Supply Chain Performance

and SCOR

Kulwant, Ma, Michael and Ramandeep

Contents
What is Supply Chain ?
Measurement of supply chain performance
Importance of SCP measurement
Tools of SCP measurement
Shortcoming of SCP Measurement
Supply Chain Performance Management
SCOR model
Best Practical Use of SCOR
Implementation of SCOR
Industry Winners
Examples of use of SCOR
Incorporation with Other Theories
Conclusion
 Supply Chain
A supply chain is a
system of organizations,
people, technology,
activities, information
and resources involved
in moving a product or
service from supplier to
customer"
SCP Measurements

Supply Chain measurements such as Inventory Turns,

Cycle Time, and Fill Rate are used to track Supply
Chain performance.
These metrics help to understand how the company is
operating over a given period of time in areas of
Procurement, Production, Distribution, Warehousing,
Inventory, Transportation, Customer Service
 Importance of SCP Measurement
All companies try to lower
the supply chain costs
Supply chains of all
companies must be
streamlined and technology-
enabled.
Organizations that want to
streamline supply chains
must first understand what is
working well---measuring
supply chain performance
SCP Measurement Tools

Traditional supply chain performance measurement:

Scorecards
Dashboards
Reports
Shortcoming of SCP Measurement

Shortcoming of traditional approaches of measuring

supply chain performance:
They are not linked to strategy

They have a silo approach

They have a flat hierarchy

Supply Chain Performance Management

SCPM: management for effective and efficient

performance in areas of Procurement, Production,
Distribution, Warehousing, Inventory, Transportation,
Customer Service
SCPM should include three capabilities:
an analytics framework

a process orientation

linkages
Analytics framework

Overall supply chain objectives

The top-line metrics that affect the objective
The description, targets and acceptable range for each
metric
A list of reports where the metric can be found
Analytics framework

The framework should allow development of a

hierarchy, such that for each Level 1 metric, which is
associated with your supply chain objective, you
should be able to define associated Level 2 metrics,
and for each Level 2 metric, lower-level metrics and
so on
The framework should also allow to import popular
hierarchies, such as the SCOR framework from
Supply Chain Council
Process Orientation

The ideal SCPM system should support a process

orientation
SCPM should address a process orientation by enabling
a user to view all key metrics, current performance and
recent trends for a process
Linkages

An ideal SCPM system should use the analytics

framework to define linkages between two metrics that
are related to the business process but associated with
different departments
The system should be able to show linkages of any
metric with lower-level metrics within the same
department
 Supply Chain Operations Reference
Model (SCOR)
Process reference models integrate the well-known concepts of
business process reengineering, benchmarking, and process
measurement into a cross-functional framework
Business Process Best Practices Process Reference
Benchmarking
Reengineering Analysis Model

Capture the as-is state

Capture
Capturethetheas-
as- of a process and derive
is state of a
is state of a the desired to-be
process
processand
andderive
derive future state
Quantify the operational
Quantify
Quantifythe
the
the desired to-
the desired to- operational performance of similar
be operational
befuture
futurestate
state performance companies and establish
performanceofof
similar internal targets based on
similarcompanies
companies Characterize
and establish
and establish Characterizethe the best-in-class results
internal management
management Characterize the
internaltargets
targets practices
based on best-in-
based on best-in- practices and
and management
class software solutions
software solutions practices and
classresults
results that
thatresult
resultinin software solutions
best-in-class
best-in-class that result in best-
performance
performance in-class
Best Practical Use of SCOR

In practical use
SCOR model integrate three basic processes of
Business:
reengineering, benchmarking and process measurement
into a cross-functional framework
It is helpful to determine the week links in the business
processes.
It is helpful to implement improvements in the weak
areas of performance
Improve ultimately performance of Business
Importance of SCOR in business

In todays business world , each company want to be the

leader in the industry
The company can be a leader by
making reduction in costs
Increasing the revenue
Making improvement in their management

practice
SCOR helps to improve performance by comparing with
the best in the industry
Where can SCOR model implemented?

These are the following areas , where it can be

implemented
establishing a new supply chain
improving planning processes
improving distribution processes
improving curriculum
refining research project
in different Govt. projects
Potential Improvements of SCOR

Functions of Business improvement with SCOR

Inventory 70%
Cost of Raw material 25%
Distribution cost 35%
Total resource deployed 50%
Space for manufacturing 50%
Order cycle time 60%

New Product Development cycle 60%

Paperwork and Documentation 80%
Industry Winners
Examples of SCOR Adoptions

Consumer Foods

Project Time (Start to Finish) : 3 months

Investment : US $50,000
First Year Return: US $4,300,000
Electronics

Project Time (Start to Finish): US 6 months

Investment: US $3-5 Million
Projected Return on Investment: US $ 230 Million
Software and Planning

SAP bases APO key performance indicators (KPIs) on SCOR Model

Aerospace and Defense
SCOR Benchmarking and use of SCOR metrics to specify performance criteria and
provide basis for contracts / purchase orders
SCOR In New York Hospital

New York Hospital was able to define and measure its

supply chain
Determine the weak links in its processes
And identify necessary improvements
39.8 percent for overall labor costs versus 36.6 percent
parity
Patient to nurse ratios is 7.2 versus 8
 SCOR at Sasol
Sasol is an integrated
energy and chemicals
Company
based on South Africa
Jolanda Pretorius, business
consultant firm applied
SCOR
to optimize Supply chain
Result is increase in IRR of
139% over the project life
period
Incorporation with Other Theories
Conclusion

In any manufacturing company Supply Chain covers

about 70-75 % of costs
Measurement of Supply Chain is necessary
Focus on supply chain performance can lead to rise the
company as a winner in the industry
SCOR model , is a very important tool to measure the
performance of supply chain.
Any Question???
References
http://emmerson.csc.wilkes.edu:2053/ehost/detail?vid=1&hid=12&sid=f97245a7-bb72-4
0f8940fdc6a80e50116%40sessionmgr4&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bsh&AN=2
545576
http://www.supply-chain.org/papers/list?body=companies+and+SCOR
http://www.supply-chain.org/papers/list?body=examples+of+SCOR+use
http://en.wikipedia.org/wiki/Supply_chain
http://searchsap.techtarget.com/news/column/0,294698,sid21_gci1345977,00.html