Supply Chain Operations Reference Model (SCOR)

Ozgun C. Demirag

Supply Chain Operations Reference Model (SCOR): Information about

(SCC)Developed by Supply Chain Council (SCC) SCC: Independent, not-for-profit corporation organized in 1996 by:

Global management-consulting firm, Pittiglio Rabin Todd & McGrath (PRTM) and Market research firm, Advanced Manufacturing Research (AMR) in Cambridge, Massachusetts.

Started with 69 voluntary companies; now close to 1000 members.SCC Objective: To develop a standard supply-chain process reference model enabling effective communication among the supply chain partners, by

Using standard terminology to better communicate and learn the supply chain issuesUsing standard metrics to compare and measure their performances

Supply Chain Operations Reference Model (SCOR)

SCOR:Integrates Business Process Reengineering, Benchmarking, and Process Measurement into a cross-functional framework.

Benchmarking Best Practices Analysis

Process Reference Model

Business Process Reengineering

Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results

Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results Characterize the

management practices and software solutions that result in “best-in-class” performance

Characterize the management practices and software solutions that result in “best-in-class” performance

Capture the “as-is” state of a process and derive the desired “to-be” future state

Capture the “as-is” state of a process and derive the desired “to-be” future state

Capture the “as-is” state of a process and derive the desired “to-be” future state

Capture the “as-is” state of a process and derive the desired “to-be” future state

Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results

Characterize the management practices and software solutions that result in “best-in-class” performance

Supply Chain Operations Reference Model (SCOR)

The Primary Use of SCOR:To describe, measure and evaluate supply chain configurations.

SCOR contains:Standard descriptions of management processesA framework of relationships among the standard processesStandard metrics to measure process performanceManagement practices that produce best-in-class performance

Enables the companies to:• Evaluate and compare their performances with other

companies effectively • Identify and pursue specific competitive advantages• Identify software tools best suited to their specific process

requirements

Supply Chain Operations Reference Model (SCOR): Boundaries

SCOR spans:• All customer interactions, from order entry through paid

invoice.• All product (physical material and service) transactions,

from supplier’s supplier to customer’s customer, including equipment, supplies, spare parts, bulk product, software, etc.

• All market interactions, from the understanding of aggregate demand to the fulfillment of each orderSCOR does not attempt to describe every business process or activity, including:

• Sales and marketing (demand generation)• Research and technology development

• Product development• Some elements of post-delivery customer support

Supply Chain Operations Reference Model (SCOR):Basic Management

Processes

Plan-Source-Make-Deliver-Return

Supplier’sSupplier

Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliverSource

Customer’s Customer

Plan

Supplier (Internal or External)

Your Company

Customer (Internal or External)

ReturnReturn ReturnReturn

ReturnReturn

Plan-Source-Make-Deliver-Return provide the organizational structure of the SCOR-model

Scopes of Basic Management Processes

Plan (Processes that balance aggregate demand and supply to develop a course of action which best meets sourcing, production and delivery requirements)

Balance resources with requirementsEstablish/communicate plans for the whole supply chain

Source (Processes that procure goods and services to meet planned oractual demand)

Schedule deliveries (receive, verify, transfer)Make (Processes that transform product to a finished state to meet planned or actual demand)

Schedule productionDeliver (Processes that provide finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management)

Warehouse management from receiving and picking product to load and ship product.

Return (Processes associated with returning or receiving returned products) Manage Return business rules

Return

Level

Description Schematic Comments

Top Level(Process Types)

Level 1 defines the scope and content for the Supply chain Operations Reference-model. Here basis of competition performance targets are set.Source Make Deliver

Plan1

#

Configuration Level (Process

Categories)

A company’s supply chain can be “configured-to-order” at Level 2 from the core “process categories.” Companies implement their operations strategy through the configuration they choose for their supply chain.

2

Process Element Level (Decompose

Processes)

Level 3 defines a company’s ability to compete successfully in its chosen markets, and consists of:Process element definitionsProcess element information inputs, and outputsProcess performance metricsBest practices, where applicableSystem capabilities required to support best practicesSystems/tools

3

P1.1Identify, Prioritize, and Aggregate

Supply-Chain Requirements

P1.2Identify, Assess, and Aggregate

Supply-Chain Requirements

P1.3Balance Production Resources with

Supply-Chain Requirements

P1.4Establish andCommunicate

Supply-Chain Plans

Implementation Level (Decompose Process Elements)

4

Not in Scope

Return

Three Levels of Process Detail

Companies implement specific supply-chain management practices at this level. Level 4 defines practices to achieve competitive advantage and to adapt to changing business conditions.

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Customer-FacingLevel 1Performance Metrics

Assets

Supply Chain Reliability

Cost

Responsiveness

Delivery performance Fill rate Perfect order fulfillment Order fulfillment lead time Supply Chain Response Time Production flexibility Total SCM cost Cost of Goods Sold Value-added productivity Warranty cost or returns processing cost Cash-to-cash cycle time Inventory days of supply Asset turns

Internal-Facing

Flexibility

Performance Attributes

Level Metrics Facts

Level 1 Metrics are primary, high level measures that may cross multiple SCOR processes. They do not necessarily relate to a SCOR Level 1 process (Plan-Source-Make-Deliver-Return).There is hierarchy among the metrics in different levels.Level 1 Metrics are created from lower level calculations (Level 2 metrics)Level 2 Metrics:

Associated with a narrower subset of processes. Example:

Metric related with Delivery Performance: Total number of products delivered on time and in full based on a commit date. Metric related with Production: Ratio Of Actual To Theoretical Cycle Time

Level 2 Process Types and Definitions

Planning: A process that aligns expected resources to meet expected demand requirements.

Balance aggregated demand and supplyConsider consistent planning horizon(Generally) occur at regular, periodic intervals

Execution: A process triggered by planned or actual demand that changes the state of material goods.

Scheduling/sequencingTransforming productMoving product to the next process

Enable: A process that prepares, maintains, or manages information or relationships on which planning and execution processes rely

Level 2 Process Categories

P1: Plan Supply ChainP2-P5: Plan SCOR ProcessS1: Source Stocked ProductS3: Source Engineer-to-Order ProductS2: Source Make-to-Order ProductM1: Make-to-StockM2: Make-to-OrderM3: Engineer-to-OrderD1: Deliver Stocked ProductD2: Deliver Make-to-Order ProductD3: Deliver Engineer-to-Order ProductD4: Deliver Retail Product (New in Version 6.0)SR1/DR1: Return Defective Product (Source Return/Deliver Return)SR2: Source Return MRO Product (Maintenance, Repair and Overhaul) DR2: Deliver Return MRO Product SR3/DR3: Return Excess Product (Source Return/Deliver Return)EP, ES, EM, ED, ER: Enable corresponding SCOR Processes

Process Category: Source Stocked Product

Process Number: S1

Process Category Definition

The procurement, delivery, receipt and transfer of raw material items, subassemblies, product and or services.

Performance Attributes Metric

Reliability % Orders/lines processed complete

Responsiveness Total Source Cycle Time to Completion

Flexibility Time and Cost related to Expediting the Sourcing Processes of Procurement, Delivery, Receiving and Transfer.

Cost Product Acquisition Costs

Assets Inventory DOS

Best Practices Features

Joint Service AgreementsAlliance and Leverage agreements

None Identified

Example Continued

Process Element: Transfer Product

Process Element Number: S1.4

Process Element Definition

The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring and stocking product. For service this is the transfer or application of service to the final customer or end user.

Performance Attributes Metric

Reliability % Product transferred damage free% Product transferred complete% Product transferred on-time to demand requirement % Product transferred without transaction errors

Responsiveness Transfer Cycle Time

Flexibility Time and Cost Reduction related to Expediting the Transfer Process.

Cost Transfer & Product storage costs as a % of Product Acquisition Costs

Assets Inventory DOS

Best Practices Features

Drive deliveries directly to stock or point-of-use in manufacturing to reduce costs and cycle time

Pay on receiptSpecify delivery location and time (to the minute) Specify delivery sequence

Capability Transfer to Organization None Identified

Example Continued

Inputs Plan Source Make Deliver

Product Pull Signals M D

Product Inventory Location ES.4

WIP Inventory Location EM

Finished Goods Inventory Location

ED

Outputs Plan Source Make Deliver

Inventory Availability P2.2 ES.4 M1.2, M2.2, M3.3

D1.8, D4.2

Daily Replenishment Requirements

D4.1

Loaded Cart D4.4

Example Continued

Some Graphical Tools: 1st Step in configuring a SC: Illustrate physical layout, material flow and place Level 2 execution process categories to describe activities at each location.

SCOR Process Maps2nd Step: Create the SCOR Process Maps: Place planning process categories, using dashed lines to show links with execution processes

Software Package for Modeling SCOR: ARIS EasySCOR

The ARIS Toolset and ARIS Easy Design are process modeling tools. The ARIS Toolset is a BPR tool, Easy Design is used for process capture.The EasySCOR Modeler is a software package that includes the ARIS Easy Design modeling kit and the SCOR model in ARIS format.ARIS EasySCOR consists of process models that describe the SCOR levels 1 to 3. Implementation level, level 4 is not included.

Suppliers Supplier

Suppliers Assemble/ Package Distribution Centers Geo Ports of Entry

Americas--->

Europe--->

Asia--->

Process Map Example created in ARIS EasySCOR

Observations

SCOR describes processes not functions. In other words, the Model focuses on the activity involved, not the person or organizational element that performs the activity.

Implementation level, Level 4, is not described in SCOR.

References

SCOR 6.0 Overview Booklet http://www.isye.gatech.edu/~lfm/8851/Sources/SCOR/SCOR%206.0%20OverviewBooklet.pdf

Supply-Chain Operations Reference-model (SCOR) 6.0 Introduction (in setup files)About ARIS: http://www.changeware.net/esitteet/scor-faq.pdf

About ARIS: http://www.changeware.net/esitteet/scor-faq.pdf