07/06/2011

Basics of Supply Chain Management and

SCOR
Albert Tan
Associate Director (Industry Research)
The Logistics Institute Asia Pacific

A Collaboration Between
Winner for
Best Educational
Course Provider
2003-2010

The Logistics Institute Asia Pacific

Established in Nov 1998

An initiative of
Economic Development Board of Singapore
A collaboration between

National University of Singapore

Georgia Institute of Technology
Mission: To be the premier institute in Asia Pacific nurturing logistics
excellence in research and education

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Agenda
1.Introduction to Supply Chain
Management
2.Manufacturing Planning and Control
from APICS
3.Overview of SCOR model
4.SCOR model for SMEs in Singapore
5.A Case Study using SCOR model

Supply Chain Management Definitions

Supply chain: The global network used to deliver
products and services from raw materials to end
customers through an engineered flow of information,
physical distribution, and cash.
Supply chain management: The design, planning,
execution, control, and monitoring of supply chain
activities with the objective of creating net value, building
a competitive infrastructure, leveraging world-wide
logistics, synchronizing supply with demand, and
measuring performance globally.
APICS Dictionary
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Basic Supply Chain: External

External supply chain from a manufacturers perspective
Dominant flow of goods and services
Returns and reverse logistics

Suppliers

Manufacturer

Distributors

Retailers
Consumers

Dominant flow of demand and design information

Dominant flow of cash
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Traditional Internal Supply Chain View

Raw Materials

Purchasing

Production

Distribution
Customers

Lowest purchase
price
Inventory buffers

High utilization %
Long runs minimize
changeovers
Low unit costs

Full truckload
quantities
Best shipping rate
Safety stocks

Safety stocks
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Cross-Functional Supply Chain View

Supply chain processes

Manage Customer Orders and Reverse Logistics

Develop
Products
and
Services

Manage
Procurement

Produce
Products

Perform
Marketing
and Sales

Manage
Distribution

Key support processes:

Manage Finance
Manage Human Resources

The value chain consists of the value-adding processes that enable a

company to take its products from conception to market
The internal supply chain is a subset of the value chain
Support processes are important but are not considered value chain
processes
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Conflicts in Traditional Supply Systems

Marketing
Traditional
Objective

Operations

Finance

Increase profit and

Increase revenue/ Reduce
satisfy customers manufacturing cost cash flow, reduce
investment

Customer service

Production efficiency

Inventory investment

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Role of Materials Management

Demand

Resources

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Objectives of Manufacturing

The right products

Of the right quality
In the right quantities
At the right time
At minimum cost (right price)

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Why Plan?
To satisfy customer demand and ensure
the availability of resources
Material
Capacity
Demand

Resources

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A Good Planning and Control System

What must
we get
and
when?

These are questions of priority and capacity.

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Manufacturing Planning and Control

Master Planning

Sales & Operations

Planning

Resource
Planning (RP)

Master Scheduling

Rough-Cut
Capacity Planning
(RCCP)

Material
Requirements
Planning (MRP)

Capacity
Requirements
Planning (CRP)

APICS CONFIDENTIAL AND PROPRIETARY

Order
Sequencing

Execution

Input/Output
Control

Production Activity
Control (PAC)

Capacity Planning

Execution Priority Planning

Business Planning

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Evolution from MRP to ERP

MRP

MRP
Closed
Loop

MRP II

ERP

MRP Processor
Closed-Loop Feedback
Best Practice Processes
Common Database
Sales and Operations
Planning
Total Cross-Functional
Software Process Integration

APICS CONFIDENTIAL AND PROPRIETARY

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Supply Chain Council

&
Supply Chain Operations Reference
(SCOR) Model Overview

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The SCC is an independent, not-for-profit, global corporation with

membership open to all companies and organizations interested in
applying and advancing state-of-the-art supply chain management
systems and practices.
Over 700 Company Members
Cross-industry representation
Chapters in Australia/New Zealand, Europe, Japan, Korea,
Latin America, and South East Asia with petitions for additional
chapters pending.
Over 30 new members per month
The Supply-Chain Council (SCC) has developed and endorsed
the Supply Chain Operations Reference-model (SCOR) as the
cross-industry standard for supply chain management
The SCC was organized in 1996 by Pittiglio Rabin Todd & McGrath (PRTM) and Advanced
Manufacturing Research (AMR), and initially included 69 voluntary member companies

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Membership
SCC Member Composition

SCC Membership by Region

Practitioners

North America

Software Vendors

Europe
Consultants

Japan
Other

Universities/Gov.
Orgs/Assns.

700+ SCC members,

Composition
Practitioners
Enabling Technology Providers
Consultants
Universities, Associations, Government
Organizations
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The Value of SCOR

Index Summary 2003-2005
60.00%

Companies with
formal process
management

50.00%

Improvement Percentage

40.00%

Are 780% more

profitable than
peers1.

30.00%

20.00%

10.00%

DJIA

SCOR
0.00%

Jan-03

-10.00%

Jan-04

Jan-05

Period

S&P 500

Exhibit greater
share growth
than leading
market
indicators2.

1 Supply-chain Council 2003 profit and revenue analysis.

2 PCOR Research 2006 SCOR company share performance whitepaper in 2007

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SCOR is structured around five distinct

management processes
Plan

Deliver
Return

Suppliers
Supplier

Source

Make

Return

Deliver
Return

Source

Make

Return

Deliver
Return

Source

Your Company

Supplier

Make

Return

Deliver

Source

Return

Return

Customer

Internal or External

Customers
Customer

Internal or External

SCOR Model
Building Block Approach
Processes

Metrics

Best Practice

Technology

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Supply-Chain Operations Reference-model (SCOR)

Plan

P1 Plan Supply Chain

Source

P5 Plan Returns

Make
M1 Make-to-Stock

S1 Source Stocked Products

S2 Source MTO Products

M2 Make-to-Order

M3 Engineer-to-Order

S3 Source ETO Products

Deliver

Customers

Suppliers

P4 Plan Deliver

P3 Plan Make

P2 Plan Source

D1 Deliver Stocked Products

D2 Deliver MTO Products

D3 Deliver ETO Products

Return
Source

Return
Deliver

Enable
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SCOR Hierarchy
Level 1

Level 2

Level 3

Level 4

Level 5

Scope

Configuration

Activity

Workflow

Transactions

Supply-Chain
Source

S1
Source
Stocked Product

S1.2
Receive Product

EDI
XML

Differentiates
Business

Differentiates
Capabilities

Names Tasks

Sequences Steps Links

Transactions

Defines Scope,
Enterprise
Strategy

Differentiates
Supply-chain
Strategies

Links, Metrics,
Tasks and
Practices

Job Details

Details of
Automation

Framework
Language

Framework
Language

Framework
Language

Industry or
Company
Specific
Language

Technology
Specific
Language

Standard SCOR definitions

Company/Industry definitions

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Linking Supply Chain Performance Attributes and

Level 1 Metrics
Performance
Attribute
Supply Chain
Delivery Reliability

Performance Attribute Definition

Level 1 Metric

The performance of the supply chain in

delivering: the correct product, to the correct
place, at the correct time, in the correct condition
and packaging, in the correct quantity, with the
correct documentation, to the correct customer.

Delivery Performance

Supply Chain
Responsiveness

The velocity at which a at which a supply chain

provides products to the customer.

Order Fulfillment Lead Times

Supply Chain
Flexibility

The agility of a supply chain in responding to

marketplace changes to gain or maintain
competitive advantage.

Supply Chain Response Time

Supply Chain Costs

The costs associated with operating the supply

chain.

Cost of Goods Sold

Fill Rates
Perfect Order Fulfillment

Production Flexibility

Total Supply Chain Management

Costs

Value-Added Productivity
Warranty / Returns Processing
Costs
Supply Chain Asset
Management
Efficiency

The effectiveness of an organization in managing

assets to support demand satisfaction. This
includes the management of all assets: fixed and
working capital.

Cash-to-Cash Cycle Time

Inventory Days of Supply
Asset Turns

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Lesson 2/ Wk 3

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The SCOR Project Roadmap

Phase
Initial

II

III

IV

V
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Name

Deliverable

Resolves

BUILD

Organizational Support

Who is the sponsor?

DISCOVER

Supply-Chain Definition
Supply-Chain Priorities
Project Charter

What will the program

cover?

ANALYZE

Scorecard
Benchmark
Competitive Requirements

What are the strategic

requirements of your
supply-chain?

MATERIAL

Geo Map
Thread Diagram
Disconnect Analysis

Initial Analysis where

are the problems?

WORK

Transactions
Level 3, Level 4 Processes
Best Practices Analysis

Final Analysis where

are the solutions?

IMPLEMENT

Opportunity Analysis
Project Definition
Deployment Organization
SCOR 8.0 Training Webinar

How to deploy?

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SCOR Projects A Wide Range of Adoption

Consumer Foods
Project Time (Start to Finish) 3 months
Investment - $50,000 US
1st Year Return - $4,300,000 US

Electronics
Project Time (Start to Finish) 6 months
Investment - $3-5 Million US
Projected Return on Investment - $ 230 Million US

Software and Planning

SAP bases 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
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SCOR for SMEs in Singapore

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Apply scale to the SCOR model

Example of Scoring

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The Solution

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E-SCM incentives for SMEs

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The Logistics Institute Asia Pacific

National University of Singapore
21 Heng Mui Keng Terrace, #04-01
Singapore 119613
Tel: (65) 6516 4842 Fax: (65) 6775 3391
E-mail: albertan@nus.edu.sg Website: www.tliap.nus.edu.sg

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