Supply Chain Optimization with High-

Level Value Stream Mapping

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ASCM Insights - Blog Posts

By: Peter L. King, CSCP; Dave Rurak, CSCP; and Stephen Liberatore

01.02.19

Too often, companies view their supply chains as a loose collection of manufacturing
sites, warehouses and distribution centers to be managed as separate entities.
Professionals fail to realize the full extent of the interconnectedness and
interdependence, nor the benefits of a system-wide view. While this behavior usually is
intended to enable growth in the short term, it hinders the identification of opportunities
for broad system optimization and can negatively affect profitability in the long term.

Consequently, it is valuable to periodically take a step back and look at the entire supply
chain to confirm that it is an integrated system that really makes sense. Questions to be
answered include the following:

 Are we manufacturing products in the best locations, aligned with emerging

global markets?
 Are we taking advantage of economies of scale or economies of flexibility in
manufacturing?
 Is our network flexible enough to take advantage of frequent market shifts?
 Would a different network design cut lead times to our customers and make us
more responsive? Would those shorter lead times reduce inventory requirements
— both pipeline inventory and inventory at the receiving end?
 Do we have a global inventory strategy, and does it cause required inventories to
be at the most appropriate locations?
 Does our strategy employ mathematical analysis of replenishment frequencies
and lead times to set cycle stock, as well as analysis of all variabilities to set
safety stock?
  Have alternate replenishment strategies been evaluated, such as occasional
expedited shipping, to reduce risk and the need for high safety stock levels?
 Are we taking advantage of postponement and finish-to-order strategies where
possible?

Value stream mapping is a proven practice at the manufacturing level and can render an
equal or greater value at the supply chain level by providing a practical, graphical and
data-driven picture to frame analysis of these factors.

This approach offers three key advantages: First, it provides a pictorial view of the end-
to-end supply chain with key flow data and control signals, offering insights that are
hidden by traditional supply chain views. Second, multifunctional discussions that
naturally occur while building the map create a broad, detailed understanding of supply
chain performance. And third, opportunities are framed in a system-wide context, which
encourages comprehensive optimization.

To deliver the full improvement potential, the value stream map must follow a well-
developed plan, with appropriate preparation and follow up.

THE METHODOLOGY IN ACTION

W.L. Gore & Associates is a global materials science company dedicated to

transforming industries, improving lives and solving complex technical challenges in
the most demanding environments — outer space, the world’s highest peaks and the
inner workings of the human body. Gore’s diverse products, such as GORE-TEX fabric,
use advanced materials to generate meaningful impact for end users and consumers.
Gore employs 9,500 associates and has manufacturing facilities in the United States,
Germany, United Kingdom, Japan and China, and sales offices around the world.

While recent supply chain initiatives had led to some degree of supply chain
optimization improvement, Gore supply chain leaders knew that additional benefits
could be achieved with a more structured approach. They chose to apply high-level
value stream mapping to the entire supply chain. So far, the process has been piloted on
four supply chains representing the variety of Gore’s businesses, leading to increasing
value as the process continues to advance.

One of the supply chains involved in the pilot manufactures and delivers assembled
products. The supply chain starts with machined components purchased from suppliers
in Europe and North America. Subassemblies are made from these components in plants
in the United States and Europe. Various subassemblies then are shipped to and from
plants in the United States, Europe and China for final assembly. Finally, they are
distributed to the world-wide customer base. Figure 1 shows a simplified portion of the
map.
One insight gained from this map was that flow could be significantly improved. For
instance, final assemblies made on any one of the three continents could be shipped to
any other continent, creating several crisscrossing paths. This had been known prior to
the mapping, but neither the full extent nor the volumes involved were fully
appreciated. As a result, the team decided to make final assemblies in each customer’s
specific region, which saved considerable transportation costs and shortened delivery
lead times.

The map also revealed that machined components were purchased from several
suppliers in the United States and several more in Europe. Some components needed in
the United States were purchased in Europe and then shipped to the U.S. plant. The
reverse situation applied as well. The team therefore chose to purchase all components
from a single supplier and have them shipped directly to the point of use, offering both
increased volume discounts and reduced shipping costs. A related improvement was to
have component suppliers prepare subassemblies from their components, further
simplifying the supply chain.

Continued mapping of other Gore supply chains revealed the following initiatives:

 Develop a global inventory strategy for each supply chain (versus

locally developed independent targets) to put inventories in the
most appropriate locations and significantly reduce or eliminate
duplicate or redundant inventory.
 Share quality data between a plant producing a major
intermediate and the plant using it to make the final product to
avoid duplicate testing and shorten lead times.
 Consolidate production equipment from two operations in Asia to
a single plant to cut lead time by three weeks and free up floor
space for future expansions.
The combined financial benefit from the first four initiatives will approach $5 million
annually when fully realized. At Gore, the creation and analysis of the map and
development of improvement possibilities occurs in a multifunctional, team-based
workshop spanning several days. The scope indicates who should participate, but it
generally includes all functions influencing supply chain performance — business
leadership, planning and scheduling, logistics, manufacturing operations, procurement,
quality, and sometimes human resources and maintenance.

The first pilots were scheduled as five-day events. With lessons learned and more
thorough preparation, this has been shortened to four days. As Figure 2 shows,
preparation is critical. There must be a clear scope and well-understood need for
improving the particular supply chain.

A preliminary supply chain map is developed prior to the workshop, with most of the
focus on material flow, how much detail is needed to understand performance and
detractors, and how to best arrange the important nodes on the map to clarify flow.
Although very important for the workshop, less time is spent on information flow.

The preliminary map is created in an electronic application, then printed as a wall-sized

copy to use during the workshop. The electronic map is updated at the end of each day,
and a new copy is printed prior to the start of the next session.

Gore team members discovered that it is imperative to identify the data that will be
needed to understand supply chain performance. Value stream maps tend to have
standard data box layouts, but they may need to be modified to focus on data that is
relevant to the scope of the supply chain being studied. Developing a data collection
plan with a core group of supply chain associates, with planned periodic check-ins,
helps the team stay on track and provide the best information available. Extreme data
accuracy is not required; rather, the goal is data that is directionally correct.

Gore associates also understand the importance of agreeing on objective criteria for
ranking both benefits and feasibility of the opportunities found prior to the workshop
itself. This makes it much more likely that there will be a fair comparison of all
opportunities and that personal bias for pet projects won’t cause poor decisions.
Depending on the kind of opportunities identified, the team sometimes needs additional
training to better understand how to resolve difficulties and determine the best
approaches.

Post-workshop activities are critical to achieving the benefits discovered, so they are
addressed during the workshop. In addition to the specific project charters, follow-up
review meetings are scheduled to ensure that all projects are on track and to provide
help if any are not. Ongoing reviews with business leaders ensure that resources aren’t
being diverted to other tasks and help overcome any newfound barriers.

CONTINUING AND SUSTAINING

Gore leaders view this optimization process as a continuous cycle. They believe that
periodically reviewing progress on current initiatives, updating the map to include
successes and seeking new opportunities based on evolving business priorities are the
best ways to sustain and grow supply chain performance. This continuous cycle also
validates value for the optimization process, maintains momentum for ongoing
initiatives and enhances further learning about the behavior and nuances of each supply
chain.

SIDEBAR: CRITICAL SUCCESS FACTORS

The following can make or break a value stream mapping workshop:

o Leaders must provide clear direction on business priorities. If SCOR

metrics have been developed, they can provide excellent guidance.
o Engage key participants, including business leaders. These professionals
provide significant benefits to the full extent they participate; their
participation at kickoff and final priority selection should be a minimum
requirement.
o Select the workshop week far enough in advance that participants who
will be travelling have time to make reasonable arrangements.
o Create a preliminary — 70-80 percent complete — supply chain map.
This enables people to get to work quickly and shortens the setup time
required.
o Insist upon an open, respectful, engaging environment where everyone
feels they are being heard.
o Be realistic about resources. Prioritize, focus on finishing the top few,
then move on to the next cycle.
o Commit to moving forward with chartered opportunities and ensuring the
necessary resources are available.
o Instill a rigorous follow-up process.
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The SCOR Model Explained

 SCOR DS
 What is SCOR
 SCOR Processes
 Value of SCOR
 Free Course
 Case Study
To move the needle on supply chain performance, organizations require savvy
operators, supervisors and leaders who understand global standards. The Supply Chain
Operations Reference (SCOR) model is the only comprehensive, universally accepted
and open-access supply chain standard. SCOR gives organizations the ability to assess
and improve their company’s supply chain, leading directly to improved business
performance.

Announcing the new SCOR Digital Standard (SCOR DS)

The new SCOR DS features the biggest update to SCOR since inception and
modernizes the framework to include sustainability standards and the digital body of
knowledge. This version shifts thinking from a linear supply chain model to a more
synchronous network. Developed by a diverse group of subject matter experts, SCOR
DS also updates processes, metrics, skills and practices to ensure coverage across
industries.

Explore the Model

The infinity loop diagram illustrates that supply chains are an ever-moving series of
activities, with no artificial starts or stops from process to process

What is the SCOR model?

The SCOR model describes the business activities associated with all phases involved in
satisfying customer demand. It has been used by thousands of public and private
organizations around the world to assess and improve their supply chains, directly
leading to improved operational performance. The updated SCOR model focuses on
seven primary management processes: Orchestrate, Plan, Order, Source,
Transform, Fulfill and Return.
Orchestrate

Orchestrate describes the activities associated with the integration and enablement of
supply chain strategies. This includes business rules and enterprise business planning;
human resources; network design and technology; data analytics; contracts and
agreements; regulations and compliance; risk mitigation; environment, social, and
governance initiatives; circular supply chain activities; performance management; and
more.

Plan

Plan describes the activities associated with developing road maps to operate the supply
chain. Planning is executed for the Order, Source, Transform, Fulfill and Return
processes, including determining requirements; gathering information about available
resources; balancing requirements and resources to determine planned capabilities and
gaps in demand or resources; and identifying actions to correct these gaps.

Order

Order describes the activities associated with the customer purchase of products and
services, including attributes such as locations, payment methods, pricing, fulfillment
status and any other order data.

Source

Source describes the activities associated with procuring, ordering, scheduling the
ordering, delivery, receipt, and transfer of products and services.

Transform

Transform describes the activities associated with the scheduling and creation of
products, including production; assembly and disassembly; maintenance, repair and
overhaul; and more.

Fulfill

Fulfill describes the activities associated with executing customer orders or services,
including scheduling order delivery, picking, packing, shipping, installing,
commissioning and invoicing.

Return

Return describes the activities associated with the reverse flow of goods and services,
as well as any service components from a customer through the network in order to
diagnose condition, evaluate entitlement, disposition back into Transform or other
circular activities.

By using common definitions among all facets of supply chain, SCOR creates a
standard by which industry professionals can gauge the maturity and effectiveness of a
network and understand how it supports business goals. Take a deeper dive into the
model:

Download the SCOR Introduction

Download the SCOR Quick Reference Guide

The value of SCOR

Results are consistent. Implementing SCOR maximizes process efficiency and overall
supply chain performance. Typical results include:

 Operating income improvement

 Two-to-six times return on investment in the first year
 Improvement in return on assets for fixed-asset technology investments
 30% faster digital transformation project implementations
 Reduction in information technology operating expenses through improved use of
standard system functions
 Ongoing profit improvement of 0.5%-1% per year

Learn how to apply SCOR to your supply chain operations.

Contact us today
How do organizations use SCOR?

The adoption of SCOR as the end-to-end process blueprint dramatically increases the
use of standard system functionality and enables more targeted investments in digital
capabilities. By combining elements of business process engineering, leading practices,
benchmarking, people skills and a variety of metrics into a succinct framework, SCOR
makes it possible to pinpoint core process areas that require optimization to further
organizational goals.
FREE COURSE: Introduction to Supply Chain Management Using SCOR

Interested in learning more about how SCOR fits into the supply chain? This free
course, open to all, uses the SCOR DS framework to illustrate how all the pieces of a
successful supply chain fit together, how it operates, and ways it can be improved.

You'll learn:

 The purpose and structure of the Supply Chain Operations Reference Digital Standard
(SCOR DS) framework.
 The importance of SCOR performance metrics.
 How to identify and organize the seven processes of the SCOR model.
 How SCOR practices can advance organizations and their supply chains.
 About the five stages of a SCOR-DS improvement program.

Start Now
SCOR at work

Pharmaceutical company F. Hoffmann La-Roche Ltd. pledged to deliver twice as many

medical advances at half the cost to society. The overarching goal was to better balance
reliability, responsiveness, agility, cost and sustainability — key SCOR metrics
categories — across operations, which they were able to achieve through SCOR training
and transformation.

Read Case Study