MCL756: Supply Chain

Management

SCOR : Supply Chain Operations

Reference Framework

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 Acknowledgement
 Presentation in this ppt is based on material from SCOR ®, APICS_SCC
 Numerous SCOR sources on web and papers (Pl see the list of references at the end of
this presentation )
 This presentation is strictly for academic purpose
 The following YouTube material is gratefully acknowledged.
 “Supply Chain Operations Reference Model (SCOR)? Introduction to Supply Chain
Model” (19.26 minutes),AIMS Lecture, Apr 2015 Retrieved from
:https://aims.education/study-online/supply-chain-operations-reference-model-scor/
 https://www.youtube.com/watch?v=yeVPZmdhfgE
 “Introduction to SCOR - How to make an impact” (48. 16 minutes) , Retrieved from
Apics, 2017
 https://www.youtube.com/watch?v=xV4XJIUSqe4

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 Context
 Take any sector, say Automotive. Automotive industry has complex supply chains because of the
nature of the products they make up. A single car can have 15 K to 20 K individual items
 Coordinating supply and assembly of such large number of items is a challenge for the Supply
chain of automotive.This challenges is compounded since these items are procured from Europe,
Japan, North America, and Asia
 Faced with the increase in supply and the strong competitive pressure on prices, coupled with the
bargaining power of Asian groups (Toyota, Hyundai, etc.) and the arrival of new players from
emerging countries (like Tata Motors, Maruti), many companies seek to optimize their value chain
in order to remain competitive
 Effective management of Supply chain of the automotive industry is a also a sign of healthy GDP !
Automotive industry is also mother of many ancillary industries !
 Technology also play a useful role in automotive industry. Innovation and new processes make SC
interesting !
 To meet customer needs, automobiles must be designed and organized appropriately -Logistics
plays a significant role in the automotive industry due to the increasing number of variants and
options of the model. Evaluation of such function becomes a key challenge in automotive SC
 SCOR provides a useful platform for this !
Source : R LEMGHARI1, ,C OKAR, and D SARSRI, 2018, Supply Chain Performance Measurement: A Case Study about
Applicability of SCOR®Model in Automotive Industry Firm ,MATEC Web of Conferences 200, 00016 (2018)
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 Typical problems in a supply
chain ..
 A series of discrete functions and events with poor coordination
 Fragmented view of supply chain activities
 Poor communication throughout the chain
 Localised/functional optimisation with myopic view
 Decision done through perception rather than fact
 Poor customer service, customer orientation simply lacking
 Long lead times
 Excess inventory
 Slow response to demand /market changes
 High costs
 Poor asset utilisation

You can relate these problems to the previous slide context of

automotive industry SC !

SCOR provides a useful template to address these problems

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 Motivation for SCOR
 SCOR is viewed as a standard template (Just like ISO9000 in quality !) for the modelling
of supply chains processes globally, partly because of the worldwide reach of the
supply chain council /APICS activities.
 SCOR includes key performance indicators that facilitate a better coordination and
control in managing the Supply chains
 SCOR includes repository of best practices (of more than Global 2000+ organizations !)
that help companies for their benchmark and improvement programmes

 The latest version of SCOR-model is numbered 12.0.

 https://www.apics.org/apics-for-business/frameworks/scor

 APICS is the association for supply chain management and a not-for-profit

international education organization
 http://www.apics.org/

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 Remarks .. 1..
 SCOR is a management tool to address, improve, and
communicate supply chain management decisions within a
company and with suppliers and customers of customers.
 It is a process reference model for supply-chain management.
The first version was launched by Supply Chain Council in 1997.
Since then, it has become increasingly accepted by industry.
 SCOR-model has been developed to describe the business
activities associated with all phases of satisfying a customer's
demand.
 SCOR integrates business concepts of process re-engineering,
benchmarking, and measurement into its framework
 By describing supply chains using 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.

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 Remarks ..2..
 SCOR assumes that all supply chain processes
can be subdivided into one of six general
subtypes: Plan, Source, Make, Deliver, Return, and
Enable
 Complex supply chains are made up of multiple
combinations of these basic processes
 SCOR spans all customer interactions (quote to
cash), all physical material transactions (procure
to payment, including equipment, supplies, spare
parts, bulk product, software, etc.) and all market
interactions (manufacturing, from the
understanding of aggregate demand to the
fulfillment of each order)
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 SCOR Structure
Plan

Supply Chain

Demand Chain

Deliver Source Make Deliver Source Make Deliver Source Make Deliver Source

Return Return Return Return Return Return

Return Return

Supplier’s Customer Customer’s

Supplier
Supplier Your Company Customer
(Internal or External) (Internal or External)

SCOR Model

Building Block Approach

Processes Best Practices Metrics Technology
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 Various processes are modeled with three standard levels

Level 1 corresponds to the upper level of the supply chain. It is divided into 6 processes:
Plan, Source, Make, Deliver, Return and Enable

SCOR in Level 2 is a breakdown of Level 1 according to major production categories and business
brief
9 strategy. The choice of SCOR level 2 processes depends on the production strategy It
will be different for “Make-to-stock “and “Order-Engineered organizations”!

Level 3 describes each process that makes up Level 2 processes with the process
diagram

Metrics are classified with the same levels as processes and with performance attributes:
Reliability, responsiveness, agility, costs and assets.

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 Some observations...
 SCOR develops a systems approach to identify, evaluate and monitor
supply chain performance
 SCOR not only provides an opportunity to see how the business
operates but also a common frame of reference and language across
the supply chain
 Version 12 contains (launched in 2017) Omni-channel, metadata, block
chain and other emerging engines that supply chain professionals are
using today. It also contains block-chain, sustainability etc.
 SCOR has become global inter-sectorial standard for supply chain
excellence.
 SCOR integrate the well-known concepts of business process
reengineering, benchmarking, and process measurement into a cross-
functional framework

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Core processes
Label Process Brief description
sP Plan Includes balancing resources, preparing business rules and aligning the supply chain plan with
the organization's financial plan
sS Source This includes inventory management, sourcing raw materials, supplier agreements and payments

sM Make Refers to manufacturing and defines whether to make to order, make to stock or engineer to
order, includes managing production, BOM, equipment and facilities. Deliver: Order receipt and
processing, warehousing, etc.
sD Deliver Order receipt and processing, warehousing, delivery, as well as finished goods inventory
management and life cycle management
sR Return Business rules for handling returned product
sE Enable These process being associated with the management of the supply chain. & include
management of: business rules, performance, data, resources, facilities, contracts, supply chain
network management, managing regulatory compliance and risk management

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 Typical sub-processes
 Business Process Analysis/Improvement
Planning and Forecasting
 Customer Support Production Execution
Product Life cycle Management
 Distribution Management
Purchasing /Procurement
 Information Management Reverse Logistics
 Inventory Management Risk/Security Management
 Material Handling Sustainable Supply Chain
Management
 New Product Introduction
Transportation Management
 Order Engineering (ETO) Warehousing
 Order Management
 People Management (Training)
Source: SCOR reference guide
https://www.apics.org/docs/default-source/scc-
nonresearch/apicsscc_scor_quick_reference_guide.pdf

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 SCOR : Practices
 A practice is a unique way to configure a process
or a set of processes.
 The uniqueness can be related to the automation
of the process, a technology applied in the
process, special skills applied to the process, a
unique sequence for performing the process, or a
unique method for distributing and connecting
processes between organizations. All practices
have links to one/more processes, one/more
performance metrics, and one/more skills !

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 Best Practices
 Nomenclature as per SCOR®
◦ 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

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 YouTube engagement ..1..
 Video : Watch this YouTube video on
 Supply Chain Operations Reference Model (SCOR)?
Introduction to Supply Chain Model (19.26 minutes)
 https://www.youtube.com/watch?v=yeVPZmdhfgE

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 SCOR Performance
 The performance or metrics section of SCOR focuses on understanding the
outcomes of the supply chain and consists of two types of elements: Performance
Attributes and Metrics., and introduces concept of process/practice maturities
 A performance attribute is a grouping or categorization of metrics used to express a
specific strategy.
 An attribute itself cannot be measured; it is used to set strategic direction. For
example: “The ABC product needs to be leading the competition in customer service
“ and “The XYZ-market requires us to be among the top 5 agile manufacturers in
consumer electronics“.
 Metrics measure the ability to achieve these strategic directions. SCOR recognizes 5
performances
◦ Reliability
◦ Responsiveness
◦ Agility
◦ Cost, and
◦ Asset Management

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 Metrics..
 Metric is a standard for measurement of the performance of a
supply chain or process. SCOR metrics are diagnostic metrics
 SCOR recognizes three levels of pre-defined metrics: Level-1
metrics are diagnostics for the overall health of the supply
chain.
 These metrics are also known as strategic metrics and key
performance indicators (KPI).
 Benchmarking Level-1 metrics helps establishing realistic
targets to support strategic directions.
 Level-2 metrics serve as diagnostics for the level-1 metrics. Th
diagnostic relationship helps to identify the root cause or
causes of a performance gap for a level-1 metric.
 Level-3 metrics serve as diagnostics for level-2 metrics.
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Attribute Metrics..
Description Focus

Reliability Addresses the ability to perform tasks as expected. Reliability focuses on the Customer-focused
predictability of the outcome of a process. Typical metrics for the reliability
attribute include: on-time, the right quantity, the right quality. The SCOR KPI
(level 1 metric) is Perfect Order Fulfillment.
Responsiveness It describes the speed at which tasks are performed. Examples include cycle- Customer-focused
time metrics. The SCOR KPI is Order Fulfillment Cycle Time.
Agility It describes the ability to respond to external influences and the ability to change. Customer-focused
External influences include: Non-forecasted increases or decreases in demand;
suppliers or partners going out of business; like COVID-19 , acts of (cyber)
terrorism; availability of financial tools (the economy); or labor issues. KPIs
include Flexibility and Adaptability.
Costs It describes the cost of operating the process. It includes labor costs, material Internally-focused
costs, and transportation costs. The SCOR KPIs include Cost of Goods Sold and
Supply Chain Management Cost. These two indicators cover all supply chain
spend.
Assets It describes the ability to efficiently utilize assets. Asset management strategies in Internally-focused
a supply chain include inventory reduction and in-sourcing vs. outsourcing.
Metrics include: inventory days of supply and capacity utilization. KPIs include:
18 Cash-to-Cash Cycle Time and Return on Fixed Assets
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 SCOPE
Plan P1 Plan Supply Chain

P2 Plan Source P3 Plan Make P4 Plan Deliver

CUSTOMERS
SUPPLIERS

Enable Plan

Source Make Deliver

S1 Source Stocked Products M1 Make to Stock D1 Deliver Stocked Products

S2 Source MTO Products M2 Make to Order D2 Deliver MTO Products

S3 Source ETO Products M3 Engineer to Order D3 Deliver ETO Products

Enable Source Enable Make Enable Deliver

Return Source Return Deliver

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 Source: SCOR reference
guide
https://www.apics.org/docs/d
Next 3 slides give Sample
20
efault-source/scc-non-
research/apicsscc_scor_quic
Performance Attributes k_reference_guide.pdf
 Reliability & Responsiveness

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 Agility & Cost

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 Asset Management
Source: SCOR reference guide
https://www.apics.org/docs/default-source/scc-non-
research/apicsscc_scor_quick_reference_guide.pdf

Note these are sample performance metrics. In

reality, there will a large number of such attribute
metrics to be captures.
In the initial stages, an organisation may capture a
small number . Later on, these attributes will be
designed and developed in a detailed manner
based on the maturity of the concerned processes.

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 SCOR Levels of Detail
Level

# Description Schematic Comments

Supply Chain Operations Reference model

Plan
1 Source Make Deliver
Level 1 defines the scope and content for the Supply
Top Level Chain Operations Reference model
Return
(Process Types) Return
Here basis of competition performance targets are set

2 A company’s supply chain can be “configured-to-

Configuration order” at Level 2 from approximately 24 core “process
Level categories.”
(Process Companies implement their operations strategy
Categories) through their unique supply chain configuration.

3 Process Level 3 defines a company’s ability to compete

Element Level successfully in its chosen markets and consists of:
(Decompose • Process element definitions
Processes) • Process element information inputs and outputs
P3.1
• Process
• performance metrics
Identify, Prioritize, and Aggregate
• Best practices, where applicable
• System capabilities required to support best
Production Requirements
P3.3 P3.4

Balance Production Resources with

Production Requirements
Establish Detailed
Production Plans
practices
•
P3.2

Identify, Assess, and Aggregate

Production Resources

Companies “fine tune” their Operations Strategy at

Level 3

Companies implement specific supply chain

4 Implementation management practices at this level
Not Level
in (Decompose Level 4 defines practices to achieve competitive
Scope Process advantage and to adapt to changing business
Elements) conditions

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 Supply Chain Performance
Measurement
Performance Performance Attribute Definition Level 1 Metric
Attribute
E
X The performance of the supply chain in Delivery Performance
T Reliability delivering: the correct product, to the correct
place, at the correct time, in the correct condition Fill Rates
E and packaging, in the correct quantity, with the
Perfect Order Fulfillment
R correct documentation, to the correct customer.

N The velocity at which a at which a supply chain Order Fulfillment Lead Times
Responsiveness provides products to the customer. Select a
A spread
The agility of a supply chain in responding to Supply Chain Response Time
L Agility marketplace changes to gain or maintain of
competitive advantage. Production Flexibility
measures
The costs associated with operating the supply Cost of Goods Sold
Costs chain. Consider
I Total Supply Chain Management where
Costs
N data is
T available
Value-Added Productivity
E
R Warranty / Returns Processing
Costs
N
The effectiveness of an organization in managing Cash-to-Cash Cycle Time
A Asset assets to support demand satisfaction. This
L Management includes the management of all assets: fixed and Inventory Days of Supply
working capital.
Efficiency Asset Turns

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 Competitive analysis
Supply Chain SCORcard Performance Versus Competitive Population
Overview Metrics SCOR Level 1 Metrics Actual Average Advantage Superior Value from Improvements
Delivery Performance to
Supply Commit Date 50% 85% 90% 95%
Chain
Reliability
Fill Rates 63% 94% 96% 98%
EXTERNAL

Perfect Order Fulfillment 0% 80% 85% 90%

Responsiveness Order Fulfillment Lead times 35 days 7 days 5 days 3 days

Calculate
Supply Chain Response Value
Flexibility Time 97 days 82 days 55 days 13 days
from
Production Flexibility 45 days 30 days 25 days 20 days
Total SCM Management
Financial
19% 13% 8% 3%
Cost
Data
Gathered
Cost NA NA NA NA
INTERNAL

Warranty Cost

Value Added Employee

Productivity
NA $156K $306K $460K

Inventory Days of Supply 119 days 55 days 38 days 22 days

Cash-to-Cash Cycle Time
Assets 196 days 80 days 46 days 28 days
Net Asset Turns (Working
Capital)
2.2 turns 8 turns 12 turns 19 turns

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 It requires
a project focus with clear cut commitment of resources (both financial and human) by the
top management and timelines

It requires identification of critical SC processes .

It also requires continuous tracking of the metrics for critical processes

SCOR templates gives an opportunity to benchmark your process against the industry average
and the best

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This sets the improvement agenda in motion

To begin with , a few low- hanging-fruits approach will be useful.

SCOR
implementation Once champions are identified, the improvement is to be done in a typical TQM project manner
!
Remember: SCOR implementation is also a change management programme !

People must be prepared for this change- a change which is focus on : Quantification, continuous
monitoring and active and Synergistics combination of Processes, People and Technology
12/29/2020
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 Engage

Define
Typical Road
28
Map for Analyse
implementation .
Plan

Launch

12/29/2020
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 SCOR Implementation
 Majority of companies adopt SCOR methodology -
“top down,” strategic to tactical
◦ Following top-down assessment and planning:
 Look for “low-hanging” fruit, involve everyone, make pareto analysis
 Develop incremental approach for improvements, Kaizens ?
◦ Some may “enter” at Level 2
 Most companies start with their own enterprise
◦ Baseline processes and performance
◦ Develop strategies for inter-enterprise initiatives
 Senior Management commitment & involvement of
prime importance
 Involvement of all – a must
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 People—Supply Chain Skills
 The people section provides a means for managing talent in the supply chain by
incorporating a standard for describing the expertise required to perform tasks and manage
processes.
 SCOR skills management complements the existing process, metrics, and practice
reference components by aligning people and their skills to the processes.
 A Skill in SCOR is the capacity to deliver predetermined results with minimal input of time
and energy, characterized by a standard definition with associated experience, aptitudes,
and training. Experience is the knowledge or ability acquired by observation or active
participation, obtained by doing the work in a real life environment, and undergoing different
situations that require different actions.
 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.
 SCOR recognizes 5 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
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 SCOR Basis for Competition

 Set business requirements and define the basis for

competition
 Evaluate the performance of the current operations
strategy against the required performance
 Set SCOR Level 1 metrics and targets, and define the
gap
 Set business priorities and state what needs to
change

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 Typical Issues before SCOR

Many participants & Complex

multiple interface Poorly integrated material/information
points. planning and visibility movements across
Limited systems of issues national/international
integration boundaries

Long lead times, High levels of freight,

Fragmented and delivery delays, high handling and duty costs;,
delayed information inventories and GST , Missed
flows up and down extensive use of opportunities for effective
the chain , No sharing costly transportation tax and duty
mode management

32
 Issues addressed thru SCOR
Many participants & Complex
multiple interface Poorly integrated material/information
points. planning and visibility movements across
Limited systems of issues national/international
integration boundaries

Third Party SCM Effective information Process benchmarking

allows improved High levels of freight,
system enables for freight planning &
planning, reduced lead handling and duty
integration & consolidation will reduce
times andirfreight
inventory, costs; missed
information flow plus freight costs, Use of
Involvement of all in opportunities for duty
performance Good information
ERP management
measurement systems

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 Benefits of SCOR Implementation
 Reduced inventory
 Improved customer service
 More efficient use of human resources
 Reduced cycle times
 Faster speed to market for new products
 Stronger focus on core competencies
 Greater trust and interdependence
 Increased sharing of information, ideas, technology
 Stronger emphasis on end-to-end supply chain
 Competitive advantage over other supply chains

These are based on the premise that there is effective collaboration across the
chain
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 Effective collaboration

❑ Results in real and recognized benefits for all members

❑ Allows participants to dynamically create, measure, and
evolve collaborative alliances
❑ Supports collaboration across all business processes
❑ Enables open integration
❑ Supports collaboration around all flows in SC products,
information, money, assets, and documents

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 Enablers and Barriers for
collaboration
Enablers Barriers
 Mutual interest  Doing things, the old way
 Openness and Transparency  Conventional accounting
 Recognizing who and what are practices
important  Limited /myopic view of the
 Clear expectations and its supply chain
articulation  Low Time investment
 Adaptive Leadership  Lack of mutually agreeable Key
 Working together and adjusting to Performance Indicators (KPI’s)
one another  Inadequate communication
 Cooperation & Mindset for Benefit  Inconsistency
sharing  Breech of trust /suspicious
 Trust behaviors
 Technology

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 Learnings from SCOR
❑ SCOR contains well-defined and standardized
processes and metrics for performance measurement
and comparative analysis of the entire supply chain
and not only internal processes
❑Process – allows rapid modeling and understanding the
supply chain
❑Metrics - enable evaluation and identification of high
value opportunities
❑Best practices and features - provide improvement
options
❑ The SCOR Model is the only model of its type that
◦ links these elements
◦ provides a means for assessment of the supply chain across
enterprises
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 YouTube engagement ..2.
 Watch Video : Introduction to SCOR - How to make an
impact (48. 16 minutes)
 https://www.youtube.com/watch?v=xV4XJIUSqe4
 Why project focus is required for implementing SCOR?
 What are the basic drivers for SCOR ?
 What is GreenSCOR?
 Interpret SCOR from implementation point of view.

 You may see APICS channel for interesting videos on SCOR

 https://www.youtube.com/channel/UCHPUI01Vc8dvDECTjbyrZwA

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 Self-assessment ..1..
 Take examples from the following SC: Automobile, Mobile,
Retail and service
 Narrate in your own words(not more than 200) problems in
these SC.
 With specific reference to any one of the above, list at least 10
processes in any one of these SC.
 Draw a diagram depicting the most significant process.
 Give justification for why do you consider this process as
“significant”.
 Identify bottlenecks in this process.
 How will you measure effectiveness of the process. List at
least 5 metrics related to the process.
 How this process is interconnected to the other process(es) ?

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 Self-assessment ..2..
• Why process orientation is necessary in SCM?
• What is the difference between customer
focused metrics and internal-focused metrics?
• List three advantages of any measurement
mechanism.
• How do we benchmark a process?
• Can we use multi-attribute model in SCOR? How?
Give an example.

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 Self-assessment ..3..
 Refer to your previous example of SC in self-assessment 1.
 Articulate how will go on implementing SCOR? List various
activities in your road map.
 What challenges do you expect in implementing SCOR?
 List at least 5 quantifiable benefits of implementing SCOR.
 Why people skills are important in implementing SCOR.
 Explain clearly the role of the following in SCOR imp mentation :
◦ Process
◦ People
◦ Technology

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 References
 SCOR Reference model
https://www.apics.org/apics-for-business/frameworks/scor
 White S K, What is SCOR? A model for improving supply chain management, 2018
https://www.cio.com/article/3311516/what-is-scor-a-model-for-improving-supply-chain-management.html
 Reiverlogic blog :The ultimate SCOR model for Supply chain decisions,
https://blog.riverlogic.com/the-ultimate-scor-model-for-supply-chain-decisions
SCOR reference guide
https://www.apics.org/docs/default-source/scc-non-research/apicsscc_scor_quick_reference_guide.pdf

R LEMGHARI1, ,C OKAR, and D SARSRI, 2018, Supply Chain Performance Measurement: A Case Study
about Applicability of SCOR®Model in Automotive Industry Firm
MATEC Web of Conferences 200, 00016 (2018)
https://doi.org/10.1051/matecconf/201820000016IWTSC
https://www.matec-conferences.org/articles/matecconf/pdf/2018/59/matecconf_iwtsce2018_00016.pdf

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