Supply Chain Integration, Resilience and Sustainability - Addressing the Big Picture using SCC...

© 2012 Supply Chain Council. ALL RIGHTS RESERVED. | Supply Chain Integration, Resilience and Sust ainability | Slide 1 | 13 May 2012

Supply Chain Integration, Resilience

and Sustainability – Addressing the

Big Picture using SCC Models

Michael D‘heur, shared.value.chain


The Last Five Years Have Been a Roller-Coaster

Ride for Many Supply Chain ManagersE

cono

mic

cyc

les What’s

next?

Flexible Global Supply Chain Required

Increase capacity at all

cost

Grinding the supply chain to almost full

stop

Adding capacity, but more wisely

A new hype –hit by disaster

Party time: “Growth,

growth, growth”

Hangover time:“Cash is king”

Getting optimistic: “Release all brakes”

Raising the bar: “Outgrow market and competitors”

Management Push

Supply Chain Response

Earthquake, Tsunami,

Fukushima

“Lehman Brothers”

Most likely:“Why can’t we get

there faster?”

2008 2009 2010 2011 2012


The ‘New Normal’ – Managing With Only Two

Constants: Change & Acceleration

• Fossil Fuels

• Rare Earths

• Fertile Farmland

• Freshwater

• Volatility of

Demand / Supply

• New markets

• Changing

demographics

• Interdependencies

• Disruption risks

• Stability of supply

networks

• Record Profits

• Societal Issues

• Compliance

Supply Chain Challenges Accelerators

“What is the right approach to

cope?”

Market Volatility Natural resources

Profit vs. PurposeGlobal Value Chain

x

Man made disasters

Natural disasters

Key Question


Flexible and Fast Value Chain Structures Require a

Cross-Enterprise Perspective

Focus on the Total Value Chain

Integration

Topics to Address

Resilience

Sustainability

• Internal integration across departments

• Integration of Customers, Suppliers & 3rd Parties

• Sharing of risks & opportunities• Faster Launch Management

• End-to-End Transparency and Response Capability

• Proactive Risk Management and Supply Assurance

• Lean Footprint Design

• Reconceive energy and material use, logistics, sourcing practices

• Focus on shared value creation• Total Lifecyle Responsibility

The Extended Enterprise


5

Sup

plie

r pr

oces

ses

Product DesignDCOR™

Custom

er processes

Supply Chain SCOR ®

Sales & SupportCCOR™

Product Management

SCOR is an Integral Part of a Larger Toolkit Integrating an Extended Value Chain

An invaluable source of knowledge, frameworks, metr ics and benchmarks – Eventually enabling your teams to make progress

based on a common language and facts (instead of em otions)

The SCC Toolkit


Research

Supply Chain Strategy Customer StrategyProduct Strategy

Plan

Source Make Deliver

Performance Management

Business Strategy

People, Processes, Enablers

R&D SCM Sales

Technical Architecture (Applications, Systems, Data)

DCOR (L1-L3) SCOR (L1-L3) CCOR (L1-L3)

Operations Strategy

Consistent Breakdown (Internally and Externally)

Design

Integrate

Amend

Relate

Sell

Price

Assist

The Translation of Strategy Into Action is Critical

for Success – Internally & Externally


L

-7

L1 Strategic

L2 Operations Strategy

L3 Process Architecture

• Corporate Supply Chain Requirements – provides language that can translate strategic goals into an understandable operations talk

• Very critical to define specific supply chain configurations and segmentation approaches

• Important to describe performance expectations

• The critical link between process and system architecture

• Important to clarify roles & responsibilities (Accountability!!)

SC Operating Model

How SCOR helpsIntegrating the Enterprise

• Supply chain segmentation• Manufacturing strategies,• Replenishment models, • Inventory deployment

• Service level, flexibility, costs, working capital

• Performance objectives for the end-to-end SC

• Business-IT requirements mapping

• Application, Data and Infrastructure architecture

• Accountability for processes

• Service Level Agreements

• Prepared escalation paths

• Defining performance expectation

• Partnership objectives & operating mode

The Complexity of Integrating the Enterprise can

be Solved using SCOR as Common Language


-8

How SCOR helpsResilience & Risk Management

Since SCOR Version 9, Supply Chain Risks

Management is an Integral Part of the Model

SCOR Elements

Application

Benefits

• Enabler process – Manage Risk of Plan, Source, Make, Deliver, Return processes

• EP.9, ES.9, EM.9, ED.9, ER.9

• Provides framework for setting up risk management approach

• Regular review of internal & external risks - SCOR as common language

• Ideally tied into an organizations ‘sense and respond’ capabilities

• Formal, Visible, Quantifiable, Coordinated - Integral in SC Design

• Avoid/minimize costs, mitigate supply chain disruptions by managing risk proactively (based on known metrics)

“Material Price Volatility”

“Business Continuity”

“Market Volatility”

“Supplier Default Risk”

“Societal Risks”


Moving beyond ‘Green’ – SCOR provides the Inroads

to Turn Sustainability into a Business Opportunity

SCOR Elements

How SCOR helps

Application

Benefits

• Green SCOR processes to cover environmental practice and performance

• Carbon, Air, Liquid, Solid Waste

• Look at Supply Chain Flexibility and Sustainability as an opportunity (and as two sides of the same coin)

• Environmental metrics, less waste, greenhouse gases etc.

• Future will be around creating shared value creation across the entire chain

Sustainability

Economic Value CreationTime-to-Market, Lead Times, SC Cost, Working Capital,

Delivery Service

Green Products, Human Rights, Labor,Environmental, Anti-Corruption, Empowerment

Societal Value Creation


The SCC Toolkit is Mature – Future Editions Needs

to Cover a Total Value Chain Perspective

2000 2003 2006 2009 2012

My prediction:Through continuous extension and improvement by the community of

practitioners…

… the SCC Toolkit will become the standard to describe and manage Total Value Chain Architectures

SC

OR

8.0

DC

OR

1.0

CC

OR

1.0

SC

OR

10.0

SC

OR

1.0

1997 …

SC

OR

9.0

DC

OR

2.0

SC

OR

7.0

SC

OR

11.0

SCOR Release Timeline SCOR in 2015

SCC Assets:• Common Language• Global Scope• Cross Industry• Driven by Practitioners,

Consultants, Academia, Analysts


Please share your companies experience in

tackling supply chain challenges

What challenges have you faced when

improving your supply chain? What helped you

to be successful?


Applying the SCC Toolkit - Think Big, Include

Partners and be Bold

(1) Approach value chain integration always with the ‚bigpicture‘ in mind – no company can do it alone anymore

(2) Use SCC toolkit (SCOR, DCOR, CCOR) as commonlanguage, but be willing to adapt to your companiesspecific language

(3) Involve customers and partners early on in the process(4) While implementing the model, be ready to adapt your

design to what really works(5) Get involved in develop SCOR further – it is your model


Thank you for your attention – I appreciate your

feedback and comments

shared.value.chain Management Consultants

Delivering Economic and Societal Value

Mühlfeldweg 25 / D-85748 Garching (Munich)Tel. +49 89 323 86 766 / Mobile +49 170 768 58 [email protected]

Diplom-KaufmannMichael D‘heur

Founder & Managing Director

shared.value.chainManagement Consultants

Supply Chain Integration, Resilience and Sustainability - Addressing the Big Picture using SCC...

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