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Supply Chain Improvement

Supply Chain Operations Reference


(SCOR) model

Peter A. Bolstorff

Executive Director, Supply Chain


PRAGMATEK Consulting Group, LTD.

PRAGMATEK Consulting Group, Ltd. 2001

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SCOR - FAQs
Who is the Supply Chain Council?
What is SCOR?
How do you use SCOR to achieve supply
chain performance improvement?
How can this apply to my company?
How can I learn more about SCOR?

PRAGMATEK Consulting Group, Ltd. 2001

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Supply Chain Council

The Supply-Chain Council (SCC) is an independent, notfor-profit, global corporation with membership open to all
companies and organizations
Over 800 Company Members (Practitioners, Technology
Providers, Consultants, Academicians, Government)
Wide range of industries (Manufacturers, Distributors,
Retailers, CPG)
The SCC endorses 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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The Two Faces of SCOR

Process
Reference

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Applied

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The SCOR Framework


The integrated processes of Plan, Source, Make, Deliver and Return,
spanning your suppliers supplier to your customers customer, aligned
with Operational Strategy, Material, Work & Information Flows.
Plan
Plan

Plan

Deliver

Source

Suppliers
Supplier

Make

Plan

Deliver

Source

Make

Deliver

Source

Make

Plan

Deliver

Supplier

Your Company

Customer

Internal or External

Return

Internal or External

Source

Customers
Customer

Supply Chain Operations Reference Model


5

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SCOR Project Roadmap


Operations Supply Chain Scope
Performance Metrics
Strategy

Analyze
Basis of
Competition

Supply Chain SCORcard


Competitive Performance Requirements
and SCORcard Gap Analysis

Material
Flow

Configure
Supply
Chain

Align
Performance
Levels,
Practices, and
Systems

Implement
Supply-Chain
Changes

AS IS Material Flow
Disconnect & Gross Opportunity Analysis
Material Flow Strategy and Best Practice
Analysis
Supply Chain Strategy
TO BE Material Flow

Information
AS IS Work/Information Map
and Work Flow Transactional Analysis

Design Specifications
TO BE Work/Information Map
Prioritized List of Changes

Implementation Master Schedule of Projects

ROI Analysis
Technology Selection
Detail Requirements, Solution
Design, Configuration, Test & Go Live

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Applications of SCOR

Software Selection &


Implementation

Cost Reduction
Productivity Improvement

Business Requirements

Direct
Indirect

SKU Rationalization
Delivery Performance
Improvement

Application optimization

Upgrade
Utilization

Implement Operational
Strategy
Network Analysis
Material Flow Design

Supply Chain Six Sigma


and Lean Enterprise

OTIF Perfect Order


Synchronize Lead-time

Continuous Improvement
Organizational Learning

Efficient Consumer
Response

Forecast Accuracy
Category Marketing
CPFR

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Implementation Results

2X to 6X ROI within 12 months

Fully Leverage Capital Investment in Systems

Stock price improvement


Income statement and balance sheet
improvement
Self fund technology investments
Utilization of current applications
Business blue print to leverage needed upgrades
Roadmap for e-investments

Framework for supply chain process


management and continuous improvement

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How Do I Use SCOR?

to Improve Supply Chain Performance

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Performance Improvement
Strategy

Design

Measurement

Organization

Process

Jobs/People

Technology

10

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Project Approach
Educate

Discover

Support

Opportunity

Workshops
Executive
Briefings
Customized
Training
SCOR Boot
Camp for
Project
Managers

1 Week

11

Discovery
Checklist
Project Charter
Stakeholder
Interviews

1-2 Weeks

Analyze

Design

Strategy

Solution

Performance
Metrics
Benchmarks
SCORcard
Competitive
Requirements

Material Flow
Design
Disconnect
Analysis
Work and
Information Flow
Design
Application
Architecture
Preliminary
Implementation
Plan

3-4 Months

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Develop

Prototype

Implement

Install

Prioritized Supply Chain Changes


Opportunity Analysis
Master Schedule of Projects
Supply Chain Project OfficeContinuous Improvement Plan
Detailed Design
Technology Selection
Conference Room Pilot

6+ Months

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Educate for Support

Key Points
Develop

an
Evangelist
Establish Core
Team Buy IN
Enroll an Active
Executive
Sponsorship

12

Deliverables

General SCOR Workshops


Customized Workshops
Executive Briefings
SCOR Boot Camp for
Project Managers

Supply Chain
Management for
Dummies, Oct 2000,
SCTN; Supply Chain
University, April 2001
SCTN; Spreading the
Word, Oct 2001, SCTN

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Discover the Opportunity


Key Points

Uses a checklist to collect


appropriate information to
paint an appropriate
business context
Actively involves your entire
business team key
stakeholders
Scopes your project
respecting all supply chain
factors
The Project Charter is the
critical output

13

Deliverables

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Business Context
Summary
Project Charter
Scope
Organization
Plan

A Model of Project
Management, Sep/Oct
1999, SCTN; Scale versus
Scope, Dec 2001, SCTN

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Business Context

Strategic Background
Strengths Weaknesses
Opportunities Threats
(SWOT)
Value Proposition
Critical Success Factors
Critical Business Issues
Competitive Analysis

Business and Financial


Information

Internal Profile
Organization
Physical Locations
Other Key
Performance
Indicators

External Profile

Profit and Loss


Statement
Balance Sheet

14

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Market/Customers
Suppliers

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Supply Chain Scope

Project is defined by the unique


combination of
Geography
Customer(s)

Item(s)

or Products
Process(es)
Supplier(s)

15

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ALPHA Definition Matrix

Geography - Customer or Market Channel


Supply Chain
Definition Matrix
US - Distributor

Product

NEW

MATURE

16

US - Direct-to-Consumer

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Project Charter
I. Introduction

Maintenance of the
Project Charter

II. Project Overview

Scope
Business Objectives
Project Objectives

Methodology
Project Schedule
Project Milestones &
Deliverables
Dependencies

17

Organization Chart
Project Resources
Roles and Responsibilities

VI. Measures of Success

III. Project Approach

IV. Project Budget


V. Project Organization

Stakeholder Expectations
Benchmarks
Benefit Analysis

VII. Project Communication

Communication Plan
Control Procedures

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Project Organization

BU Advisory/Steering Committee

BU Project Sponsor

Content SME

BU Project Manager

Experienced Project Manager

BU Design Team

BU Extended Team

18

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Analyze to Align Strategy


Key Points
Balances Customer,
Internal, and
Shareholder Facing
Metrics
Incorporates multiple
sources of useful
benchmarks
SCORcard data queries
Hot Links to the P&L
Provides the
foundation for
strategy, priority, and
cascading goals

19

Deliverables

SCOR v5.0 Metrics


Competitive Performance
Requirements
SCORcard
www.pmgbenchmarking.
com,
www.marketguide.com

Target the Impact, Cut


the Risk, June 2000,
SCTN; How to SCOR with
Six Sigma, September
2001, SCTN

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SCOR v5.0 Metrics


Performance
Attribute
Supply Chain
Delivery Reliability

Supply Chain
Responsiveness
Supply Chain
Flexibility
Supply Chain Costs

Supply Chain Asset


Management
Efficiency

20

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.
The velocity at which a supply chain
provides products to the customer.
The agility of a supply chain in responding
to marketplace changes to gain or maintain
competitive advantage.
The costs associated with operating the
supply chain.

Delivery Performance
Fill Rates
Perfect Order Fulfillment

The effectiveness of an organization in


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

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Order Fulfillment Lead Times


Supply Chain Response Time
Production Flexibility
Cost of Goods Sold
Total Supply Chain Management
Costs
Value-Added Productivity
Warranty / Returns Processing
Costs
Cash-to-Cash Cycle Time
Inventory Days of Supply
Asset Turns

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Competitive Requirements
Performance
Attribute
Delivery Reliability
Flexibility/ Responsiveness

*Performance
vs.
Competition
Supply
Chain 1

Supply
Chain 2

Supply Chain Cost

Asset

*From your
Organizations
Point of View

Legend

Superior
21

Advantage

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Parity

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SCORcard

External

Performance Attribute or
Category

Supply Chain Delivery


Reliability

Supply Chain Responsiveness

Level 1 Performance Metrics

Actual

Parity
Advantage
Superior
Median of
Midpoint of parity 90th Percentile of
statistical sample
and superior
Population

Parity Gap
Parity - Actual

Requirements
Gap

Delivery Performance

68.4%

74.7%

85.0%

95.0%

-6.3%

-26.6%

Fill Rates
Substitute Line Item Fillrate here

91.0%

92.0%

95.5%

99.0%

-1.0%

-8.0%

Perfect Order Fulfillment

35.0%

74.0%

81.0%

88.0%

-39.0%

-53.0%

Order Fulfillment Lead Time

5 days

10 days

6.5 days

3 days

5 days

5 days

Supply Chain Response Time

90 days

60 days

45 days

29 days

-30 days

-30 days

Production Flexibility

61 days

42 days

26 days

10.8 days

-19 days

-19 days

86%

69%

61%

53%

-17%

-25%

17.0%

9.5%

6.7%

3.9%

-7.5%

-10.3%

7%

17%

12%

7%

10%

5%

1.5%

1.5%

1.0%

0.5%

0.0%

-0.5%

Cash-to-Cash Cycle Time

197

97.9

63.8

29.7

-99.1

-99.1

Inventory Days of Supply

91

74

48

23

-17.4

-17.4

Asset Turns

1.5

2.5

4.7

7.0

1.0

1.0

14%

31%

39%

47%

-17%

-8%

Operating Income

7%

14%

19%

23%

-7%

-5%

Net Income

4%

5%

8%

11%

-2%

10.7%

11%

15%

20%

-0.4%

Supply Chain Flexibility

Cost of Goods
Total Supply Chain Cost
Supply Chain Cost

Internal

SG&A Cost
Warranty / Returns Processing
Costs

Shareholder

Supply Chain Asset


Management Efficiency

Gross Margin
Profitability

Effectiveness of Return

22

Return on Assets

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Design Material Flow


Deliverables

Key Points
Includes all Internal &
External Physical Locations
Incorporates P/N
classification SCOR L2

Stock versus To Order


RM versus FG versus WIP

Illustrates P/N Routes


Transportation Cost
Inventory Level
Leadtime

Disconnect Analysis drives


savings opportunity

23

AS IS Material Flow
Disconnect Analysis
List and Group
Quantify
Prioritize
TO BE Material Flow

When Performance is no
Joking Matter, April 2000,
SCTN

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Classify Items
Plan
Make

S1 Source Stocked
Products

M1 Make-to-Stock

S2 Source MTO
Products

M2 Make-to-Order

S3 Source ETO
Products

M3 Engineer-to-Order

Deliver
D1 Deliver Stocked
Products

D2 Deliver MTO Products

D3 Deliver ETO Products

Customers

Suppliers

Source

R1 Return Defective Product


R2 Return MRO Product
R3 Return Excess Products

Return

24

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Physical Material Flow


As Is Material Flow
Suppliers

Suppliers

Distributors

Dealers

Warehouse
Factory
Factory

Factory
Warehouse
Warehouse
Distributors

Warehouse

Dealers

Dealers

Factory

Distributors
Factory

3rd Party Supplier


Far East Suppliers

Distributors

Distributors

Dealers

Warehouse

Dealers

Suppliers

Suppliers

Distributor

Distributors

Factories

Factories

Warehouse

Dealers

Factory

Australia Suppliers

Warehouses
Distributors

= Inbound

Dealers

= Outbound

Dealer

25

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Disconnect Analysis

Identify individual disconnects (brainstorm)


Group disconnects using an Affinity Diagram
approach
Quantify Disconnects

Analyze Cause and Effect with Disconnect Group


using Fishbone Analysis
Estimate Performance Opportunity using Test
Scenarios for each Fishbone

Validate Savings

26

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Fishbone Analysis

Product Quality perceived as a


competitive advantage

Marketing did
not assess
design
requirements

The supplier
does not
carry
inventory in
the NA this
p/n

Supplier
physical
location
is in
Japan

The lab did


not invest in a
redesign prior
to the
outsource
decision

Design
Component
of MATURE
Product adds
90 days to
source
leadtime

The Bill of
Materials for this
product has not
changed

27

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TO BE Material Flow

Identifies appropriate leading practices to


improve material flow
CPFR,

cross-dock, VMI, rapid


replenishment, supplier agreements,
product rationalization

Eliminates inefficiencies identified in


disconnect analysis
Transportation

cost, inventory turns, leadtime, delivery performance

28

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Design Work & Information Flow

Key Points

Integrates the work and


information flow which
moves the material
Incorporates application
modules and submodules
Organization roles
illustrated using Swim
Diagram
Blueprints the impact of
e to your business
Focuses performance on
transactional productivity

Deliverables
AS IS Work & Information
Flow
Revised Disconnect Analysis

Productivity
Quality

TO Be Work & Information


Flow
SCOR Cheat Sheet

Before You Buy, Reconnect, February 2000;


Slow Down to Speed Up,
Nov/Dec 1999; Putting the
e in Enterprise, August
2000, SCTN; How to Design
a Business Blueprint, August
2000, SCTN

29

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Transactional Analysis

Purchase Order
Work Order
Sales Order
Return Authorization
Planning Event

Staple Yourself to an Order

Process Steps (Level 4)


Inputs and Outputs
Enabling Technology
Business Rules
Transactional Productivity

Forecast
Replenishment Order

Volume
Cycle Time
Event Time
Elapsed Time

Yield

30

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Transactional Analysis
PROCESS:
M1.2 Make (Stocked Product) : Issue Material
INPUT / OUTPUT:
Staged Components

Production Schedule
Pull Instruction

M1.2

PROCESS STEPS:
1. Locate Components
2. Wand Components out of Warehouse
3. Move components to in process staging area
4. Sequence components based on schedule
TECHNOLOGY USED: Oracle Manufacturing, , Manual, RF, Excel
VOLUME: 1300 pcs / hr
CYCLE TIME: Event 1 hr / Elapsed = 4 hrs
YIELD: 85 %
BUSINESS RULES:
1. Dont let the production line stop.
DISCONNECTS:
1. Pull materials from receiving area.
31

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32

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Supplier

AP

Purchasing Warehouse

SCOR Level 3 Source


S1.2
Receive
Product

Purchase
Order

S1.1
Schedule
Product Deliveries

Purchase
Order

D1.2

33

Product
Packing
Slip

S1.3
Verify
Product

S1.4
Transfer
Product

Receipt
of Purchase
Order
Payment
S1.5
Authorize
Supplier Payment

D1.10

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Invoice

D1.13

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Plan Element Relationships


P1 Plan
Supply
Chain
P2 Plan
Source

S1.1
Schedule
Product
Deliveries

34

P3 Plan
Make

M1.1 Schedule
Manufacturing
Activities

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P4 Plan
Deliver
D1.3
Reserve
Inventory
& Promise
Date

D1.5
Plan &
Build
Loads

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Business Blue Print


Exec
utive

Cust
ome
r
Serv
ice

SCOR Level 3 Supply Chain


Process Map
D1.1 Process
Inquiry & Quote

Quote

Leadership
Review

Updated Annual Business


Plan w/ P&L action plan

Booked
Order

D1.2 Receive,
Enter, & Validate
Order

D1.3 Reserve
Inventory &
Determine Delivery
Date

Confirmed,
Allocated
Order

Mark
etin
g

Strategy, Goals,
Annual Business Plan, P&L
Plan Supply Chain (P1)
Quarterly, Product
Family

Requirements

Resources

Balance

Available
Inventory

Weekly, SKUL
Daily
Orders
Plan Source (P2)
Monthly, SKU

Requirements

Resources

Balance

Plan
ning

Plan Make (P3)


Monthly, SKU

Requirements

Resources

Balance
Material
Needs

Logi
stics
Planned
D1.4 Consolidate
Materials
Orders

Man
ufact
urin
g

Purc
hasi
ng

Plan Deliver (P4)


Monthly, SKU

Requirments

Resources

Balance

Quarterly, Product Family

Inventory
Needs
Planned Orders

D1.9 Pick
Product

D1.6 Route
Shipments

D1.7 Select Carriers &


Rate Shipments

D1.8 Receive
Product

Planned Orders
M1.2 Issue
Product
M1.1 Schedule
Manufacturing
Activities

Schedule
of Jobs

S1.4 Transfer
Product

Picked Load
D1.10 Load
Vehicle,
Generate Ship
Docs & Ship

Pick List
D1.5 Plan & Build
Loads

Invoice,
Payment
D1.13 Invoice &
Receive Payment
Ship
Confirmation

Replenishment Shipment
M1.3
Manufactcure &
Test

M1.4 Package

M1.5 Stage
Product

M1.6 Release
Product to Deliver

Available Inventory
S1.1 Schedule
Product
Deliveries

S1.2 Receive
Product

S1.3 Verify
Product

PO, Receipt

S1.5 Authorize
Payment

PO
Shipment
D1.2 Receive,
Enter, & Validate
Order

Sup
plier

35

D1.10 Load Vehicle,


Generate Ship Docs &
Ship

Ship
Confirmation

D1.13 Invoice &


Receive Payment

Invoice,
Payment

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Productivity Improvement

Source (S1) - Purchase Order

Volume
Event Time
Elapsed Time
Yield
Event Time
Elapsed Time
Yield
Event Time
Elapsed Time
Yield

AS IS
Productivity
Consolidated
TO BE
Productivity
Consolidated
Improvements

36

S1.1
Schedule
Product
Deliveries

S1.2
Receive
Product

S1.3
Verify
Product

S1.4
Transfer
Product

S1.5
Authorize
Supplier
Payment

Totals

5900 y
9h
29.6 h
83%
1h
1h
99.9%
8h
28.6 h
16.9%

15300 y
1.86 h
3.45 h
95%
1h
2h
99.9%
0.86 h
1.45 h
4.9%

44000 y
1.13 h
39.9 h
98%
0.565 h
24 h
100%
0.565 h
15.9 h
2%

78600 y
0.16 h
2h
83%
0.16 h
0.75 h
100%
0
1.25 h
17%

40600 y
0.6 h
48.8 h
93%
0.16 h
24 h
98%
0.45 h
24.8 h
5%

178400 y
12.75 h
123.75 h
90%
2.885 h
51.75 h
99.56%
9.876 h
72 h
9.16%

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Prioritize Disconnects

37

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Develop Integrated Solution


Key Points

Recommendations address
all factors of performance
Portfolio of Projects
managed as a whole;
initiates ROI analysis
Integrates with Application
Detailed Business
Requirements Definition and
Solution Design
Transition Teams from
Design to
Implementation

38

Deliverables

Master Schedule of Projects


ROI Schedule
Implementation Organization
Keeping Your Focus,
December 2000; and Who

SCORed my Cheese?;
February 2001, More Faster,
Less Later, June 2001, SCTN

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Balanced Project Mix

Scope of Change

Balanced
Project Mix

39

Pace of Change
Fast

Measured

Tactical

Focused
Improvement

Continuous
Improvement

Strategic

Focused
Restructuring

Business Process
Innovation

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Master Project Schedule


TYPE
PROJECT NAME
SCOR
PROJECT MANAGER
SUPPLY CHAIN SCOPE

RESULTS PLAN

Strategic
Deliver

Available to Promise
Joe Smith

Service
Cost

Flexibility
Assets

02/08/00
12/31/00

Strategic
Make

Make-to-Order
David Harris

Service

Flexibility
Assets

10/01/99
06/30/00

Strategic
Source

Outsource Reconfiguration
Deb Larue

Service
Cost

Flexibility
Assets

12/03/99
12/31/00

Assets

07/19/99
04/30/00

Flexibility
Assets

08/16/99
TBD Disconnects

Deficiency Non Working Inventory Reduction


Deliver
Jay Jones
Deficiency Integrated Supply Chain Planning
Plan
Peter Brinkman

Service
Cost

START
END JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Brainstorming Quarterly
Session
Action
Plan
Complete
Capital Plan

Service
Cost

Strategic
Source

Efficient Material Acquisition


Elaine Randall

Cost

Strategic
Deliver

Direct to Consumer Transportation


Sandy Levee

40

Flexibility
Assets

Complete Test

Process Design
Validation

Complete 3rd
Quarter Plan

Complete 4th
Quarter Plan

Complete
Implementation

Process
Cutover

Planning
Review

Reviewed

Deficiency Texas Consignment


Source
Joe Williams

Complete 2nd
Quarter Plan

NWI
Data Integration
M onthly Action Plan Reviews - Plants

Action
Plan
Determine Schedule

Determine Schedule

Service

Flexibility
Assets

03/01/00
12/31/00

2001 plan
Brainstorm
Project Objectives;
Set Strategy

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Projected Net Earnings Impact


12.0%
10.0%

Net Earnings

10.0%

8.0%

6.9%

6.7%
5.9%
5.3%

6.0%
4.2%

4.5%

4.6%

4.7%

4.0%

2.0%

0.0%
FY '01
Low Difficulty Projects

41

FY '02
Low + Medium Difficulty Projects

FY '03
Low + Medium + High Difficulty Projects

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Implement the Changes


Project
Management
Office

Annual Budget
& Business
Strategy

Ongoing
Business
Requests

Monthly
Project
Review

Maintain
Master
Schedule

Create Project Charter

Monthly
Status
Report

Create Project Plan


Assign
Project
Manager

Project
Management
Methodology

Generate
Statement of
Work and
Funding
Request

Create Budget
Spreadsheet

Maintain Project Plan

Create Communication
Plan

Manage Change

Establish Roles and


Responsiblities

Report Performance

Create Risk Plan

Cost Control

Manage Issues

Initiate
42

Create Procurement
Plan

Plan
Plan

Document
Project
Performance

Quality Control

Create Project Charter

Stakeholder
Approval

Prepare
Project
Close Report

Manage Risks

Manage Procurement and


Contracts

Plan
Execute/Control

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Close
Project
Contracts

Close
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Toro Adoption Progress

1st SCOR Project

43

Enterprise SCOR

PRAGMATEK Consulting Group, Ltd. 2001

Phase 1 Implemented

pragmatek.com

Project Life Cycle Adoption

Discover
1 Week

Analyze
4 Weeks

Discovery Checklist
Customized Training
Project Charter
Detailed SCORcard
w/Benchmarks
Opportunity Assessment

44

Design

Develop

8-12 Weeks

Business
Case

AS IS & TO BE
Material Flow
Detailed Disconnect
To Be Solutions
Analysis
Recommendations
for Change
Design
Specifications
AS IS & TO BE Work
and Information Flow
Prioritized List of
Supply Chain
Changes
Technology Selection

PRAGMATEK Consulting Group, Ltd. 2001

Implement

24 - 32 Weeks
Master Schedule of
Projects
ROI Analysis
2X to 6X
Technology Selection ROI within
12 months
Detail Design
(Requirements) and
Configure
Pilot (Test) and Roll Out
or Go Live

pragmatek.com

Resources
www.supply-chain.org
www.supplychaintech.com
www.forbes.com
www.pmgbenchmarking.com
www.Toro.com - 3Q Earnings
Announcement (NYSE:TTC) 5 by Five
Initiative
www.pragmatek.com

45

PRAGMATEK Consulting Group, Ltd. 2001

pragmatek.com

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