How SCOR Model Enhance

Global Sourcing Effectiveness

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 What are the challenges in global sourcing?

» Supplier selection
» Supplier performance monitoring
» MOQ
» Complex Logistics

» And many more …

2
 What is Supply Chain Operation Reference
(SCOR) Model?
» The Supply-Chain Operations Reference-model (SCOR) is a process reference
model that has been developed and endorsed by the Supply-Chain Council as the
cross-industry standard diagnostic tool for supply-chain management. SCOR
enables users to address, improve and communicate supply-chain management
practices within and between all interested parties.
» SCOR has been adopted by major industries over the past 10 years and the latest
version of SCOR (v. 9.0).

3
 What are the benefits of SCOR model?

» Provides a structured approach and practical methodology for supply

chain process improvements.
» Provides a common language to share operational views, and
communicate changes or definitions of processes.
» Provide a set of common, easy to understand terminology, process
building blocks with definitions and performance metrics.
» SCOR offers companies insights and suggestions on best practices to
build a project portfolio for improvement.

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Three Major Components of SCOR

Performance Metrics

Process Building Blocks

Best Practices

5
Process Building Block

6
Level 1 Process Type

Customer’s
Customer

7
All Process Type

8
Process Classification

Plan

Source

Make
Management
Deliver
Process
Return

Manufacturing Make-to-Stock
Process
Environment Make-to-Order

Engineer-to-Order

Process Type Planning

Execution

Enable
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What Can You Tell From The Process Map?

S1

SR1

S2 M2 D2
SR3
S2
M1 D1 S1 D1 S1
DR1 SR1
DR1 SR1 DR1 SR1

DR3 SR3 DR3 SR3

S1

S1 M1 D1

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What Can You Tell From The Process Map?

S1

SR1

S2 M2 D2
SR3
S2
M1 D1 S1 D1 S1
DR1 SR1
DR1 SR1 DR1 SR1

DR3 SR3 DR3 SR3

S1

S1 M1 D1

Raw Material Your Your Regional Customer’s

Supplier’s Production Warehouses Warehouses
Production Site
Site

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What Can You Tell From The Process Map?

What is the
implication of S1
S2+S1->M1
SR1

S2 M2 D2
SR3
S2
M1 D1 S1 D1 S1
DR1 SR1
DR1 SR1 DR1 SR1

DR3 SR3 DR3 SR3

S1

S1 M1 D1

Raw Material Your Your Regional Customer’s

Supplier’s Production Warehouses Warehouses
Production Site
Site

12
What Can You Tell From The Process Map?

What is the
implication of S1
SR3->DR1
SR1

S2 M2 D2
SR3
S2
M1 D1 S1 D1 S1
DR1 SR1
DR1 SR1 DR1 SR1

DR3 SR3 DR3 SR3

S1

S1 M1 D1

Raw Material Your Your Regional Customer’s

Supplier’s Production Warehouses Warehouses
Production Site
Site

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Business Process Reengineering

• Change the performance of a business process by capturing the “As-Is”

state of a process, deriving the desired “To-Be” future state and closing the
gap between the two states.

• The operational states can be documented by SCOR process building

blocks and measured by SCOR metrics.

• The gap can be closed through applying SCOR best practices.

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 “As-Is” P1
P1

P4
P2 P3 P4

S1 M3 D1
S1 M3 D2
NORTH & SOUTH

M1 S1 M3 D1 AMERICAN
D1 S1 D1 CUSTOMERS
S1 M3 D2
D1 CUSTOMERS
D2 S2 M2 D2
D2

INDIAN &
D1 S1 M1 D1 BANGLADESHI
ROW
CUSTOMERS
CUSTOMERS
D2 S2 M2 D2

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 “To-Be” P1

P4
P2 P3 P4

D1

NORTH & SOUTH

M1 D1 D1 AMERICAN
D1 S1 CUSTOMERS

D1
D2 CUSTOMERS
D2 S2 M2

M1 INDIAN & ROW

D1 S1 D1 BANGLADESHI CUSTOMERS
CUSTOMERS
D2 S2 M2 D2
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Performance Metrics

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Measuring Performance

• Measuring how well the supply chain performs

is as essential as understanding how it
operates
» Measurements must link to business objectives
» Measurements must be repeatable
» Measurements must provide insights into how to
manage the supply chain more effectively
» Measurements must be appropriate for the
process activity they are measuring
- Same level

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Supply-chain Performance Risks
(Performance Metrics of SCOR)
Attribute Strategic metric
Reliability RL.1.1 Perfect Order Fulfillment
Responsiveness RS.1.1 Order Fulfillment Cycle Time
Customer

Agility AG.1.1 Upside Supply Chain Flexibility

AG.1.2 Supply Chain Upside Adaptability
AG.1.3 Supply Chain Downside Adaptability
Cost CO.1.1 Supply Chain Management Cost
CO.1.2 Cost of Goods Sold
Internal

Assets AM.1.1 Cash-to-Cash Cycle Time

AM.1.2 Return on Supply Chain Fixed Assets
AM.1.3 Return on Working Capital

Copyright © Supply Chain Council, 2008. All rights reserved 19

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1
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Measuring Process Performance with SCOR
Performance Metrics
Cycle Time
Perfect Order Perfect Order
Fulfillment S1
Fulfillment

SR1

S2 M2 D2
SR3
S2
M1 D1 S1 D1 S1
DR1 SR1
DR1 SR1 DR1 SR1

DR3 SR3 DR3 SR3

S1

S1 M1 D1

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Benchmarking - Parity, Advantage, Superior

Attribute Metric (level 1) P A S

Reliability Perfect Order Fulfillment

Responsiveness Order Fulfillment Cycle Time

Agility Supply Chain Flexibility

Cost Supply Chain Mgmt Cost

Assets Cash-to-Cash Cycle Time

Parity Median of
Compare to:
Statistical Sample
» Lines of business in your company
Advantage Midpoint of Parity
» Businesses in your industry and Superior
» Businesses across industries
Superior 90th percentile of
population

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Supply-Chain Strategy Matrix
Supply Supply Supply
Supply-Chain
Strategy Matrix
Chain Chain Chain
A B C
» Each unique
Reliability
P P S combination of ratings
defines Your Supply
Chain Strategy for the
External

Responsiveness
A P A channel
» Think of the rating as a
Agility
P P P desired state, NOT
where you want to
improve the most
Cost
S A P
Internal

Assets
P S P

22 22
Benchmarking

• Quantify the operational performance of similar companies and establish

internal targets based on the “best-in-class” results.

• A question that managers should always ask themselves is “How is my

company’s performance compared with other similar companies?”

• It may be easy to compare on financial performance, but how about

responsiveness to customer need, flexibility in dealing with changes and
reliability of the supply chain?

• SCOR defines a set of metrics to measure operational performance which

enable direct comparison of supply chains similar to those of financial
performance.

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 Supply-chain Performance Scorecard

Strategic Metrics Actual Parity Advantage Superior Parity Require-

(50th) (90th) gap ment gap

Reliability 60 % 74 % 81 % 88 % 14 % 14 % [P]
[Perfect order fulfillment]

Responsiveness
[Order cycle time] 9 days 10 days 6.5 days 3 days -- 6 d [S]

Agility
[Upside supply chain 110 d 60 d 45 d 29 d 50 d 81 d [P]
flexibility]
Cost
[Supply Chain 14.0 % 9.5 % 6.7 % 3.9 % 4.5% 7.3% [A]
Management Cost]

Asset
[Cash-to-cash cycle time] 197 d 98 d 64 d 30 d 99 d 99 d [P]

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Best Practice

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Best Practice

• A current, structured, proven and repeatable method for making a

positive impact on desired operation results.
» Current: Must not be emerging & must not be antiquated.
» Structured: Has clearly stated goal, scope, process & procedure.
» Proven: Success has been demonstrated in a working
environment.
» Repeatable : The practice has been proven in multiple
environments.
» Method: Used in a very broad sense to indicate business process,
practice, organizational strategy, enabling technology, business
relationship, business model and information or knowledge
management.
» Positive impact on desired operation results: The practice
shows operational improvement related to the stated goal and
could be linked to key metrics. The impacts should show either
as gain (increase in speed, revenue, quality) or reduction
(resource utilizations, costs, loss, returns, etc.)
(Defined by SCC Best Practices Team 2003)

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Best Practices Analysis

• Characterize the management practices and software solutions that result

in “best-in-class” performance

• Not all best practices are suitable to all industries / companies, things to
be considered include but not limited to the following items:
» Geographical location
» Industry
» Management practices
» Software solutions
» ..etc

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Improving Process Performance with SCOR
Best Practices
VMI
S1
EDI
SR1
Automatic
S2 M2 D2 Identification
SR3
S2
M1 D1 S1 D1 S1
DR1 SR1
DR1 SR1 DR1 SR1

DR3 SR3 DR3 SR3

S1

S1 M1 D1

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Best Practice Analysis

Relevance Importance Implemented

Practice
(Y/N) (H/M/L) (Y/N)

ATP

Carrier Agreements

CPFR

Co-located Procurement

Cross Docking

TOC-DBR

Postponement

S&OP

VMI

Wave Picking
Copyright © Supply Chain Council, 2006-2010. All rights reserved 29
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2
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CPFR is a Best Practice

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Cross Docking

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SCOR Model is a Business Process Reference
Model

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How to Start Supply Chain Improvements?

1 2 3 4 5
Competitive As-Is To-Be
Feasibility
Education & Strategy Operation Operation
Study
Analysis Modeling Modeling

Align Internal Define Areas of Define Supply Chain Define Current Define Required
understanding Improvement Performance Process Description Process Description

6 7 8 9
Gap
Project Project Improvement
Identification
Justification Implement- Audit
& Project
ation
Portfolio

Set Improvement Target Justify Project Based on Implement SCOR Audit on Result of
and Projects Portfolio Savings or Benefits Operations Project Implementation

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Step 1

1 2 3 4 5
Competitive As-Is To-Be
Feasibility
Education & Strategy Operation Operation
Study
Analysis Modeling Modeling

Align Internal Define Areas of Define Supply Chain Define Current Define Required
understanding Improvement Performance Process Description Process Description

6 7 8 9
Gap
Project Project Improvement
Identification
Justification Implement- Audit
& Project
ation
Portfolio

Set Improvement Target Justify Project Based on Implement SCOR Audit on Result of
and Projects Portfolio Savings or Benefits Operations Project Implementation

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 Education – SCOR Workshop
» 4-days workshop
» 2-days workshop on the SCOR Framework
» 2-days workshop on SCOR Project.
» The SCOR Framework focus on
» how to map their current operations using SCOR’s process building blocks (the “As-is”
operations) and define the required SCOR process (the “To-be” operations) based on
management requirements
» define performance metrics to measure the performance of individual process
» provide recommended best practices for the right direction on supply-chain process
improvements
» The SCOR Project workshop focus on
» how to implement successful SCOR projects using the implementation roadmap that
was developed based on more than 60 SCOR projects.
» All students are entitled to take the SCOR-Professional Examination (awarded by Supply
Chain Council) after taking the Framework and Project workshops

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 Certify as SCOR Professional

» Examination Format
» Computer based multiple choices
» 60 questions
» Passing mark is 45 out of 60 (at least 45 correct answers)
» Examination Time Frame
» Examination window 2010-1 2010-02-08 2010-02-19
» Examination window 2010-2 2010-05-24 2010-06-04
» Examination window 2010-3 2010-08-23 2010-09-03
» Examination window 2010-4 2010-11-08 2010-11-19
» Venue
» GUANGZHOU
» GUANGZHOU UNIVERSITY OF FOREIGN STUDY, BAIYUN DADAO NORTH #2
GUANGZHOU, CHN 510420
» HONG KONG
» RM 501 HKEA SAN PO KONG SUB-OFFICE
#17 TSUEK LUK STREET, SAN PO KONG
KOWLOON

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More Information

www.supply-chain.org

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 Common Sourcing
KPIs (ESCAB)

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Common Sourcing KPIs (ESCAB)

KPI name KPI description

Factory Measure the ability of factory, compliant with buyer's hard
Certification - and soft factors/requirements
Technical
Factory Focus on Business Behaviours (such as Operating according
Compliance - to government / authority laws and regulations, provides safe
Regulatory, working environment, Code of Conduct, C-TPAT, etc.), and
Environmental and Compliance to required standards to best benefit both sides.
Social
Product Focus on product, supply chain management, and process.
introduction
Vertical set up To count supplier's own vertical set up, e.g. own washing
mills, own weaving mills, own printing facilities, own
embroidery facilities provided that it delivers economy of
scale
Cost Estimated Landed Cost (ELC) Comparison
Competitiveness

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Common Sourcing KPIs (ESCAB)

KPI name KPI description

Manufacturing Lead The manufacturing lead time quoted by the supplier during
Time the bid process which the will abide by.
Response time The time supplier needs to response, e.g. confirm orders,
reply requests, sign agreements and others
1st Sample The sample is rejected if failure or does not meet our
rejection requirement
Sample Cycle Time Measure the number of days taken to approve sample. Can
apply to various kind of sample, e.g. color sample, fit sample,
etc.
Sample Iteration Measures the frequency with which samples require rework,
indicate efficiency and timeliness for on time production. Can
apply to various kind of sample, e.g. color sample, fit sample,
etc.
Sample on time To measure if the requested sample can be submitted before
the deadline

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Common Sourcing KPIs (ESCAB)
KPI name KPI description
1st Inspection Passing Measure final inspection passing rate
Rate

Inspection rejection rate An order is rejected during final inspection due to quality
problems or formal mistakes.
Quality (Major/Minor ‘Quality’ reflects the product quality of the supplier. Basis
defects during QC for the calculation of that KPI are the inspection results.
Inspection)
Upside Deliver Flexibility The number of days required to achieve an unplanned
sustainable % increase in quantity delivered with the
assumption of no other constraints (= Elasticity of ETD)
Cancellations rate Measures the share of order cancellations caused by the
(responsible party supplier
supplier)
Claim to shipment ratio Measure unmet customer expectations
(dollar value)
Claim to shipment ratio Quality problem or formal mistakes after arrival to our
(no. of incidents) customer.
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Common Sourcing KPIs (ESCAB)
KPI name KPI description
Compliance Document material safety data sheets, GDOT, etc are complete
accuracy and and correct
completeness

Container Booking A container booking is considered submitted to 3PL

Timeliness within the agreed time frame
Delivery Quantity Measures the share of articles delivered correctly
Accurary concerning quantities. Only short deliveries have a
negative influence.
Document submission Meaure the average time when the supplier submit
cycle time document to the document is confirmed correct and
completed
Forwarder document To measure the time which the forwarder needs to
process time provide the documents e.g. airway bill (AWB), BL,
SWB
On time and honoured Measure the reliability of inspection booking by
Inspection Booking vendor

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Common Sourcing KPIs (ESCAB)
KPI name KPI description
On time document Supplier is supposed to submit document according to
submission predefined timeframe in order to ensure accurate
documents are on time for custom clearance.
On time Shipment A vessel booking is submitted within the agreed time
Booking frame.
Shipment booking Measure the average time when the supplier submit
cycle time first booking to the time carrier booking is confirmed.
Shipment reliability Measure timeliness of shipments.
Shipping document Shipping documents are complete and accurate
accuracy and
completeness
Space & Equipment Carriers performance on space and equipment
Availability availability

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Common Sourcing KPIs (ESCAB)

KPI name KPI description

Timely Advanced Measure the timeliness of ASN / Dispatch Advice
Shipment Notification
(ASN) submission
Withhold Payment Measure the % of payment that ware withhold due
to supplier's issues

Annual Sales Growth Measure the sales growth of a supplier

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Enquiry

» Please contact us for further enquires:

» Mr. Rocky Yu Ms. Tina Ho
» Tel: 2863 9731 Tel: 2863 9758
» Email: [email protected] Email: [email protected]

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Thank You.
Questions?