NGalazzo Using SCOR Model in a Real Collaborative Sourcing Scenario[1]

8/8/2019 NGalazzo Using SCOR Model in a Real Collaborative Sourcing Scenario[1]

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creating essentials

Using SCOR model

in a real CollaborativeSourcing Scenario

VIB-ABCAL-PICS

Supply Chain Award 2006

Nando GalazzoVP Procurement - Borealis

creating essentials


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SCOR Borealis Degussa Supply Chain Improvements SCOR Borealis-Degussa

Adding value in Procurement:

Twist suppliers

to the last drop ...

... Lopez was wrong !


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SustainedValue Creation

and Dialogue...

... are a lot more fun


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Content

The strategic framework

The players The vision

Tools & Methodology

Partnership excellence

Supply Chain Reference Model (SCOR)

The Opportunity

The Degussa-Borealis business case

Whats different ? Conclusions

A New Dynamic


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Presenting the Players


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Borealis Degussa

5 B sales 11.7 B sales

Olefins and Polyolefins( PE/PP) Specialty Chemicals

EU/Global Global

Supplier Relationship Management Solutions to Customer program

Degussa seen as strategic supplierin 12 supply chains

Borealis seen as key customerfor 5 business units

Value Creation Through Innovation

Responsible-RespectExceed-Nimblicity

Research & Innovation are keyelements in our sustainable

development growth strategy

Profile

Products

Reach

Strategic

Fit

ValuesFit

ExecutionFit

SCOR + SRM + Proc Excell. SCOR + CRM + M&S Academy


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Creating a new collaborative vision


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Competitive advantage

low

low

high

high

Innovationintensity

Strategic framework: Sustainable value creation through collaboration

TheMagic

Quadrant


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Innovate & differentiate

Create visibility onextended SC Opportunities

Extract value

Goals & objectives:

... and share


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Presenting the Approach

Tools and Methodology


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Partner Relationship Management

Supply Chain Programs Innovative Product Developments Total Cost Reduction Programs

SCOR:

Common Methodology

Common Language

Common Metrics

Procurement Excellence:

Value Creation

Low Cost Sourcing

Operational ExcellenceCollaborative

Sourcing

Procurement

excellence

PartnerRelationshipManagement

SCOR

A integrated three-prong approach


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Why SCOR:If we had mapped processes the classical way:

SCORSCOR start small & scale fast

Easy mapping

Quick opportunities identification

Commonly used methodology & language

+ =- Where is the burningplatform ?

- Where to start ?

- How to start ?


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The Supply Chain Council (SCC) has developed and endorsed thThe Supply Chain Council (SCC) has developed and endorsed thee

Supply Chain Operations ReferenceSupply Chain Operations Reference--model (SCOR)model (SCOR)as the crossas the cross--industry standard for supply chain managementindustry standard for supply chain management

The SCC is an independent, notThe SCC is an independent, not--forfor--profit, global corporation withprofit, global corporation with

membership open to all companies and organizations interestemembership open to all companies and organizations interested ind inapplying and advancing in stateapplying and advancing in state--ofof--thethe-- art supply chainart supply chain

management systems and practices.management systems and practices.

Over 1000 Company MembersOver 1000 Company Members

CrossCross--industry representationindustry representation Chapters in Australia/New Zealand, Brazil, Europe, Japan, NortChapters in Australia/New Zealand, Brazil, Europe, Japan, Northh

America, Southern Africa, and South East Asia with petitionsAmerica, Southern Africa, and South East Asia with petitions forfor

additional chapters pending.additional chapters pending.

wwwwww..supplysupply--chainchain..orgorg


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SCOR: A Reference Model for a Supply Chain:5 core processes:

SOURCE MAKE DELIVER

PLAN

RETURNRETURNRETURN

Degussa&

otherBorealis

Suppliers

Degussa

& OtherBorealis

Customer

Common Building Block Approach

Processes Metrics

Best Practices Technology


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#

Level

Schematic Comments

1

2

3

4

Configuration

Level

(ProcessCategories)

ProcessElement Level(DecomposeProcesses)

Plan

DeliverMakeSource

A companys supply chain can be configured-to-order at Level 2 from approximately30 core processcategories.

Companies implement their operations strategy

through their unique supply chain configuration.

Companies fine tune their Operations Strategy at

Level 3

Level 3 defines a companys ability to competesuccessfully 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 bestpractices

ImplementationLevel

(DecomposeProcess

Elements)

Companies implement specific supply chain

management practices at this level

Level 4 defines practices to achieve competitiveadvantage and to adapt to changing business

conditions

SupplyChainOperationsReferencem

odel

Top Level

(Process Types)

Level 1 defines the scope and content for the SupplyChain Operations Reference model

Here basis of competition performance targets are set

Notin

Scope

Description

Balance Production Resources withProduction Requirements

Establish DetailedProduction Plans

Identify, Prioritize, and Aggregate

Production Requirements

Identify, Assess, and AggregateProduction Resources

P3.1

P3.3 P3.4

P3.2

SCOR Contains 3 Levels of Detail

ReturnReturn


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Supply chain improvementsBorealis DegussaUsing SCOR across enterprises

Case Study


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Initial project scope & complexity

3 continents, 8 countries

23 production sites

30 shipping points

27 receiving points

1600 deliveries/year

50,000 Tons shipped

7 major supply chains


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Common & Simple methodology used

Analyze and map common SC

Prioritize and select a Pilot

Do & Implement Pilot

Scale to other areas

Share the benefits


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Project milestones: Fast & Furious

AnalyzeTO BEDesign

Implementation& Improvement

Implementation& Improvement

Analyze Production, SC-

Structure and Processesfor Borealis and Degussa

supply chains Measure current

performance foridentified product (high

level) Identification of

Measurements of

Improvements

Detailed Analysis Level 3

Configuration TO-BE Detailed Improvements

TO BEValidation

Kick Off

Implement & Communicate

changes in : Organization,Processes and Performance

Management Systems

SCOR Concept

Methodology Project

Approach Define Scope

Agree AS IS

Select the BU to focus onwith further process

decomposition

Presentrecommendations

Define low level KPIs& targets

Define tasks &

responsibilities Map changes and define

change process

Agree detailed design

Train & Coach theorganization

Realize & sustain the benefits

0 1 2 3

Mgt. Team MeetingFeb 7th

Mgt. Team Meeting

September 29th

Visioning workshop

Develop common set of

KPIs

July 05 Sept 05 Feb 06


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Roadmap to improvements

1. Detailed Level 3 Analysis

2. Discussion Production and

deliver strategy

3. Quantitative analysis oftransportation costs

5. Judgment of benefits andimplementation effort 4. Visioning workshop


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Impact/ Benefits

low

low

high

high

Solution portfolio

EaseofImplementation

SCReconfiguration

medium

medium

SCReconfiguration

Direct shipment

Transport LoadOptimization

Portfolio & Strategic

DevelopmentVMI

Lead Time reduction

Forecasting Process

Supply chain deliveryperformance


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Shared Supply Chain metrics (template)

Overview Metrics Shared SCOR Level 1 Metrics

Actual

"As-is"

2005

Actual

"As-is"

Q1 2006

Actual

"As-is"

Q2 2006

"To-be"

(progress)

"To-be"

(success)Competition

Median

Process

Industry

Best in class

Process

Industry

(02/05)

Delivery Performance (Requested Del.

date)

65% 66% 69% 85% 90% 90% 95%

Forecast accuracy

55% 58% 58% 70% 80% n.c n.c

Order Fulfillment Lead Time (days)

SOURCE (peroxides - MTF) 15 15 15 10 8 n.c

SC Avg 2005 Inventory qty (Tons) -

Peroxides450 440 435 405 360 n.c n.c

SC Avg 2005 Consumption qty

(Tons/Month) - Peroxides product mix220 220 215 250 260 n.c n.c

SC Inv days of supply (days) -

Peroxides62 61 62 49 42 51 [days] 40 [days]

IN

TE

R

NA

L

Cash Cycle

Degussa - Borealis Supply Chain SCOR-Card (Level 1 & 2)

E

XT

E

R

N

A

L

Responsiveness

Supply ChainReliability

* Data only for illustration purpose


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Total identified SC savings & origin

Deliver Source

100 %

Source

Return Return

Deliver

Return Return

DeliverMake Source Make

Plan Borealis

Degussa

Plan

Make Make


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Savings breakdown

4231074Cash cycle

274050Responsiveness

169040295Supply chain reliability

SC value scaled

up to otherbusiness line (K)

Investment cost

(estimated K)Pilot

SC Value for

improvement (K)Pilot

Overview Metrics


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Change management issues in a collaborative scenario

Typical barriers:

Shared vision feedingmutual need & interest

Understanding aboutbusiness concepts &opportunities

Trust & opennessbetween partners whilebuilding reliable supplychain operations

Change managementsolutions:

Collaborativeworkshops

Common definitions(Reference model)

Commonly selected

& shared metrics


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Time for conclusion


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Enhancing partner collaboration is key

SCOR


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Conclusions

PROCESS

SCOR toolkit applied to the extended SC

SRM & CRM PRMTOOLS

GOALS

Create & Share value through SC collaboration

A total of 2387 K savings identified

Business growth (new prod. devpt.) estimated at 3800 K

Foster partnership

Collaborative sourcing


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Competitive advantage

low

low

high

high

In

novation

intensity

Strategic framework: Landing to The Magic Quadrant

TheMagic

Quadrant


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Key take away message

Procurement is a viable source of value creation

Innovation, entrepreneurial spirit and creativity arekey attributes for procurement

The journey is not always long & difficult

Using simple tools & simple methodology boostproject management

NGalazzo Using SCOR Model in a Real Collaborative Sourcing Scenario[1]

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