The supply chain operations reference model (SCOR) is a management tool used to address, improve, and communicate supply chain management decisions within a company and with suppliers and customers of a company. The model describes the business processes required to satisfy a customer’s demands. It also helps to explain the processes along the entire supply chain and provides a basis for how to improve those processes.
A Supply Chain Operations Reference (SCOR) model is an emerging management diagnostic tool that can be used to measure supply chain performance. It lays out the top-level supply chain processes in five key steps:
- Plan—This step balances aggregate demand and supply to develop a course of action that best meets sourcing, production, and delivery requirement.
- Source— This step procures goods and services to meet planned or actual demand.
- Make— This step transforms materials into finished products to meet planned or actual demand.
- Deliver—This step provides finished goods and services to meet planned or actual demand, typically including order management, transportation management, distribution management, and import/export management.
- Return—This step handles post-delivery customer support, including warranty administration, disposition, and replacement
Unlike a traditional performance measurement tool, the SCOR model allows a company to communicate with its supply chain partners using common terminology and standard descriptions of the process elements that help explain the cross-functional aspects of the supply chain management processes and the best practices/strategies that yield the most desirable supply chain performance
The SCOR model was developed by the supply chain council (http://www.supply-chain.org) with the assistance of 70 of the world’s leading manufacturing companies. It has been described as the “most promising model for supply chain strategic decision making.” The model integrates business concepts of process re-engineering, benchmarking, and measurement into its framework. This framework focuses on five areas of the supply chain: plan, source, make, deliver, and return. These areas repeat again and again along the supply chain. The supply chain council says this process spans from “the supplier’s supplier to the customer’s customer.”
SCOR Model Benefits
The SCOR process can go into many levels of process detail to help a company analyze its supply chain. It gives companies an idea of how advanced its supply chain is. The process helps companies understand how the 5 steps repeat over and over again between suppliers, the company, and customers. Each step is a link in the supply chain that is critical in getting a product successfully along each level. The SCOR model has proven to benefit companies that use it to identify supply chain problems. The model enables full leverage of capital investment, creation of a supply chain road map, alignment of business functions, and an average of two to six times return on investment.
Implementation
The successful implementation of the SCOR model requires a careful step-by-step roadmap, as
- Analyze the basis of competition in terms of supply chain performances.
- Perform SWOT analysis to identify the strengths and weaknesses of the current supply chain activities.
- Develop a supply chain map to visualize the material and information flows throughout the supply chain and pinpoint the key sources of performance weaknesses in that map.
- Develop specific courses of action that can improve supply chain performance and determine necessary changes in current supply chain practices that will help those courses of action be implemented successfully.
- Clearly define milestones and deliverables to monitor the progress made by changes in supply chain practices.
- Communicate the status of the progress to all supply chain partners and stakeholders on a regular basis.
- Identify proven best practices
- Continue to refine and improve those practices in response to dynamically changing business environments.