Case Studies Scm

Case Studies This section will focus on 3 case studies to see how the SCOR model was implemented, how much time was taken for the implementation and the results that were achieved. The 3 companies in focus are: 1) United Space Alliance, LLC 2) Manugistics 3) Alcatel

United Space Alliance is one of the world’s leading space operations company and is equally owned by The Boeing Company and Lockheed Martin Corporation. The Parachute Refurbishment Facility (PRF) was chosen as the unit within the corporation for assessment of the SCOR model since it represented most of the internal and external processes within the company. Objectives of Project: To ensure that the SCOR model was a feasible method of analyzing the supply chain To increase customer satisfaction by improving material acquisition process and eliminating workflow process delays. The total duration of the project was about 9 months (August 2000 – May 2001) With reference to the methods used in the SCOR model, Source, Make and Deliver elements were included in the project. Initially, however focus was on USA’s internal processes. Approach used: A considerable effort was required to convert practices in use by USA to the metrics specified by SCOR. One of the major tools that aided USA was the Supply Chain “Roadmap” which provided step-by-step detailed information. Steps involved Firstly, a project charter was used to maintain clear goals throughout the process. The next phase was to collect historical data and identify “as-is” metrics. This was one of the challenging areas since limited data was available A top-down system approach was used, wherein Level 1 metrics were determined first, and then further decomposed to Level 3 metrics. Benchmarking was performed simultaneously and this helped USA determine that it was the area of sourcing that needed to be concentrated upon. Benefits achieved: The various metrics that showed a significant improvement were: - End Item Delivery Performance - Perfect Order Fulfillment - Supply-chain Response Time - Value-added Productivity

Manugistics Profile: Manugistics offers the industry's most proven demand and supply chain solutions, including enterprise applications and infrastructure products, strategic consulting, and Manugistics Consulting Services. Manugistics solutions optimize strategic and planning decisions, drive flawless execution, and help companies drive exponential value from their existing systems. Objective: Since Manugistics supply chain solutions wants to continue providing companies with lowest total cost benefits, it is continuously trying to develop and fine-tune its planning and execution optimization engines. Implementation The Manugistics developed solution is based upon an order-to delivery (an Internet-based collaborative solution) system that leads to reduced inventory levels and improved forecast accuracy. A combination of new technologies coupled with proven Manugistics applications create a robust solution. The total implementation time for developing a solution for 1 of its main customers – Mitsubishi was less than 6 months Impact on SCOR model: Make: Along the way, as the forecasts go through their iterations, the manufacturing plants are provided with a picture of real demand which in turn drives their manufacturing planning and scheduling functions Plan: This phase involves 2 aspects: - Highly complex algorithms that drive the forecasting mechanism - A collaborative component that helps automakers to share preliminary forecasts with district managers and ultimately its dealers via the internet. Source: This aspect is impacted to a lesser degree, possibly because it is a solely Manugustics developed solution. Results: • Reduce port stock from a high of over 45,000 units to 0 – resulting in over $100 million in cost savings, • Slash collective vehicle inventory in half – from 80,000 to 40,000 units (both numbers are approximate), • Lower the average age of vehicles on dealer lots from 166 days to 38 days – resulting in the delivery of higher quality vehicles to customers, a corresponding decrease in warranty costs and lower inventory carrying costs, • Reduce order-to-delivery time by approximately 75%,

Alcatel Profile: Alcatel provides end-to-end communications solutions, enabling carriers, service providers and enterprises to deliver content to any type of user, anywhere in the world. Leveraging its long-term leadership in telecommunications network equipment as well as its expertise in applications and network services, Alcatel enables its customers to focus on optimizing their service offerings and revenue streams. It claims to provide leading-edge products and services in virtually every sector of the Telecommunications industry. Objective: Before January 2001, Alcatel realized that many products were not being released on time, the cycle time for inventory and installations was too long, and there were inefficiencies in the interface processes. Due to these problems, customer service was being affected and there was a need for improvement. Implementation: In accomplishing its goal, a Business Improvement Council (BIC) was set up that essentially establish the right metrics which govern the supply chain, institutionalize best practices and manage via facts/metrics. “As-is” Practices: - Customer places discrete order - Enter and then schedule order - Manage order fulfillment - Achieve customer buy-off for order - Plan manufacturing - Buy/build product & prepare for shipment - Deliver to site “To-be” Pull based, VMI system - Alcatel plans strategic inventory - Customer pulls whatever is needed - Via EDI, components are delivered, and product is built - Products get replenished to site. Results SCOR helped Alcatel with its process, structure and benchmarking. They realized that they need to communicate and collaborate more frequently with their suppliers. With regards to metrics, the following changes were noted: • On-time delivery increased from approx 10 % in Jan ‘01à 50% in Nov ’01

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Total Backlog ↓, Supply Chain Management Cost ↑ by 18% as a % of Revenue Material Acquisition Cost ↓ 33% as a % of Revenue

Example of SCOR Process Element Best Practices Showing Impact on ERP System

References: www.supply-chain.org www.usalliance.com www.manugistics.com www.alcatel.com

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