Working with the SCOR® model
The Supply Chain Operations Reference (SCOR) model is the product of the Supply Chain Council (SCC); the current version as of October, 2012 is Version 10. It provides a standardized framework to model an end-to-end supply chain system, and provides partners within the supply chain a structure that links processes, best practices, technology and industry-standard metrics. Compared to other techniques, it attempts to provide the most complete view of the supply chain, (including suppliers and their respective suppliers, and customers and their respective customers), and enable a platform for identifying those processes that may be performing at a level below the industry standard. More information can be found on the Supply Chain Council web site at http://supply-chain.org/scor .
A key starting point is the identification of the supply chain components within these categories or overall processes:
- Plan – management of supply and demand for the entire chain, together with creation of planning business rules and management of ‘infrastructure’ such as data collection and capital assets. This phase also consists of aligning the financial plan with the supply/demand plan.
- Source – the complete set of processes inclusive of material planning and acquisition through payment. As with the Plan phase, business rules are created for the activities in both to-order and to-stock environments.
- Make - management of the manufacturing scheduling and execution processes both for to-order or to-stock environments. Testing and packaging activities are also identified and managed in this phase.
- Deliver – order management and logistics activities from order receipt through invoicing. This set of activities includes warehouse management receiving and pick, pack and load, and adherence to import/export requirements.
- Return – managing reverse logistics in authorizing and processes customer returns. Examples of returns managed in this phase include those for defects, MRO items and excess products.
The proper identification of components for each of these categories results in an overall process map that includes transactional, communications, technological and physical interactions. This mapping will present a visual diagram of the integration points within an organization, and with outside suppliers and customers. While the SCOR model covers all customer, product and market interactions, it does not contain provisions for every single business activity (for example, sales and marketing or research and development).
After identifying the key components for each category, a next step is to measure and communicate the current performance of the supply chain against internal and external industry standard levels. The processes within each category are improved as needed to achieve the required or expected level of performance.
The overall SCOR model is composed of three hierarchical levels and is often represented in a pyramid shape as follows:
- The top level consists of Process Types – the Plan, Source, Make, Deliver and Return elements. Competitive performance targets are typically set at this level, and metrics are created for both customer-facing and internal-facing performance attributes.
- Level 2 consists of a set of core Process Categories. Examples of categories at this level include ‘Source Stocked Product’ and ‘Delivered Stocked Product’.
- Level 3 is the Process Element level, which decomposes the process categories defined in Level 2. At this level, individual process elements are defined (along with their inputs and outputs), along with best practices and performance metrics. The definition of supporting systems and tools is also defined in Level 3.
The SCOR model ends at Level 3, but for individual companies Level 4 implementation activities would be defined to manage the activities specific to their business (in support of Levels 1 through 3). Level 4 activities are then decomposed to successive lower levels as necessary.
While much of the SCOR model may sound intuitive, the actual implementation enforces a systematic way to analyze and codify your end-to-end supply chain activities, instead of viewing individual elements in a ‘silo’. It enforces a discipline in defining and providing visibility to the total set of activities, and in identifying and providing visibility to standard metrics to measure internal performance and provide a basis for comparison to the competition. By building and monitoring the standard structure, it allows an organization to identify elements of variation from best practices and create mitigation plans using supporting methodologies such as six sigma.
Source: Bridgefield Group Copyright©2013. All rights reserved.
This article, in part or entirety, is the sole property of the Bridgefield Group and may not be copied, transmitted, or otherwise published without the express permission of the Bridgefield Group Inc.