SCOR: A model for improving supply chain management

Adopting the supply chain operations reference model can help businesses perfect supply chain management (Image piranka / iStockPhoto)

Supply chain management (SCM) is a critical focus for companies that sell products, services, hardware and software. The supply chain includes everything involved in the flow of goods from a business to its customers, clients or to other businesses. It’s not something that can be set up and left alone — your supply chain needs to be regularly evaluated so it stays efficient and productive for the business.

The supply chain operations reference (SCOR) model is designed to help maintain these processes and to evaluate them for effectiveness and efficiency. SCM is complex, but the SCOR model is intended to help standardize the process and create a measurable way to track results. It’s meant to work across industries using common definitions that can apply to any supply chain process. Using the SCOR model, businesses can judge how advanced or mature a supply chain process is and how well it aligns with business goals.

SCOR 12.0

Originally developed in 1996 by PRTM, a management consulting firm, SCOR is endorsed by the Supply-Chain Council, which is now a part of APICS. The most recent version of the framework, SCOR 12.0, was released in 2017 by APICS.

The updated version includes more “emerging drivers of supply chain success,” covering topics such as omni-channel, metadata and blockchain, according to APICS. The framework was also modernized so best practices better align with digital strategies, including new training information and integrated sustainability standards using the Global Reporting Initiative (GRI).

Six primary management processes

As a framework, SCOR focuses on all customer interactions between the moment an order is placed until the invoice is paid. That includes all material and services needed to complete transactions, including supplies, parts, software and equipment. Market interactions are also considered a part of the model, since they help establish demand.

The processes defined in the SCOR framework are provided as examples of what commonly takes place in supply chain management. Your business might find it has different priorities and that some steps are redundant or irrelevant to your business goals. But most businesses should find it useful to organize the supply chain — the framework uses standardized and common definitions so it can be adapted for simple or complex supply chains across any industry.

The SCOR model is based on six main management processes that include:

Plan: Planning processes include determining resources, requirements and establishing the chain of communication for a process to ensure it aligns with business goals. This includes developing best practices for supply chain efficiency while considering compliance, transportation, assets, inventory and other required elements of supply chain management.

Source: Source processes involve obtaining goods and services to meet either planned or actual market demand. This includes purchasing, receipt, assay and the supply of incoming material and supply agreements

Make: This includes processes that take finished products and make them market-ready to meet planned or actual demand.

Deliver: Any processes involved in delivering finished products and services to meet either planned or actual demand fall under this heading, including order, transportation and distribution management.

Return: Return processes are involved with returning or receiving returned products, either from customers or suppliers. This includes post-delivery customer support processes.

Enable: This includes processes associated with supply chain management such as business rules, facilities performance, data resources, contracts, compliance and risk management.

SCOR model metrics and performance measurements

There are three levels used to measure supply chain performance. These levels help standardize supply chain performance metrics so that companies can be evaluated against other businesses, even if they’re operating differently. A smaller organization can be compared to a bigger organization, or businesses can judge supply chain performance against companies in other industries.

There are over 250 SCOR metrics in the framework, categorized against five performance attributes: reliability, responsiveness, agility, costs and asset management efficiency. Businesses use these to establish the requirements for the supply chain by figuring out which performance attributes to prioritize and which areas the business can perform at an average pace.

The three levels include:

  • Level 1: Defining scope, including geographies, segments and context. At this level, the focus is on the six main process configurations: plan, source, make, deliver, return and enable.
  • Level 2: Configuration of the supply chain, including geographies, segments and products. At Level 2, metrics are high level and evaluated across multiple SCOR processes. This level includes subtype categories that fall under the “parent” categories found in Level 1.
  • Level 3: Process element details, identifying key business activities within the chain. At this level, you can associate any Level 2 process or subcategory with a Level 3 process.

What makes a good SCOR process?

There are four types of SCOR best practices:

  • Emerging practice: a process that involves new technology, knowledge or new approaches to organizing processes
  • Best practices: up-to-date practices that produce consistent and reliable results with supply chain performance
  • Standard: typical practices used throughout the years by multiple businesses across different industries that have produced consistent results
  • Declining: out-of-date practices that have been used consistently but are now redundant or obsolete and act as roadblocks to supply chain performance

Once the performance of your supply chain operations has been measured, you’ll be able to find any inefficiencies or gaps. A good SCOR process needs to be current, structured, proven and repeatable. That means it’s not cutting-edge but it’s not obsolete, the process has clear goals, scope and procedure and it’s proven to be successful in multiple environments repeatedly.

CIO

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