Global supply chain management iCognitive

PLAN SOURCE MAKE DELIVER RETURN
©2011CopyrightiCognitivePte.Ltd.Allrightsreserved
Global supply chain management
challenges and opportunities
John PAUL
Managing Director, iCognitive
Professor & Research Fellow at BEM (Bordeaux Ecole de Management)
Qualified SCOR® Instructor by Supply Chain Council

Agenda
• Introduction
• Five key supply chain trends
• Technology impact on supply chain strategies
• Priorities for Supply Chain Success
• Introduction to SCOR
• Solving the Five Biggest Supply Chain
Challenges using SCOR
2

Introduction
• After the crisis of 2008 and 2009, the global
economy continues to recover.
• Last year survey by PRTM shows that most of
the companies surveyed believed there will be
a significant upturn in demand from their
customer.
3

Introduction
• Companies were optimistic about the revenue
and margin potential of their companies and
industry in 2012.
Expected annual revenue growth in 2012
4

Introduction
• However the prediction did not come true!
And the problems arising from the global
financial crisis still remained unsolved.
5

Global Outlook for Growth of Gross Domestic Product,
2012-2025 (November 2011)
6Source: The Conference Board Global Economic Outlook, November 2011

Introduction
• Driven by short-term
exigencies, many companies
did not strengthen critical
capabilities during the
recession.
• They still lack the capabilities
critical for managing the
complex global supply chain.
7

8
Five key supply chain trends
8

• The degree to which companies can capture
benefit from an eventual upturn will depend
largely on how they deal with five key supply
chain trends.
9

• Trend 1: Supply Chain Volatility and
Uncertainty Have Permanently Increased:
• Market transparency and greater price
sensitivity have led to lower customer loyalty.
Product commoditization reduces true
differentiation in the consumer and business-
to-business (B2B) environments.
* Source: 2010–2012 Global Supply Chain Trends, PRTM
10

Trend 1 (Flexibility ): Supply Chain Volatility
and Uncertainty Have Permanently Increased
• Concerns about continued demand volatility
hamper companies’ ability to effectively
manage supply chains in an upturn.
• Many companies do not have the flexibility to
meet an increasingly volatile demand.
11

Top Challenges to Supply Chain Flexibility
(Percentage of participants)
Biggest roadblocks
for 2/3 companies
12

Opportunities to improve
What best in class companies do?
• The best-performing companies have already taken
steps to improve supply chain response time and
visibility across all supply chain partners.
• Companies are focusing primarily on deepening
collaboration with key customers to reduce
unanticipated changes in demand.
13

Based on PRTM survey half of participants
plan to implement joint “real-time” planning
with their key customers by 2012.
And half plan to develop processes for improved demand sensing
—that is, understanding the market rate of demand in real time,
rather than having to wait for after-the-fact reporting.
14

Why S&OP is vital?
• If Sales and Operations Planning (S&OP) activities
are not aligned and integrated, small problems
quickly escalate into major challenges, which
adversely impact corporate performance.
• As each part of an organization wants to satisfy it’s
own priorities, valuable time and resources are
wasted, ultimately leading to poor customer service.
15

S&OP is the top SCM technology investments through 2013
16
Source: Tech Trends report 2011

Why S&OP is vital?
• The consequences of poor sales & operations
planning are substantial: excess inventory, short
orders, overtime, inter-plant transfers, expediting,
reduced order fulfillment, poor resource utilization.
• These issues impact the bottom-line, while fostering
a reactive culture of undisciplined business
processes.
17

Why S&OP is vital?
• Bringing together sales/marketing, operations,
finance, and product management to facilitate joint
objectives of the overall enterprise is what makes
effective S&OP work.
• This is why S&OP has become more important than
ever!
18

• Trend 2: Securing Growth Requires Truly
Global Customer and Supplier Networks
• Future market growth depends on
international customers and customized
products. Increased supply chain globalization
and complexity need to be managed
effectively.
19

Trend 2 (Complexity): Securing Growth Requires
Truly Global Customer and Supplier Networks
• The years before the financial crisis witnessed an
uptick in globalization and access to new consumer
groups in emerging markets; these trends will
continue.
• Future business growth will come primarily from new
international customers and products that are customized to
meet their needs.
20

Drivers of Supply Chain Complexity
(Percentage of participating companies expecting
an increase)
21

• Top companies are managing their growing
international customer and supplier base
without overloading their supply chains with
additional complexity.
• Regionally configured supply chains will be the
key to success.
22

• Trend 3: Market Dynamics Demand Regional,
Cost-Optimized Supply Chain Configurations
• Customer requirements and competitors
necessitate regionally tailored supply chains
and product offerings. End-to-end supply
chain cost optimization will be critical.
23

Trend 3: Market Dynamics Demand Regional,
Cost-Optimized Supply Chain Configurations
• Gains will not come from price increases, but
from further reductions of end-to-end supply
chain costs.
• Globalizing supply chain operations and
outsourcing specific functions are critical for
controlling costs.
24

In-House vs. Outsourced Supply Chain
Functions until 2012
(%share of functions managed in-house global/local/outsourced)
25

• Leading companies understand the impact of
outsourcing hidden costs and are taking aggressive
steps to identify and manage them.
• Many are embracing new concepts like Total Supply
Chain Cost Engineering, an integrated approach to
calculating and managing total cost across all supply
chain functions and interfaces.
26

• In addition, leading companies are building regional
supply chains to meet the cost and quality
requirements of their local customers and to
outperform the networks their competitors have
established in the region.
• Rigorous cost optimization across the end-to-end
supply chain are critical for success.
27

• Trend 4: Risk Management Involves the End-
to-End Supply Chain
• Risk and opportunity management should
span the entire supply chain—from demand
planning to expansion of manufacturing
capacity—and should include the supply
chains of key partners.
28

Trend 4: Risk Management Involves the
End-to-end Supply Chain
• During the global financial crisis, many companies
operated with the fear that suppliers would be
forced into default, cutting off critical sources of
components and increasing the cost of introducing
alternative suppliers.
29

Trend 4: Risk Management Involves the
End-to-end Supply Chain
• Many companies began monitoring their suppliers’
financial status and mitigating default risks while
they aggressively managed their own working
capital.
• Today, risk has become a management challenge
across the entire supply chain.
30

Top Supply Chain Risk Management Strategies
(Percentage of participants that plan to pay significant attention to
the following risk mitigation strategies by 2012 )
31

• Leading companies are taking an end-to-end
approach in managing risk at each node of the
supply chain.
• To keep the supply chain as lean as possible, they are
taking a more active role in demand planning, which
ensures that they order only the amount of materials
needed to fill firm orders.
32

• Firms are also limiting the complexity of products
that receive late-stage customization.
• Leading companies mitigate inventory-related risks
by shifting the responsibility for holding inventory to
their suppliers and, furthermore, by making sure
finished product is shipped immediately to
customers after production.
33

• Trend 5: Existing Supply Chain Organizations
Are Not Truly Integrated and Empowered
• The supply chain organization needs to be
treated as a single integrated organization. In
order to be effective, significant
improvements require support across all
supply chain functions.
34

Trend 5: Existing Supply Chain Organizations
Are Not Truly Integrated and Empowered
• Companies that wish to secure future revenue and
margins must be able to address many different
supply chain challenges.
• Yet little can be achieved without a supply chain
organization that is truly integrated across all
functions and empowered to take bold action.
35

• Leading companies understand that breakthrough
improvements are not possible unless the decisions
made are optimal for all supply chain functions.
• For this reason, they have already taken steps to
integrate and empower their supply chain
organization.
36

• Managing all functions of the supply chain as a single
resource under one joint responsibility, these firms
are making sure the organization has a strong end-to-
end optimization focus and are integrating supply
chain partners up- and downstream.
• No less important, they are putting increased
emphasis on finding and training top talent with end-
to-end supply chain knowledge.
37

• There is reason to believe that building global and
integrated supply chain management is becoming an
important priority.
• According to PRTM survey, in 2010 approximately
50% of the companies will manage supply chain
planning and S&OP on a globally integrated level, in
contrast with 60% of companies projected for 2012.
38

39
Technology impact on supply
chain strategies
What technologies will have the biggest impact on supply
chain in coming years
39

What technologies will have the biggest impact
on supply chain in coming years?
• According to annual Logistics CIO and Supply
Chain Technology Forum in Chicago (2011)
– mobile computing
– analytics software
– social media
have the biggest impact on logistics and SCM.
40

Mobile computing devices
• Mobile computing devices, whether in the form of
smart phones or tablet computers, could have a
more far-reaching impact on logistics than anyone
ever imagined.
41

Access to information anytime we want it
• With a tablet or smart phone in hand,
managers can pull up the information
wherever they are—whether in the
warehouse or on the road.
42

Access to information anytime we want it
• As these devices are better suited to
distribution operations, it is expected that
most of the trucking companies equip their
drivers with smart phones in the future.
43

Analytics software
• As firms get better at collecting data, they use
the data more for analysis.
• While there are many different types of
analytics software, two are particularly
relevant to logistics operations:
– Prescriptive analytics
– Predictive analytics
44

Analytics software
Prescriptive analytics
• Prescriptive analytics tell a manager what's
going on in his supply chain now. The manager
can then use that information to take any
actions needed to keep the operation running
smoothly.
45

Analytics software
Predictive analytics
• Predictive analytics help managers assess
future risks and weigh the pros and cons of
alternative responses.
• It will come up with a range of options. For
example, you could see what your supply
chain should look like with oil at $70 a barrel
versus $150 a barrel.
46

Analytics software
• Some examples of the popular technologies
include:
– Data mining technologies
– Agent based applications
– Neural networks, etc.
47

Analytics software
• According to Tech Trends report 2011, many
companies are growing IT budgets again,
albeit cautiously.
48

Expected change in total IT spending for 2012
49
The number of
companies expecting
budgets to increase
improved to 50 percent
from 43 percent last year.
Source: Tech Trends report 2011

Social media
• Facebook, Twitter, LinkedIn, are changing the way
information is exchanged in the logistics
community.
• It's becoming common for companies to use
social media to find and recruit younger supply
chain professionals.
• However for many companies it's still debating
whether access to networking sites is more likely
to enhance efficiency or drag down productivity.
50

51
Priorities for Supply Chain
Success
51

Priorities for Supply Chain Success
1. Improve customer access and accuracy of
supply chain planning:
– Improved point of sale presence/partnering
concepts
– End-to-end supply cooperation/ optimization
– Real-time demand and supply planning
– Supply chain response time reduction
52

2. Increase upstream and downstream supply
chain flexibility
– Global network design adjustments
– Improved supply chain upward and downward
flexibility
– Product and process complexity management
– Late-stage customization
53

3. Focus on Total Supply Chain Cost Engineering
– Outsourcing of non-core functions
– Regionally configured, optimized supply chains
– Total Supply Chain Cost and process optimization
– Low-cost country utilization
54

4. Implement end-to-end supply chain risk
management
– Demand and supply risk optimization
– Supplier risk management
– Working capital and asset optimization
– Optimization of key partner’s supply chain risks
55

5. Integrate and empower supply chain
organization
– Integrated supply chain organization across all
functions
– Empowered decision making with clarity on
global versus local responsibilities and functional
decisions
– Ability to deploy the right skill sets and expertise
56

57
Introduction to SCOR
How SCOR could solve Supply Chain Challenges
Supply chain reference model framework (SCOR)
57

Reconfiguring supply chains
• One positive effect of the recent economic
crisis was that it forced companies to take an
intense look at their supply chains, question
some of their assumptions, and root out
major inefficiencies.
58

• For example, ad hoc decisions to source low-price
products from countries with the lowest labor cost
may no longer make sense when factors like:
– long-term increase in transportation rates
– risks of disruption
– and weeks of inventory in the pipeline
are factored into total landed cost calculations.
59

• Such analysis and restructuring is an ongoing
requirement for effective supply chain
management.
60

• No clear set guidelines for creating/terminating alliance
with supply chain partners
• Failure to develop and implement measures for
monitoring alliances
– Lack of a common set of metrics that can be applied and shared across the
chain
• Inability to broaden the supply chain vision
– Most companies stop at the logistics function, instead of the entire ‘cash-to-cash’
business cycle.
Donald J. Bowersox
Reconfiguring supply chains:
Obstacles of integrating SCM
61

Accelerating SCM improvements through
systematic attitude and approach
Company A jumped into the upgrading of APS server
before the systematic evaluation of all the disconnects
and opportunities. This:
– Caused the difficulties in analyzing other planning
disconnects
– Blindly chopped off the possibilities of other root causes
– Created biased situation to other potential projects
– Make the evaluation difficult
– Impact the final project returns
62
Systematic
Ad-hoc
• Supply Chain is complicated and confused sometimes.
The best way to get the maximum return is to do
improvement properly and systematically.

SCOR®: A Systematic Approach
• Supply chain council offers a systematic
approach for SC management and
reconfiguration.
63

64
SCOR®
64

Supply-Chain Council Overview
• The SCC is an independent, not-for-profit, trade association
• Membership open to all companies and organizations
• Focus is on research, application and advancement and advancing state-of-the-art
supply chain management systems and practices
• Developer and endorser of the Supply Chain Operations Reference (SCOR®) as a cross-
industry standard for supply chain management
• Offers Training, Certification, Benchmarking, Research, Team Development, Coaching,
and Cross-standard Integration focused on the SCOR® framework
• Founded in 1996
• Approaching 1000 Association Members
• Chapters in North America, Europe, Japan, South Africa, Latin America, Australia/New
Zealand, South East Asia and Greater China, with developing Chapters India and
Middle East
Driving value through the use of SCOR®
65

Process model
A change of mindset
66
Porter
• Functional view of operations
SCOR
• Process view of operations
DeliverMakeSource
Plan
ReturnReturnSuppliers
Customers
Enable

Supply chain configuration
SCOR®: A Systematic Approach
Supply-Chain Operations Reference-model (SCOR)-
A process reference model
67

Process model - SCOR ®
SCOR® contains three levels of details
68
Level
# Description Schematic Comments
SupplyChainOperationsReferenceModel
Top Level
(Process Types)
Configuration
Level
(Process
Categories)
Process Element
Level
(Decompose
Processes)
Implementation
level
(Decompose
Process
Elements)
Top-DownProcess
1
2
4
3
BalanceProduction Resources with
Production Requirements
Establish Detailed
Production Plans
Identify, Prioritize, and Aggregate
Production Requirements
Identify, Assess,and Aggregate
Production Resources
P3.1
P3.3 P3.4
P3.2
Not
In
Scope
Plan
DeliverMakeSource
Return Return
A company’s supply chain can be “configured-to- order”
at Level 2 from approximately30 core “process
categories.”
Companies implement their operations strategy through
their unique supply chain configuration.
Companies “fine tune” their Operations Strategy at Level 3
Level 3 defines a company’s ability to compete
successfully in its chosen markets and consists of:
• Process element definitions
• Process element information inputs and outputs
• Process performance metrics
• Best practices, where applicable
• System capabilities required to support best
practices
Companies implement specific supply chain
management practices at this level
Level 4 defines practices to achieve competitive
advantage and to adapt to changing business conditions
Level 1 defines the scope and content for the Supply
Chain Operations Reference model
Here basis of competition performance targets are set

Customers
Suppliers
Enable
Source Make Deliver
S1 Source Stocked Products M1 Make-to-Stock
M2 Make-to-Order
M3 Engineer-to-Order
D1 Deliver Stocked Products
D2 Deliver MTO Products
D3 Deliver ETO Products
S2 Source MTO Products
S3 Source ETO Products
D4 Deliver Retail Products
Process model - SCOR ®
SCOR® Processes – Level 2
69
SR1 Source Return Defective Product
SR2 Source Return MRO Product
SR3 Source Return Excess Product
DR1 Deliver Return Defective Product
DR2 Deliver Return MRO Product
DR3 Deliver Return Excess Product
P1 Plan Supply Chain
P2 Plan Source P3 Plan Make P4 Plan Deliver P5 Plan Returns
Plan

Copyright2002–2010iCognitivePte.Ltd.Allrightsreserved
70
P1 Plan Supply Chain
P2 Plan Source P3 Plan Make P4 Plan Deliver
Source Make Deliver
S1 Source Stocked Products M1 Make-to-Stock
M2 Make-to-Order
M3 Engineer-to-Order
D1 Deliver Stocked Products
D2 Deliver MTO Products
D3 Deliver ETO Products
S2 Source MTO Products
S3 Source ETO Products
P5 Plan Returns
D4 Deliver Retail Products
Plan
Level 3
Sub
processes of
D2
Level 1
processes
and
Level 2
variations
Process Inquiry
& Quote
D2.1
Receive,
Configure, Enter &
Validate Order
D2.2
Select Carriers &
Rate Shipments
D2.7
Route
Shipments
D2.6
Plan & Build
Loads
D2.5
Consolidate
Orders
D2.4
Reserve Resources
&
Determine
Delivery Date
D2.3
Pick Product
D2.9
Receive Product
from Source or
Make
D2.8
Load Product
& Generate
Shipping Docs
D2.11
Ship Product
D2.12
Receive &
Verify Product
by Customer
D2.13
Install
Product
D2.14
Invoice
D2.15
Pack Product
D2.10
Supply-Chain Operations Reference-model
(SCOR) 10.0 - Processes

SCOR Level 1 Metrics
Level 1 Metrics
Performance Attributes
Customer-Facing Internal-
Facing
Reliability Responsiveness Agility Costs Assets
Perfect Order Fulfillment X
Order Fulfillment Cycle Time X
Upside Supply Chain Flexibility X
Upside Supply Chain Adaptability X
Downside Supply Chain Adaptability X
Supply Chain Management Cost X
Cost of Goods Sold X
Cash-To-Cash Cycle Time X
Return on Supply Chain Fixed Assets X
Return on Working Capital X
71

72
Solving the Five Biggest Supply
Chain Challenges using SCOR
72

1. Customer service
• Effective supply chain management is all
about delivering the right product in the right
quantity and in the right condition with the
right documentation to the right place at the
right time at the right price. If only it were as
simple as it sounds.
73

1. Customer service
Solution:
• Developed and maintained by SCC members,
the Supply Chain Operations Reference
(SCOR®) model provides a framework for
measuring and understanding current supply
chain conditions and performance and creates
a foundation for improvement.
74

1. Customer service
Solution:
• SCOR can help supply chain managers
evaluate cost/performance tradeoffs, develop
strategies for meeting new customer
expectations, and respond to domestic and
global market growth.
75

2. Cost control
• Supply chain operating costs are under
pressure today from rising freight prices, more
global customers, technology upgrades, rising
labor rates, expanding healthcare costs, new
regulatory demands and rising commodity
prices.
76

2. Cost control
• To control such costs there are thousands of
potential metrics that supply chain
organizations can and do measure.
• Managers need to zero in on the critical few
that drive total supply chain costs within their
organizations.
77

2. Cost control
Solution:
• Metrics provide the basis for an organization
to measure how successful it is in achieving its
desired objectives.
• SCOR metrics are designed to be used in
conjunction with supply chain performance
attributes, making it easier to compare
different supply chains and different supply
chain strategies.
78

2. Cost control
Solution:
• SCOR Level 1 metrics are strategic, high-level
measures that typically cross multiple SCOR
processes.
– Lower level metrics are associated with a narrower
subset of processes.
• For example, delivery performance is calculated
as the total number of products delivered on
time and in full based on a commit date.
79

2. Cost control
Solution:
• To help SCC members use these metrics to
benchmark performance, SCC offers
unlimited, on-demand access to two type of
benchmark reports:
– Global benchmarking portal
– Regional benchmarking portal
80

3. Planning and Risk Management
• Supply chains must periodically be assessed and
redesigned in response to market changes,
including new product launches, global sourcing,
new acquisitions, credit availability, the need to
protect intellectual property, and the ability to
maintain asset and shipment security.
• In addition, supply chain risks must be identified
and quantified.
81

• SCC members report that less than half of
their organizations have metrics and
procedures for assessing, controlling, and
mitigating such risks.
82

Solution:
• Organizations in all sectors—commercial,
military and NGOs—have found that using
SCOR as a planning and risk management
foundation leads to faster implementation,
more comprehensive identification of
potential risks and easier coordination with
customers, suppliers and other stakeholders.
83

Solution:
• It helps users establish rules and strategies,
assign responsibilities, coordinate responses,
and monitor current conditions.
• The topic of risk is of such importance that
SCC included a special Risk section of the
SCOR model to address member needs.
84

4. Supplier/partner relationship
management
• Different organizations, even different
departments within the same organization,
can have different methods for measuring and
communicating performance expectations and
results.
85

4. Supplier/partner relationship
management
• Trust begins when managers let go of internal
biases and make a conscious choice to follow
mutually agreed upon standards to better
understand current performance and
opportunities for improvement.
86

4. Supplier/partner relationship management
Solution:
• SCOR provides a common language for supply
chain classification and analysis.
• Using a common language and framework
makes it easier for teams to communicate,
speeds benchmarking efforts, and enhances
the evaluation of best practices.
87

5. Talent
• As experienced supply chain managers retire,
and organizations scale up to meet growing
demand in developing markets, talent
acquisition, training, and development is
becoming increasingly important.
88

5. Talent
• Supply chain leaders need a thorough
understanding of the key competencies
required for supply chain management roles,
specific job qualifications, methods for
developing future talent and leaders, and the
ability to efficiently source specific skill sets.
89

5. Talent
Solution:
• SCC members have developed methodologies
for applying SCOR to human resource
management, and even organized the
capabilities of their global supply chain staff
around the SCOR framework. Their work is
driving the release of SCOR 10.0 in late 2010.
90

5. Talent
Solution:
• The new skills management framework
complements process reference, metrics
reference, and practice reference components
with baseline skills, critical skills, job
performance measures, and supply chain
management credentials.
91

SCOR model
• The Supply Chain Council (SCC) mission is to
aid SC management efforts by advancing
supply chain knowledge and its application to
solve real-world problems.
• SCOR model could help facilitating these
efforts in a systematic way.
92

SCOR 11 what's new
• Let’s see
– Best practices
– Cost to serve or total cost to serve
– Enabling processes
– Implementation is Core
– Sustainability is key
•Your partner iCognitive
93

PLAN SOURCE MAKE DELIVER RETURN
New in SCOR 11
12/19/2012

Agenda
• What’s New in SCOR 11
1. The Process Framework
• added People and organizational design
2. Cost metrics
• new level 1 metric “Total cost to serve”
3. Enable process
• restructured as level 1 process following the same coding as
P, S, M, D, R…..E
4. Practices
• reclassified as emerging, best, standard, and decline
practices
95

• Process reference model integrates the well-known concepts of business process
reengineering, benchmarking, process measurement, and organizational design
into a cross-functional framework
Assess skills and
performance needs
and align staff and
staffing needs to
internal targets
Organizational Design
Identify the practices
and software
solutions that result
in significantly better
performance
Best Practices Analysis
Quantify relative
performance of
similar supply chains
and establish
internal targets
Performance
Benchmarking
Capture the ‘as-is’
business activity and
design the future
‘to-be’ state
Business Process
Re-engineering
What’s New in SCOR 11
1. The Process Reference Framework
People
(skills)
Practices
Performance
(metrics)
Processes
Process Reference Framework
96

2. Cost metrics
• A new level-1 Cost metric (Total Cost to Serve) replaces the prior
Cost metrics.
• For the reasons that,
– The prior cost metrics were confusing and created potential overlaps;
– The prior level 1 cost metrics were difficult to benchmark considering
the interpretation of COGS differs from industry, company, and even
supply chain;
– The concern on that making supply chain decisions based on COGS
alone can lead to wrong outcomes.
• Cost of Goods Sold (COGS) has been demoted to a level-2 metric that serves as
a diagnostic for Total Cost to Serve.
• The new level 1 cost metric (Total cost to serve) focus on the point
of consumption or use.
97

Total Cost to Serve
Definition:
• The sum of the supply chain cost to deliver products and services
to customers.
– Total Cost to Serve includes the cost to plan the supply chain, cost to
source materials, products, goods, merchandize and services, cost to
produce, manufacture, remanufacture, refurbish, repair and maintain
goods and services if applicable, cost to manage orders, customer
inquiries and returns, and cost to deliver products and services at the
agreed location (point of revenue).
• Total Cost to Serve comprises of 2 types of cost:
– Direct cost. Cost that can be directly attributed to fulfilling customer
orders.
• For example the cost of the materials used and/or delivered, all direct supply
chain labor, etc.
– Indirect cost. Cost required (or occurring) to operate the supply chain.
• For example: Cost to lease and maintain equipment, inventory depreciation,
damage and returns costs, and more.
98

Total Cost to Serve
Calculation & Hierarchy:
• Total Cost to Serve is the SUM of:
– Planning Cost
– Sourcing Cost
– Material Landed Cost
– Production Cost
– Order Management Cost
– Fulfillment Cost
– Returns Cost
LEVEL2
Planning Cost
Sourcing Cost
Material Landed Cost
Production Cost
Order Management Cost
Fulfillment Cost
Returns Cost
LEVEL1
Total cost to serve
LEVEL2&LEVEL3
Planning Cost
Planning Labor Cost
Planning Automation Cost
Planning Property, Plant and Equipment Cost
Planning GRC and Overhead Cost
Sourcing Cost
Sourcing Labor Cost
Sourcing Automation Cost
Sourcing Property, Plant and Equipment Cost
Sourcing GRC, Inventory and Overhead Cost
Material Landed Cost
Purchased Materials Cost
Material Transportation Cost
Material Customs, Duties, Taxes and Tariffs Cost
Material Risk and Compliance Cost
Production Cost
Production (Direct) Labor Cost
Production Automation Cost
Production Property, Plant and Equipment Cost
Production GRC, Inventory and Overhead Cost
Order Management Cost
Order Management Labor Cost
Order Management Automation Cost
Order Management Property, Plant and Equipment Cost
Order Management GRC and Overhead Cost
Fulfillment Cost
TransportationCost
Fulfillment Customs, Duties, Taxes and Tariffs Cost
Fulfillment Labor Cost
Fulfillment Automation Cost
Fulfillment Property, Plant and Equipment Cost
Fulfillment GRC, Inventory and Overhead Cost
Returns Cost
Discounts and Refunds Cost
Disposition Cost
Return GRC, Inventory and Overhead Cost
99

3. Enable process
• Enable is now a level-1 process, at the same level of
detail as Plan, Source, Make, Deliver and Return
processes. It recognizes the importance of these
enabling processes.
• The processes associated with establishing, maintaining
and monitoring information, relationships, resources,
assets, business rules, compliance and contracts
required to operate the supply chain.
• Enable processes interact with processes in other
domains:
₋ Financial, HR, IT processes
₋ facilities management processes
₋ product & portfolio management processes
₋ product and process design processes
₋ sales and support processes
ENABLE
Activities to support the
realization &
governance of the
planning & executions
100

3. Enable process
• Enable is now a level-1 process, at the same level of
detail as Plan, Source, Make, Deliver and Return
processes. It recognizes the importance of these
enabling processes.
• The processes associated with establishing, maintaining
and monitoring information, relationships, resources,
assets, business rules, compliance and contracts
required to operate the supply chain.
• Enable processes interact with processes in other
domains:
₋ Financial, HR, IT processes
₋ facilities management processes
₋ product & portfolio management processes
₋ product and process design processes
₋ sales and support processes
ENABLE
Activities to support the
realization &
governance of the
planning & executions
101

Level 2 Enable Processes
102
E1 Manage Business Rules
The process of establishing, documenting, communicating and publishing supply
chain business rules.
E2 Manage Performance of Process
The process of reporting performance, identifying gaps in performance, performing
root cause analysis, and developing and launching corrective actions to close gaps in
performance.
E3 Manage Process Data Collection
The process of collecting, maintaining and publishing data and information required
to plan, operate, measure and manage the supply chain.
E4 Manage Integrated SC Inventory
The process of developing, governing and maintaining an organization of permanent,
temporary and outsourced staff, with the right qualifications, in support of the
business objects and supply chain goals.
E5 Manage SC Capital Assets
The process of scheduling, maintaining and dispositioning of supply chain assets that
operate supply chain processes.
E6 Manage Integrated SC Transportation
The management and communication of contractual agreements in support of
business objectives and supply chain goals.
E7
Manage Process Network
The process of developing, governing and maintaining a network of supply chain
assets (locations, plants, buildings, equipment, people and processes) that support
the planning, sourcing, making, delivery and returning of products and services in
support of the business objectives and supply chain goals.
E8 Manage SC Regulatory Compliance
The process of identifying, collecting, assessing and integrating regulatory compliance
requirements in standard supply chain processes, policies and business rules.
E9 Manage Supply Chain Risk
The process of identification and assessment of potential disruptions (risks) in the
supply chain and developing a plan to mitigate these threats to operating the supply
chain. Supply chain risks include: all supply chain risks

Level 2 & Level 3 Enable Processes
103
E1. Manage
Business
Rules
E2. Manage
Performance
of Process
E3. Manage
Process Data
Collection
E4. Manage
Integrated
SC Inventory
E5. Manage
SC Capital
Assets
E6. Manage
Integrated
SC
Transportati
on
E7. Manage
Process
Network
E8. Manage
SC
Regulatory
Compliance
E9. Manage
Supply Chain
Risk
E1.1Gather Business
Rule Requirements
E2.1 Initiate
Reporting
E3.1 Receive
Maintenance
Request
E4.1 Identify
Skills/Resource
Requirement
E5.1 Schedule
Asset Management
Activities
E6.1 Receive
Contract/Contract
Updates
E7.1 Select Scope
and Organization
E8.1 Monitor
Regulatory Entities
E9.1 Establish
Context
E1.2Interpret
Business Rule
Requirement
E2.2 Analyze
Reports
E3.2
Determine/Scope
Work
E4.2 Identify
Available
Skills/Resources
E5.2 Take Asset
Off-line
E6.2 Enter and
Distribute Contract
E7.2 Gather Input
and Data
E8.2 Assess
Regulatory
Publications
E9.2 Identify Risk
Events
E1.3 Document
Business Rule
E2.3 Find Root
Causes
E3.3 Maintain
Content/Code
E4.3 Match
Skills/Resources
E5.3 Inspect and
Troubleshoot
E6.3
Activate/Archive
Contract
E7.3 Develop
Scenarios
E8.3 Identify
Regulatory
Deficiencies
E9.3 Quantify Risks
E1.4 Communicate
Business Rule
E2.4 Prioritize Root
Causes
E3.4 Maintain
Access
E4.4 Determine
Hiring/Redeployme
nt
E5.4 Install and
Configure
E6.4 Review
Contractual
Performance
E7.4
Model/Simulate
Scenarios
E8.4 Define
Remediation
E9.4 Evaluate Risks
E1.5 Release/Publish
Business Rule
E2.5 Develop
Corrective Actions
E3.5 Publish
Information
E4.5 Determine
Training/Education
E5.5 Clean,
Maintain and
Repair
E6.5 Identify
Performance
Issues/Opportuniti
es
E7.5 Project Impact E8.5 Verify/Obtain
License
E9.5 Mitigate Risk
E1.6 Retire Business
Rule
E2.6 Approve &
Launch
E3.6 Verify
Information
E4.6 Approve,
Prioritize and
Launch
E5.6 Decommission
and Dispose
E6.6 Identify
Resolutions/Impro
vements
E7.6 Select and
Approve
E8.6 Publish
Remediation
E5.7 Inspect
Maintenance
E6.7 Select,
Prioritize and
Distribute
Resolutions
E7.7 Develop
Change Program
E5.8 Reinstate
Asset
E7.8 Launch
Change Program

E1 Level 3 process flow
104

4. Practices
• SCOR 11.0 introduces 4 qualifications of practices: Emerging, Best, Standard
and Declining, recognizing that not all business practices are considered best
practices.
• All practices in SCOR are now classified with the classification categories
shown in the table below.
Categories
Business Process Analysis/Improvement Planning and Forecasting
Customer Support Product Lifecycle Management
Distribution Management Production Execution
Information/Data Management Purchasing/Procurement
Inventory Management Reverse Logistics
Material Handling Risk/Security Management
New Product Introduction Sustainable Supply Chain Management
Order Engineering (ETO) Transportation Management
Order Management Warehousing
People Management (Training)
105

Practices under Category:
Planning and ForecastingEmerging Practices
Demand Planning & Forecasting
Demand Management
Lean Planning
Long Term Supplier Agreement/Partnership
Best Practices
Pull-Based Inventory Replenishment
Inventory Optimization
Safety Stock Planning
Supply Network Planning
ABC Inventory Classification
Days of Supply Based MRP Proposal Management
Work Center Load Evaluation
Balance and firm within horizon
Publish Production Plan
Characteristics-based Forecasting
Bill of Material Audit/Control
Logistics & Warehouse Planning
Facility Master Planning
TaskManagement
VendorManagedInventory(VMI)
VendorCollaboration
Automated Data Capture (ADC)
Collaborative Planning, Forecasting and Replenishment (CPFR)
Convergence of SCOR with Lean and Six Sigma
Standard Practices
Min-Max Replenishment
Safety Stock Planning
Demand Planning
Sales and Operations Planning
MRP I
Improve S&OP process
Declining Practices
TraditionalDemandForecastingImprovement
106

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Q & A
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www.iCognitive.com

Global supply chain management iCognitive

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