Overview Presentation Supply Chain Operations Reference-model (SCOR)

1. Overview PresentationSupply Chain Operations Reference-model (SCOR)

2. 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 800 Company Members • Cross-industry representation • Chapters in Australia/New Zealand, Brazil, Europe, Japan, North America, Southern Africa, and South East Asia with petitions for additional chapters pending. • 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

3. SCC Organization - Chapters and Staffing SCC Global Headquarters Pittsburgh, Pennsylvania, USA Disney Japan Chapter Tokyo, Japan NEC Europe Oslo, Norway Modus Media North America Chapter South East Asia Chapter Singapore Venture Inc. Brazil Chapter Effective 9/1/03 Southern Africa Johannesburg, South Africa UTi Australia/New Zealand Chapter Sydney, Australia

4. SCC Leadership Teams Europe Diversey Lever– C Siemens AG – VC Euro-Chain Bomardier Tansportation BASF AG Borealis SAP AG Oracle EMEA Rhodia Swiss Federal Institute of Technology EDS UK and SA Board of Directors Disney - C Eaton - VC DaimlerChrysler MOPAR Business Process Training Center Europe PeopleSoft I2 Technologies Georgia Institute of Technology IBM SCE Limited ICI Supply Chain Phillips Lighting PRTM McCormick & Company, Inc. HP South East Asia Vemture Corporation – C Phillips CFT – VC Modus Media Deloitte Singapore Institute of Mfg. Technology SCM Institute Autoscan Technology Polyolefin Company Asia Pacific Breweries I2 Technologies iPerintis Sdn Bhd Australia/New Zealand Owens Global Logistics – C Health Purchasing Victoria – VC Oracle RMIT University MI Services BHP EAN Australia Japan NEC – C JBC Create – VC Mitsui Global Strategic Studies Olympus Optical EXA Chubu Electric Power J.D. Edwards Nihon Unisys Hitachi Hokkaido University Matsushita Electric Industrial Yamaha Toray Systems Center North America Toys R Us - C Raytheon IBM Adjoined Consulting Avicon Bayer Chemicals The Boeing Company Center for Supply Chain Research / Penn State Air Products and Chemicals Raytheon SAP Elections Pending South Africa Brazil China

5. MembershipMember by Type Members by Region • 800+ SCC members, • Composition • 40%: Practitioners • 25%: Enabling Technology Providers • 20%: Consultants • 15%: Universities, Associations, Government Organizations

6. Current Technical Projects SCOR Technical Development Steering Committee C - Tom Phelps – HP V – Paul Schiller – BP Amoco Best Practice Returns C- Paul Janke (Nokia) C- Lt Col Scott Koster (USMC) MRO Returns Metrics C- Joe Burak (Boeing) C- Michael Memmel - Siemens

7. Supply Chain Operations Reference-Model (SCOR) Overview

8. What is a process reference model? • Process reference models integrate the well-known concepts of business process reengineering, benchmarking, and process measurement into a cross-functional framework Business Process Reengineering Best Practices Analysis Process Reference Model Benchmarking Capture the “as-is” state of a process and derive the desired “to-be” future state Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results Characterize the management practices and software solutions that result in “best-in-class” performance Capture the “as-is” state of a process and derive the desired “to-be” future state Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results Characterize the management practices and software solutions that result in “best-in-class” performance

9. Plan Return Return Source Deliver Return Return Return Return Return Return SCOR is structured around five distinct management processes Make Deliver Source Make Deliver Source Deliver Make Source Customer’sCustomer Your Company Supplier Customer Suppliers’Supplier Internal or External Internal or External SCOR Model Building Block Approach Processes Metrics Best Practice Technology

10. Supply-Chain Operations Reference-model (SCOR) 6.1 - Processes Plan P1 Plan Supply Chain P4 Plan Deliver P5 Plan Returns P3 Plan Make P2 Plan Source Source Make Deliver M1 Make-to-Stock S1 Source Stocked Products D1 Deliver Stocked Products Suppliers S2 Source MTO Products M2 Make-to-Order D2 Deliver MTO Products Customers M3 Engineer-to-Order S3 Source ETO Products D3 Deliver ETO Products D4 Deliver Retail Products Return Deliver Return Source Enable

11. SCOR Boundaries • SCOR Spans: • All supplier / customer interactions • Order entry through paid invoice • All physical material transactions • From your supplier’s supplier to your customer’s customer, including equipment, supplies, spare parts, bulk product, software, etc. • All market interactions • From the understanding of aggregate demand to the fulfillment of each order • Returns

12. SCOR Boundaries (cont’d) • SCOR does not include: • Sales administration processes • Technology development processes • Product and process design and development processes • Some post-delivery technical support processes • SCOR assumes but does not explicitly address • Training • Quality • Information Technology (IT) administration (non-SCM)

13. SCOR Project Roadmap • Competitive Performance Requirements • Performance Metrics • Supply Chain Scorecard • Scorecard Gap Analysis • Project Plan Analyze Basis of Competition Operations Strategy SCOR Level 1 • AS IS Geographic Map • AS IS Thread Diagram • Design Specifications • TO BE Thread Diagram • TO BE Geographic Map Configure supply chain Material Flow SCOR Level 2 Align Performance Levels, Practices, and Systems • AS IS Level 2, 3, and 4 Maps • Disconnects • Design Specifications • TO BE Level 2, 3, and 4 Maps Information and Work Flow SCOR Level 3 Implement supply chain Processes and Systems Develop, Test, and Roll Out • Organization • Technology • Process • People

14. Manufacturing Warehouse Warehouse Warehouse Warehouse European Supplier Latin American Suppliers Other Suppliers Mapping material flow (S1, D1)(SR1,DR1,DR3) (S1, S2, M1, D1)(SR1,,DR1) (S1)(SR1,SR3) (S1)(SR1,SR3) (D2)(DR1) (S1, D1)(SR1,DR1,DR3) (S1, D1)(SR1, DR3) (D1) (D1) (S1)(SR1,SR3) (S1)(SR1,SR3) (S1, D1)(SR1,DR1,DR3)

15. Mapping the execution processes Americas Distributors S1 SR1 D2 M2 S2 European RM Supplier SR3 S2 D1 M1 S1 D1 S1 DR1 SR1 DR1 SR1 DR1 SR1 DR3 SR3 DR3 SR3 S1 D1 S1 M1 Key Other RM Suppliers Alpha Regional Warehouses RM Suppliers ALPHA Distributors

16. Identifying Plan Activities P1 P1 P1 P3 P2 P4 P3 P2 P4 P4 P2 D2 M2 S2 European RM Supplier S2 D1 M1 S1 D1 S1 S1 M1 Key Other RM Suppliers D1 S1 Alpha Regional Warehouses Consumer RM Suppliers ALPHA Distributors

17. Performance Attribute Performance Attribute Definition Level 1 Metric Supply Chain Delivery Reliability 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 Fill Rates Perfect Order Fulfillment 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 Production Flexibility Supply Chain Costs The costs associated with operating the supply chain. Cost of Goods Sold 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 Linking Supply Chain Performance Attributes and Level 1 Metrics

18. Level 1 Performance Metrics Customer-Facing Internal-Facing SCOR Level 1supply chain Management Responsiveness Flexibility Supply Chain Reliability Cost Assets Delivery performance  Fill rate  Perfect order fulfillment  Order fulfillment lead time  Supply Chain Response Time  Production flexibility  Total SCM management cost  Cost of Goods Sold  Value-added productivity  Warranty cost or returns processing cost  Cash-to-cash cycle time  Inventory days of supply  Asset turns 

19. Supply Chain Scorecard & Gap Analysis Supply Chain SCORcard Performance Versus Competitive Population Overview Metrics SCOR Level 1 Metrics Actual Parity Advantage Superior Value from Improvements Delivery Performance to 85% 90% 95% 50% Supply Chain Reliability Commit Date 63% 94% 96% 98% Fill Rates 80% 85% 90% Perfect Order Fulfillment 0% $30M Revenue EXTERNAL Order Fulfillment Lead times Responsiveness 35 days $30M Revenue 7 days 5 days 3 days Key enabler to cost and asset improvements Supply Chain Response Time Flexibility 97 days 82 days 55 days 13 days 30 days 25 days 20 days Production Flexibility 45 days Total SCM Management 3% $30M Indirect Cost Cost 19% 13% 8% Cost NA NA NA NA NA Warranty Cost INTERNAL Value Added Employee NA $156K $306K $460K NA Productivity 119 days 55 days 38 days 22 days NA Inventory Days of Supply Cash-to-Cash Cycle Time Assets 196 days 80 days 46 days 28 days $7 M Capital Charge Net Asset Turns (Working 2.2 turns 8 turns 12 turns 19 turns NA Capital)

20. Decomposing Metrics Revenue Accounts Receivable Cash Flow Perfect Order Fulfillment Cycle Time Supplier on time delivery Schedule Achievement Perfect Order Fulfillment On Time On Time Delivery Performance In Full In Full Docs Docs European RM Supplier Damage D2 M2 S2 Damage Supplier on time delivery Perfect Order Fulfillment S2 Key Other RM Suppliers D1 M1 S1 D1 S1 D1 S1 M1 S1 Alpha Regional Warehouses Consumer RM Suppliers ALPHA Consumer

21. Revenue Accounts Receivable Cash Flow Performance Measurement Perfect Order Fulfillment Perfect Order Fulfillment Goal – 95% Cycle Time Inventory Metrics Conflict Supplier on time delivery Schedule Achievement Perfect Order Fulfillment Supplier on time delivery Actual – 85% Schedule Achievement Actual – 95% Perfect Order Fulfillment Actual – 90% Perfect Order Fulfillment Actual - 85% On Time On Time Delivery Performance In Full Delivery Performance Actual – 99% In Full Docs Docs • Under-performance • Process • Systems European RM Supplier Damage D2 M2 S2 Damage Supplier on time delivery Perfect Order Fulfillment S2 • Under-performance • Process • Systems Key Other RM Suppliers D1 M1 S1 D1 S1 D1 S1 M1 S1 Alpha Regional Warehouses Consumer RM Suppliers Consumer RM Suppliers ALPHA Consumer

22. Implementation Issues • SCOR Implementations • Vary in scope and objective • Green Field • Distribution analysis • Planning Improvements • Change Management / COTS-Consultant Selection • How to conduct an ROI evaluation • Senior Management support vs. Middle Manager resistance • Project timelines • Benchmarking • Implementation • Tools

23. ATT Wireless – Fixed Wireless Operations

24. Intel As-Is Modeled in Easy SCOR Suppliers Supplier Suppliers Assemble/ Package Distribution Centers Geo Ports of Entry Americas---> Europe---> Asia--->

25. Gold’n Plump Supply Chain Planning

26. F404 Engine HP Rotor Assy NAS F/A18 NADEP DSC NAVICP CV 25% On-Time Fairchild Fasteners 60% of Requirement Accepted, 90% of that Completed on time Serviceable Modules 188% of Requirement, Svc Engines 112% of Requirement 77%SMA Self LockingNut D2 S1 D1 S1 Serviceable M2 D2 S1 D1 S1 Rotor Assy S2 (carcass) Svc M2 D1 164 Days 32 Days Unserviced Engine Module Engine 98 days S2 (carcass) Unserviceable Rotor Assy DR2 SR2

27. Practice not yet adopted Practice adopted Best practice achieved Carter Holt Harvey – Focus on Best Practice / Change Management COTS / Consultant Evaluations

28. USMC SRAC – IT Gaps and Redundancies

29. 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 APO 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

30. www.supply-chain.org info@supply-chain.org