Supply Chain Operations Reference Model
What is Supply Chain Model?
Supply Chain Operations Reference model or SCOR is the planning and diagnostic system of supply chain management. SCOR is the product of Supply-Chain Council (a global non-profit consortium) whose methodology, diagnostic and benchmarking tools help organizations make dramatic and rapid improvements in supply chain processes. The SCOR supply chain model is also used to evaluate and compare supply chain activities and performance.
Supply Chain Model
SCOR captures the Council’s consensus view of supply chain management. It provides a unique framework that links business process, metrics, best practices and technology into a unified structure to support communication among supply chain partners and to improve the effectiveness of supply chain management and related supply chain improvement activities. SCC membership is open to all companies and organizations interested in applying and advancing the state-of-the-art in supply-chain management systems and practices.
Figure: SCOR is organized around five major management processes.
Supply Chain Council
The SCC was organized in 1996 and initially included 69 practitioner companies meeting in an informal consortium. Subsequently, the companies of the Council elected to form an independent not for profit trade association. The majority of the SCC’s members are practitioners and represent a broad cross-section of industries, including manufacturers, distributors, and retailers. Equally important to the Council and the advancement of the Supply Chain Operations Reference Model are the technology suppliers and implementers, the academicians, and the government organizations that participate in Council activities and the development and maintenance of the Model. At the time of this release, the Council has approximately 800 corporate members worldwide and has established international chapters in Australia/New Zealand, Latin America, Greater China, Europe, Japan, Southeast Asia, and Southern Africa with additional requests for regional chapters pending.
The Supply-Chain Council is interested in providing the widest possible dissemination of the Supply Chain Operations Reference Model. The wide-spread use of the Model results in better customer-supplier relationships, software systems that can better support members through the use of common measurements and terms, and the ability to rapidly recognize and adopt best practice no matter where it originates. SCC requests that all who use the Supply Chain Operations Reference Model provide attribution to the Supply-Chain Council.
End to End Supply Chain
This introduction is provided to assist new users of the Supply Chain Operations Reference Model to begin analytic and implementation projects. It is intended to remind experienced users of the framework and structure of the Model when tackling more complex applications of the Model for their businesses. Finally, it is provided to orient members to the changes between Version 9.0 and Version 10.0.
Version 10.0 of the Supply Chain Model is the twelfth revision since the Model’s introduction in 1996.xRevisions of the Model are made when it is determined by Council members that changes should bexmade to facilitate the use of the Model in practice. Specific changes in Version 10.0 are outlined later in this Introduction.
Supply Chain Model:
The Supply Chain Operations Reference Model has been developed to describe the business activities associated with all phases of satisfying a customer’s demand. The Model itself contains several sections and is organized around the five primary management processes of Plan, Source, Make, Deliver, and Return (shown in Figure 1). By describing supply chains using these process building blocks, the Model can be used to describe supply chains that are very simple or very complex using a common set of definitions. As a result, disparate industries can be linked to describe the depth and breadth of virtually any supply chain. The Model has been able to successfully describe and provide a basis for supply chain improvement for global projects as well as site-specific projects.
It spans: all customer interactions (order entry through paid invoice), all physical material transactions (supplier’s supplier to customer’s customer, including equipment, supplies, spare parts, bulk product, software, etc.) and all market interactions (from the understanding of aggregate demand to the fulfillment of each order). It does not attempt to describe every business process or activity. Specifically, the Model does not address: sales and marketing (demand generation), product development, research and development, and some elements of post-delivery customer support.
It should be noted that the scope of the Model has changed and is anticipated to change based on Council member requirements. With the introduction of Return, the Model was extended into the area of post-delivery customer support (although it does not include all activities in that area).
As shown in Figure, the Model is designed and maintained to support supply chains of various complexities and across multiple industries. The Council has focused on three process levels and does not attempt to prescribe how a particular organization should conduct its business or tailor its systems / information flow. Every organization that implements supply chain improvements using the Supply Chain Model will need to extend the Model, at least to Level 4, using organization-specific processes, systems, and practice.
The Model is silent in the areas of human resources, training, and quality assurance. Currently, it is the position of the Council that these horizontal activities are implicit in the Model and there are other highly qualified organizations that are chiefly concerned with how an organization should train, retain, organize, and conduct their quality programs. Just as the Council recognized the requirements for marketing and sales in commercial organizations, the Council is not minimizing the importance of these activities, but they are currently out of scope for Supply Chain Operations Reference Model.
SCOR Supply Chain:
The Practices section consists of best practices organized by original objective:
- SCOR: Improving overall supply chain operational performance. These best practices focus on the Reliability, Responsiveness, Agility, Cost and/or Asset Management Efficiency performance attributes.
- GreenSCOR: Improving the environmental footprint of the supply chain.
- Risk Management: Improving (mitigating) the risks of an undesired event taking place, limiting the impact of such an event and improving the ability to recover from the event.
Best practices are best described as unique ways to configure a set of processes (Configuration), unique ways to automate a set of processes (Technology) and/or unique ways to perform a set of processes (Knowledge) that result in significant better results. No codification exists for Best Practices at this time.
The People section of Supply Chain Operations Reference Model is new. Starting revision 10 Supply Chain Model incorporates a standard for describing skills required to perform tasks and manage processes. Generally these skills are supply chain specific. Some skills identified may be applicable outside the supply chain process domain.
Skills are described by a standard definition and association to other People aspects: Aptitudes, Experiences, Trainings and Competency level. Competency level is not included in the framework descriptions. Supply Chain Operations Reference Model recognizes 5 commonly accepted competency levels:
- Novice: Untrained beginner, no experience, requires and follows detailed documentation.
- Beginner: Performs the work, with limited situational perception.
- Competent: Understands the work and can determine priorities to reach goals.
- Proficient: Oversees all aspects of the work and can prioritize based on situational aspects.
- Expert: Intuitive understanding. Experts can apply experience patterns to new situations.
These competency levels are used similarly as process or practice maturity levels. The person or job specification is evaluated on the found (person) or desired (job specification) level of competency.
Codification within the People section consists of coding of the Skills as well as the Aptitudes, Experiences and Trainings that define the Skills. All People elements start with a capital letter H followed by a capital letter representing the element: S for Skills, A for Aptitudes, E for Experiences and T for Trainings. These are followed by a period and a for digit number. For example HS.0010 is the code for Basic Finance skill, HT.0039 is the code for CTPAT training.
Note: The number in the ID – for example the 0018 in HA.0018 – does NOT indicate any kind of priority, importance, or other meaning. It is a unique identifier.
Supply Chain Modeling
Since the inception of the Supply Chain Operations Reference Model (SCOR) companies have looked at how to best utilize the rich content of Supply Chain Model. Supply Chain Council has supported and continuous to support practitioners by offering training focused on the interpretation and use of Supply Chain Operations Reference Model. Experience tells us that SCOR as a tool needs to be integrated into existing project methodologies used, where they exist. Effective supply chain organizations have learned that using the Supply Chain Model is not a business goal; it is a tool to reach the true business goal: An integrated optimized supply chain, meeting market requirements.
A typical Supply Chain Operations Reference Model (SCOR) project comprises of the following phases:
Understand the scope:
The scope of a Supply Chain Operations Reference Model project is defined by the following components - Business: Understanding the markets the supply chain serves, the products and/or services the supply chain delivers and competitive landscape for each product and market;
- Configuration: Understanding the high level processes. Develop geographic maps and thread diagrams to understand material flows and supporting processes
- Performance: Understanding the areas of under performance. Companies develop scorecards and may organize a benchmark to understand how their supply chains perform in comparison to similar supply chains
- Opportunity: Defining the improvement opportunity. Setting the scope of the effort. Focus on one or few supply chains and one or few metrics per supply chain
- Plan the next steps.
Determine where the root causes are: Metrics decomposition: For each problem metric identify the diagnostic metrics and collect the data to calculate these diagnostic metrics. Determine the the problem metric or metrics. Repeat this process until no more diagnostic metrics can be identified;
- Process problem discovery: For all diagnostic metrics, determine the associated processes. For each process collect information about how the process operates. (‘operates’ not ‘is supposed to operate’). Collect relevant information about who performs the work, sources or lack of relevant information to perform the work, rules and regulations that apply, tools and software supporting the process. Collect observed performance information from those who perform the work.
- Classify the problems: Group relevant observed process and performance problems together and determine how this impacts the overall problem. (Cause and Effect)
- Plan the next steps.
Review different ways to solve the individual observed problems and the overall problem.
- Research better practices: Determine how others have solved similar problems. Identify best practices, leading practices and software and tools that may address individual problems and/or the overall problem;
- Develop what-if scenarios: Using information about alternative practices, new technology, internal knowledge and external resources* describe new ways to configure and organize the processes. (*) External resources can be paid consultancies, peers in other industries or peers in other business units in the same company. Internal resources and knowledge refers to workers in or close to the process. Some IT resources may qualify as internal resources;
- Review and select: Review each scenario. Weigh improvement impact against estimated cost, risk, effort, lead-time, and feasibility. Select the appropriate (or best) solution scenario for each problem. The collection of these solutions is the strategy to resolve the overall problem.
- Plan the next steps.
Document the new processes, technologies and organizations. Describe the To-Be state.
- Document processes: Develop the detailed transactional information.
- Develop detailed process flows and descriptions. Document how the process is organized, who does what and what information is used and created in each process step.
- Develop detailed work instructions. Document how the work is done. Develop Standard Operating Procedures (SOPs) for new processes. Update SOPs for all processes impacted by the change.
- Document organizational designs:
- Develop detailed job descriptions.
- Document authority, responsibility and span of control.
- Document training needs, develop training if needed.
- Document metrics, describe how the processes (and process owners) will be measured upon implementation of the new process.
- Document technology requirements: Describe how existing and/or new technology will support the new process. A business requirements document will enable internal and/or external technology providers to match their tools to the process needs. Solution design may require significant resources and time for projects with large dependencies on technology and maybe considered separate IT projects.
- Document transitions: Describe the dependencies and restrictions related to the change. Estimate resource needs
- Plan the next steps.
Plan and launch change projects:
Create a roadmap to implement the changes.
- Define projects: Define unique projects for implementation. Combine changes that impact the same technology, organizations, products, processes as required. Note: Not all projects are equal: Large scope changes need managed projects, small changes may need a memo to a manager with documentation.
- Critical path and dependencies: Document the interdependencies of projects. “Project D requires Project K to be completed”. “Project F can start at any time”.
- Manage the project portfolio: Prioritize projects based on expected return, business strategy and other relevant projects. Allocate resources; people, funds, time.
- Launch and oversee the projects: Make sure the project deliverables result in the desired change.
Supply Chain Council recognizes that not every Supply Chain Operations Reference Model project is the same. Some projects require all or most detailed activities listed to take place to ensure the project outcomes. Most projects however do not. For example: Supply chains that have previously identified realistic improvement targets do not necessarily require another round of benchmarking. Or, if the changes do not require changes to software, do not spend months on documenting the technology requirements.
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