan process (in essence a management process).
Level 1
Operational processes are the overall processes of the supply chain. Plan process includes the scope and content of the overall supply chain.
Level 2
Operational processes further classified as variations or categories. Three variations for Source, Make and Delivery processes, namely Stocked product, Make- to- order and Engineer- to- order products. Two types of Returns Source Returns and Delivery Returns.
Defective products, MRO (Maintenance, Repair and Overhaul) products and Excess products.
Level 1 and Level 2 normally depicted with corresponding numbering: (established by SCC)
Plan:
P1 Plan Supply Chain; P2 Plan Source; P3 Plan Make; P4 Plan Deliver; P5 Plan Return S3 Source ETO Products.
Source: S1 Source Stocked Products; S2 Source MTO products;

Make:
M1 Make to stock; M2 Make- to- order; M3 Engineer- to- order D3 Deliver ETO Products
Deliver: D1 Deliver Stocked Products; D2 Deliver MTO products; Return:

Source Return: SR1 Return Defective Products; SR2 Return MRO Products; SR3 Return Excess Products. Delivery Return: DR1 Return Defective Products; DR2 Return MRO Products; DR3 Return Excess Products.
In case of any intermediary organization like customs or outside shipper, it would be represented by a Source or Delivery process. However, there would not be any Make process in this case.
Level 3
Level for further decomposition. Source Stocked Product (S1) is broken to sub-processes like Schedule Product deliveries (S1.1), Receive Product (S1.2), Verify product (S1.3), Transfer Product (S1.4) and Authorize Supplier Payment (S1.5). These five sub-processes are similar to the generic activities Plan, Source, Make, Deliver and Return under the Sourcing of Stocked Product, a process of Level 2.
As Is Geography Map
A spatial representation with prime focus on geographic location of supply chain partners and their linkages. (Figure 1) Initial requirements
To rethink on the scope issues of the supply chain under consideration. How much of your suppliers supply chain do you want to include in your analysis? Do you distribute through wholesalers and do you want to include them in analysis? Is this analysis meant for one specific product line or for all the products produced by your company covering all the customers?
For the purpose of overall improvement and to avoid complexity in analysis, the level 3 sub processes are rarely used in As Is Geography Map . For more detailed analysis or detailed description of elemental processes the Level 3 sub-processes may Int Conf on Management and be included in later stage.
Information Security at IIIT Allahabad, 21 - 24 January, 2010
Thread Diagram
Geography Map more location-focused diagram.
Thread Diagram focuses on processes, their multiple linkages and the organizations managing those processes. (Figure 2)
The standardized letters and numbers (as established by SCC) are used inside arrows, each of which is representing a specific process and they are subsequently linked together.
Bold vertical lines separate companies. Dashed vertical lines represent divisions within the same organization
Determine the performance of the existing supply chain
SCOR methodology defines five generic performance attributes, used in four levels of measurement of the entire supply chain process. Three performance attributes are Customer Facing Attributes (externally affected) and two attributes are Internal Facing Attributes (internally affected) as shown in figure 3. Levels of measurement - m0, m1, m2 and m3. m0 measures the performance of the organization as a whole. m1 measures the performance of the whole supply chain process SCOR normally refers to m0 measures as Internal Facing Measures and to m1 as Customer Facing Measurers. m2 measures the performance of each of the Level 2 processes, m3 measures the performance of specific sub-processes within a Level 2 process as shown in figure 4.
Prioritization of one set of measures over other as per the strategic bias of a company. Measures at lower levels are aligned with that at Level 1 (i.e. m1). At m2 level, the performance attributes will be more related to the specific process under consideration (in Level 2 of SCOR framework). For example, for S1 process i.e. Source Stocked Products process, the following metrics may be considered as the performance attributes.
Reliability: Percent of orders received and transferred Responsiveness: Total sourcing cycle time Flexibility: Time and cost related to expediting the sourcing processes i.e. procurement, delivery, receiving and transfer. Cost: Product acquisition costs. Assets: Inventory days of supply.
Now Benchmarking - assess the ranking of the supply chain relative to bestin-class in the industry. Performance Measurement Group (working closely with SCC) may supply specific benchmark data on payment and supply of existing performance data of the company. Normally SCOR refers to a Supply Chain SCORcard.
Prepared on the basis of comparative analysis of performance of the company under consideration. Depicts all performance attributes and relevant metrics and the corresponding actual performance and industry benchmarks.
The comparison leads to gap analysis for improvement of supply chain performance in its redesign to be carried out in subsequent phase.
Establish your supply chain strategy, Goals and Priorities To establish road map for getting competitive advantage and planning for implementation of the supply chain strategy in line with the corporate strategy of the company. The performance attributes are assigned actual values for As Is and expected or derived values for To Be supply chain. SCOR convention
Assign one black ball to the box corresponding to a performance attribute that dominate (in case of As Is process) or expected to dominate (in To Be process). Bold circles are meant for the above average performance. Narrow circle for parity (at least on per with the competition).
Assignment in To- Be boxes reflects the constraints or reality on the one hand and competitive priority of the company on the other. Both priority of a performance and gap between As Is and To Be performance are equally important in framing the guidelines for improvement of the supply chain. The gap analysis also throws some light on the possible benefit and cost associated with eliminating the gap between As Is and To Be supply chain.
Redesign the supply chain

To redesign the To- Be supply chain on the basis of targets for each performance attributes and prioritized gaps to be eliminated. A To- Be Geographical map and Thread Diagram is created introducing the changes in process and activities for better performance. The designers start with a tentative redesign and create the corresponding map and thread diagram. The team looks for opportunities, explores possibilities and studies the problem in depth. The To- Be thread diagram may be changed several times for getting the ultimate redesign of the supply chain. Once the first draft of the Level II Thread Diagram is complete team moves to Level III. Sometimes swimlane type diagram is used to incorporate functional responsibilities in analyzing the activities at Level III as shown in figure 5.
The SCOR project team essentially refers to the list of best practices (available for external service providers like PMG) corresponding to a process element (i.e. a sub process created in level III). The team is to decide what changes they might make, if they were to adopt one or more of the best practices. Best practice suggestions may be categorized under three types
new management practices new employee practices and use of software applications or automation for supporting activities or employees.
By management process we mean the generic plan process. Plan processes are activities that are assigned to managers who must oversee operational processes. These processes can be improved by best management practices
P2 i.e. Plan Source process may be improved utilizing the following information collected from SCOR card.
Reliability: Supplier delivery as on- time delivery performance. Responsiveness: Cumulative source cycle time. Flexibility: Source flexibility. Cost & Assets: None identified.
Best practices:
1. EDI links integrating supplier resource information (inventory, capacity availability etc.) with own resources by inter- company resource planning with EDI/ Internet communication. 2. Levels of flexibility within stated lead times are defined as per joint service agreements. 3. All key supply chain partners have full visibility of the demand/ supply plan.
Redesign plan
may suggest tools and activities, employees need to utilize for realization of the improvement. may require job changes and new job descriptions to implement the changes.
A wide variety of software modules and applications are now available for process automation. Some modules do not exactly match with the sub process descriptions used in SCOR. After deciding changes in existing supply chain test the new design by a simulation tool. Essence of simulation
Model the To-Be process Identify assumptions about the cost and efficiency of new activities Run the simulation through the system to see if it performs as anticipated. Helps designer to identify bottlenecks and improve the To-Be supply chain.
Enable the redesign and implement

This phase is in Level 4. It is beyond the scope of SCOR. Different companies operate under different constraints and business environments. Finding common vocabulary in this phase is quite difficult. All the processes involved in enabling changes in supply chain system are grouped under the term Enable. This primarily include software development and human resource efforts in this category.

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SCOR Modeling in Supply Chain performance analysis

Supply Chain Performance indicators some basic issues

Business Process Methodology

SCOR methodology concepts

Benchmarking measurement, comparison with best

Process Reference Model use of a general and

Phases of SCOR Project Roadmap

Review Corporate Strategy

Define Supply Chain Process

Two aspects of process representation.

Basic operational processes

Source: S1 Source Stocked Products; S2 Source MTO products;

Deliver: D1 Deliver Stocked Products; D2 Deliver MTO products; Return:

Determine the performance of the existing supply chain

Redesign the supply chain

Enable the redesign and implement

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