6/14/2021 How Does Nike’s Supply Chain Work?

| CleanChain

HOW DOES NIKE’S SUPPLY CHAIN WORK?

Posted by Wendy Ye (blog/author/wendy.ye) on May 12, 2020

As one of the most recognizable brands in the world, the American

multinational is arguably the most influential player in the modern
textile industry. Behind the hundreds of millions of shoes and other
products Nike sells each year lies a highly complex supply chain. Their
success has been attributed by many to the proactive approach of their
supply chain management.

How Does Nike’s Supply Chain Work?

Nike is the world’s largest seller of running shoes and sportswear. As one of the most
recognizable brands in the world, the American multinational is arguably the most influential
player in the modern textile industry. Behind the hundreds of millions of shoes
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6/14/2021 How Does Nike’s Supply Chain Work? | CleanChain

(https://shoesops.com/how-many-shoes-does-nike-sell-a-year/) and other products Nike sells

each year lies a highly complex supply chain. Although there are undoubtedly significant
challenges involved in managing this complexity, Nike’s proactive approach to supply chain
management (https://info.esg.adec-innovations.com/blog/what-are-the-components-of-
effective-supply-chain-management) has been credited by many as a significant contributor to
its phenomenal success.

What is it that makes Nike’s supply chain so unique and so effective?

The key principles behind Nike’s supply chain are outsourcing and diversification. Nike contracts
100% of its manufacturing for footwear and apparel out to independent suppliers
(https://marketrealist.com/2019/10/nike-manufacturing-and-supply-chain-strategies/). It was
one of the earliest multinationals to adopt this approach. Thanks to effective management,
Nike’s supply chain team quickly learned to manage the additional logistical complexity involved
in this outsourcing and have seen significant cost savings over the years as a result.
Outsourcing is inherently a risky approach, but by extensively diversifying its supplier base, Nike
successfully mitigated this risk from the beginning. In 2019, Nike’s footwear components were
supplied by 112 different factories in 12 countries, with no factory accounting for more than 9%
of branded footwear. Not being overly reliant on any one site means Nike is less vulnerable to
unpredictable occurrences, such as accidents and extreme weather events.
However, this distributed approach has its downsides. Sourcing components from so many
different facilities presents a real challenge for quality control. To ensure its high quality
standards are met at every step of production, Nike maintains continual communication with its
suppliers, providing support through tools and training to initiate suppliers in its ‘Lean
Management’ framework and Total Quality Management (TQM) approach
(http://panmore.com/nike-inc-operations-management-10-decisions-areas-productivity).
Challenges to this approach have also come from outside the supply chain. In the early stages
of its pioneering approach to outsourcing manufacturing, Nike chose not to engage in centrally
monitoring supplier practice. However, due to increasing consumer demand and changes in the
market, Nike took a look at its sourcing approach and ultimately adapted a new strategy.

From around 1996, Nike started making significant progress towards

bringing corporate social responsibility to the heart of its operations.

It set up a department tasked solely with improving the lives of factory workers, and in 1999 was
instrumental in the creation of the Fair Labor Association (https://www.fairlabor.org/) (FLA). The
FLA is a collaborative effort of companies, colleges and universities, and civil society
organizations dedicated to improving conditions for factory workers worldwide. In the 20 years
since the FLA’s foundation, Nike has revamped its sourcing strategy
(https://www.nike.com/gb/help/a/modern-slavery-act-disclosure) to prioritize suppliers that
show demonstrable leadership in corporate responsibility and sustainability. Nike is also
committed to transparency - in 2005 it became the first company in the apparel industry to
publish a complete list of the factories in its supply chain
(http://manufacturingmap.nikeinc.com/).

Today, Nike takes an ambitious approach to managing the impact of its supply chain
(https://purpose-cms-preprod01.s3.amazonaws.com/wp-
content/uploads/2020/02/11230637/FY19-Nike-Inc.-Impact-Report.pdf) that is as pioneering as
its initial transition to 100% outsourced manufacturing was over 30 years ago. In 2019, Nike
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6/14/2021 How Does Nike’s Supply Chain Work? | CleanChain

sourced 93% of its products and materials from sustainably run factories, well on its way to its
target of 100% by the end of 2020. It has also reduced the number of factories in its supply chain
that inflict excessive overtime on their workers down to less than 2.5%.

Nike’s supply chain functions around three core organizational principles: outsourcing, to save
costs; diversification, to minimize risk; and corporate social responsibility, to manage its impact
on the world it works in.Under focused and experienced management, its supply chain has
grown from these principles into one of the most effective and responsible large international
supply chains operating in 2020.

ADEC ESG Solutions (http://esg.adec-innovations.com/) is a leading provider of ESG solutions,

including fully-integrated industry expertise, software solutions, and data
management. Contact us (https://esg.adec-innovations.com/contact-adec/) to learn more
about how we can work with you to design custom solutions for your sustainable supply
chain (https://esg.adec-innovations.com/industry-expertise-solutions/sustainability-
performance/sustainable-supply-chain/).

Blog Author

(blog/author/wendy.ye)

As Customer Success Manager, Wenting (Wendy) Ye uses a data-driven approach to identify optimal sustainability
solutions for organizations. She is skilled in collecting, normalizing, and analyzing data and synthesizing analysis
outcomes in a comprehensive report to guide decision-making.

Wendy joined FCS as a Sustainability Coordinator in January 2016 to support the ESG team, focusing on CDP and ZDHC-
related projects. Before joining FCS, Wendy has had years of experience in sustainability-related market research and
quantitative analyses, business sustainability, and environmental accounting projects.

Wendy graduated from the Nicholas School of the Environment, Duke University with a Master's Degree in Environmental
Management and concentrated in Energy & Environment. She also holds the Certificate of Sustainable System Analysis
which is issued by Duke Energy Initiative, and earned her B.E. in Environmental Engineering at Donghua University in
China.

Wendy has published four papers in national journals and international conferences. She was the winner of the Bayer
Young Environmental Envoy award in 2012, one of the top 20 recipients in China by UNEP & Bayer Group. In the same
year, she won the second Prize of Klaus Teopfer Environmental Innovation Student Competition awarded by UNEP and
Germany Consulate in Shanghai.

Wendy has a strong interest in business sustainability and renewable energy.

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6/14/2021 'Supply chain challenges' hit revenues at Nike - Supply Management

'Supply chain challenges' hit

revenues at Nike
posted by Will Green
in Risk, Supply chain
19 March 2021

Nike has said port congestion delayed inventory supply and held back
the company’s growth in North America.

The company said revenue dropped 10% in North America in the three
months to 28 February 2021 due to “supply chain challenges”, which
included global container shortages and US port congestion.

In an earnings call Matt Friend, executive vice president and CFO, said:
“Disruption in the global supply chain due to container shortages,
transportation delays, and port congestion has interrupted the flow
of inventory supply.

“The result has been supply shortages relative to continued strong

marketplace demand.

“In North America specifically, inventory supply was delayed by more

than three weeks, impacting the timing of wholesale shipments and
growth in the quarter.”

Nike said inventories were up 15% year-on-year to $6.7bn, largely

because of “higher in-transit inventory in North America due to US
port congestion and temporary store closures in EMEA”.

Overall third quarter revenues were up 3% year-on-year to $10.4bn.

Friend said: “We continue to see the value of a more direct, digitally-
enabled strategy, fueling even greater potential for Nike over the long
term.”

In February Peloton said it would be spending $100m on expedited

shipping and increased use of air freight to manage a backlog of
orders caused by port congestion.

Container traffic has been disrupted globally by the coronavirus

pandemic and in November 2020 the US Federal Maritime Commission
launched an investigation into the behaviour of shipping companies
amid concerns about “potentially unreasonable practices” at jammed
ports,
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In the UK trade bodies have called for an inquiry into port disruption
and the shipping market, with reports that shipping costs have rise
170%.

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VERSION 12.0

QUICK REFERENCE GUIDE

SCOR Processes People—Supply Chain Skills
The Supply Chain Operations Reference (SCOR) model describes the business activities The people section introduced in SCOR 10.0 provides a means for managing talent in the
associated with all phases of satisfying a customer’s demand. The model itself is organized supply chain by incorporating a standard for describing the expertise required to perform
around the six primary management processes of Plan, Source, Make, Deliver, Return tasks and manage processes. The SCOR skills management complements the existing
and Enable. Using these process building blocks, the SCOR model can be used to describe process, metrics, and practice reference components by aligning people and their skills to
supply chains that are very simple or very complex using a common set of definitions the processes.
across disparate industries. Today public and private organizations and companies around
the world use the model as a foundation for global and site-specific supply chain A Skill in SCOR is the capacity to deliver predetermined results with minimal input of time
improvement projects. and energy, characterized by a standard definition with associated experience, aptitudes,
and training.
SCOR spans all customer interactions (quote to cash), all physical material transactions
(procure to payment, including equipment, supplies, spare parts, bulk product, software, Experience is the knowledge or ability acquired by observation or active participation,
etc.) and all market interactions (manufacturing, from the understanding of aggregate obtained by doing the work in a real life environment, and undergoing different situations
demand to the fulfillment of each order). that require different actions.

The model is designed and maintained to support supply chains of various complexities and Training develops a skill or type of behavior through instruction.
across multiple industries. The model focuses on three process levels and does not attempt
to prescribe how a particular organization should conduct its business or tailor its systems All people skills are coded with a capital letter H followed by a capital letter representing the
or information flow. element: S for Skills, E for Experience and T for Training. These are followed by a period and
a four digit number. Note: The number in the ID is a unique identifier and does NOT indicate
any kind of priority, importance, or other meaning.

2 SCOR 12.0 Quick Reference Guide

sP - Plan sS - Source sM - Make sD - Deliver
sP1 sP2 sP3 sP4 sP5 sS1 sS2 sS3 sM1 sM2 sM3 sD1 sD2 sD3 sD4
Plan Supply Chain Plan Source Plan Make Plan Deliver Plan Return Source Stocked Source Make-to- Source Engineer- Make-to-Stock Make-to-Order Engineer-to-Order Deliver Stocked Deliver Make-to- Deliver Engineer- Deliver Retail
Product Order Product to-Order Product Product Order Product to-Order Product Product
sP1.1: sP2.1: sP3.1: sP4.1: sP5.1: sS1.1: sS2.1: sS3.1: sM1.1: sM2.1: sM3.1: sD1.1: sD2.1: sD3.1: sD4.1:
Identify, Prioritize Identify, Prioritize Identify, Prioritize Identify, Prioritize Assess and Schedule Schedule Identify Sources Schedule Schedule Finalize Production Process Inquiry Process Inquiry Obtain and Generate
and Aggregate and Aggregate and Aggregate and Aggregate Aggregate Return Product Deliveries Product Deliveries of Supply Production Production Engineering and Quote and Quote Respond to RFP/ Stocking Schedule
Supply Chain Product Production Delivery Requirements sS1.2: sS2.2: sS3.2: Activities Activities sM3.2: sD1.2: sD2.2: RFQ sD4.2:
Requirements Requirements Requirements Requirements sP5.2: Receive Product Receive Product Select Final sM1.2: sM2.2: Schedule Receive, Enter, Receive, Configure, sD3.2: Receive Product
sP1.2: sP2.2: sP3.2: sP4.2: Identify, Assess sS1.3: sS2.3: Supplier and Issue Material Issue Sourced/In- Production and Validate Order Enter and Negotiate and at Store
Identify, Prioritize Identify, Assess and Identify, Assess Identify, Assess and and Aggregate Verify Product Verify Product Negotiate sM1.3: Process Product Activities sD1.3: Validate Order Receive Contract sD4.3:
and Aggregate Aggregate Product and Aggregate Aggregate Delivery Return Resources sS3.3: Produce and Test sM2.3: sM3.3: Reserve Inventory sD2.3: sD3.3: Pick Product
Supply Chain Resources Production Resources sS1.4: sS2.4:
sP5.3: Transfer Product Transfer Product Schedule sM1.4: Produce and Test Issue Sourced/In- and Determine Reserve Inventory Enter Order, from backroom
Resources sP2.3: Resources sP4.3: Balance Return Product Deliveries Process Product Delivery Date and Determine Commit Resources
sS1.5: sS2.5: Package sM2.4: sD4.4:
sP1.3: Balance Product sP3.3: Balance Delivery Resources sS3.4: Package sM3.4: sD1.4: Delivery Date & Launch Program Stock Shelf
Balance Supply Resources Balance Production Resources and with Return Authorize Authorize sM1.5:
Supplier Payment Supplier Payment Receive Product Stage Product sM2.5: Produce and Test Consolidate Orders sD2.4: sD3.4: sD4.5:
Chain Resources with Product Resources Capabilities Requirements Consolidate Orders Schedule
with SC Requirements with Production with Delivery sS3.5: sM1.6: Stage sM3.5: sD1.5: Fill Shopping Cart
sP5.4: Verify Product Finished Product Package Build Loads sD2.5: Installation
Requirements sP2.4: Requirements Requirements Establish and Release Product to sD4.6:
sS3.6: Deliver sM2.6: sM3.6: sD1.6: Build Loads sD3.5: Checkout
sP1.4: Establish Sourcing sP3.4: sP4.4: Communicate Build Loads
Establish and Plans Establish Establish Return Plans Transfer Product sM1.7: Release Finished Stage Route Shipments sD2.6: sD4.7:
Communicate Production Plans Delivery Plans sS3.7: Waste Disposal Product to Deliver Finished Product sD1.7: Route Shipments sD3.6: Deliver and/or
Supply Chain Plans Authorize sM2.7: sM3.7: Select Carriers and sD2.7: Route Shipments install
Supplier Payment Waste Disposal Release Product Rate Shipments Select Carriers and sD3.7:
to Deliver sD1.8: Rate Shipments Select Carriers &
sM3.8: Receive Product sD2.8: Rate Shipments
Waste Disposal from Source Receive Product sD3.8:
or Make from Source Receive Product
sD1.9: or Make from Source
Pick Product sD2.9: or Make
sD1.10: Pick Product sD3.9:
Pack Product sD2.10: Pick Product
sD1.11: Pack Product sD3.10:
Load Vehicle sD2.11: Pack Product
& Generate Load Product sD3.11:
Shipping Docs & Generate Load Product
sD1.12: Shipping Docs & Generate
Ship Product sD2.12: Shipping Docs
sD1.13: Ship Product sD3.12:
Receive and sD2.13: Ship Product
Verify Product Receive and sD3.13:
by Customer Verify Product Receive and
sD1.14: by Customer Verify Product
Install Product sD2.14: by Customer
sD1.15: Install Product sD3.14:
Invoice sD2.15: Install Product
Invoice sD3.15:
Invoice

sR - Return sE - Enable
sSR1 sSR2 sSR3 sDR1 sDR2 sDR3 sE1 sE2 sE3 sE4 sE5 sE6 sE7 sE8 sE9 sE10 sE11
Source Return Source Return Source Return Deliver Return Deliver Return Deliver Return Manage Supply Manage Manage Manage Manage Manage Manage Manage Supply Manage Manage Manage
Defective Product MRO Product Excess Product Defective Product MRO Product Excess Product Chain Business Supply Chain Supply Chain Data Supply Chain Supply Chain Supply Chain Supply Chain Chain Regulatory Supply Chain Risk Supply Chain Supply Chain
Rules Performance and Information Human Resources Assets Contracts Network Compliance Procurement Technology
sSR1.1: sSR2.1: sSR3.1: sDR1.1: sDR2.1: sDR3.1: sE1.1: sE2.1: sE3.1: sE4.1: sE5.1: sE6.1: sE7.1: sE8.1: sE9.1: sE10.1: sE11.1:
Identify Defective Identify MRO Identify Excess Authorize Defective Authorize MRO Authorize Excess Gather Business Initiate Reporting Receive Identify Skills/ Schedule Asset Receive Contract/ Select Scope Monitor Establish Context Develop Strategy Define Supply
Product Condition Product Condition Product Condition Product Return Product Return Product Return Rule Requirements sE2.2: Maintenance Resource Management Contract Updates and Organization Regulatory Entities sE9.2: and Plan Chain Technology
sSR1.2: sSR2.2: sSR3.2: sDR1.2: sDR2.2: sDR3.2: sE1.2: Analyze Reports Request Requirement Activities sE6.2: sE7.2: sE8.2: Identify Risk Events sE10.2: Requirements
Disposition Disposition Disposition Schedule Defective Schedule MRO Schedule Excess Interpret Business sE2.3: sE3.2: sE4.2: sE5.2: Enter and Gather Input Assess Regulatory sE9.3: Pre-Procurement sE11.2:
Defective Product MRO Product Excess Product Return Receipt Return Receipt Return Receipt Rule Requirement Find Root Causes Determine/Scope Identify Available Take Asset Off-line Distribute Contract and Data Publications Quantify Risks / Market Test and Identify Technology
sSR1.3: sSR2.3: sSR3.3: sDR1.3: sDR2.3: sDR3.3: sE1.3: Work Skills/Resources sE5.3: sE6.3: sE7.3: sE8.3: Market Engagement Solution
sE2.4: sE9.4: Alternatives
Request Defective Request Request Excess Receive Defective Receive Receive Document Prioritize sE3.3: sE4.3: Inspect and Activate/Archive Develop Scenarios Identify Regulatory Evaluate Risks sE10.3:
Product Return MRO Return Product Return Product MRO Product Excess Product Business Rule Root Causes Maintain Match Skills/ Troubleshoot Contract sE7.4: Deficiencies Develop sE11.3:
Authorization Authorization Authorization (includes verify) Content/Code Resources sE9.5: Procurement Define/Update
sDR2.4: sDR3.4: sE1.4: sE2.5: sE5.4: sE6.4: Model/Simulate sE8.4: Mitigate Risk
sSR1.4: sSR2.4: sSR3.4: sDR1.4: Transfer Transfer Communicate sE3.4: sE4.4: Install and Review Contractual Scenarios Define Remediation Documentation Supply Chain
Develop Technology
Schedule Defective Schedule Schedule Excess Transfer MRO Product Excess Product Business Rule Corrective Actions Maintain Access Determine Hiring/ Configure Performance sE7.5: sE8.5: sE10.4:
Product Shipment MRO Shipment Product Shipment Defective Product Redeployment Supplier Selection Roadmap
sE1.5: sE2.6: sE3.5: sE5.5: sE6.5: Project Impact Verify/Obtain
sSR1.5: sSR2.5: sSR3.5: Release/Publish Publish Information sE4.5: Clean, Maintain Identify License to Participate sE11.4:
Approve & Launch sE7.6: Select Technology
Return Return Return Business Rule sE3.6: Determine and Repair Performance Issues/ Select and Approve sE8.6: sE10.5:
Defective Product MRO Product Excess Product Training/Education Opportunities Issue ITT / RFQ Solution
sE1.6: Verify Information sE5.6: sE7.7: Publish
Retire Business sE4.6: Decommission sE6.6: Remediation sE10.6: sE11.5:
Develop Change Define and Deploy
Rule Approve, Prioritize and Dispose Identify Program Bid / Tender
and Launch Resolutions/ Evaluation and Technology
sE5.7: sE7.8: Solution
Inspect Improvements Validation
Launch sE11.6:
Maintenance sE6.7: Change Program sE10.7:
Select, Prioritize Contract Award and Maintain and
sE5.8: Improve Technology
Reinstate Asset and Distribute Implementation
Resolutions Solution
sE11.7:
Retire Technology
Solution
SCOR Practices SCOR Performance
A practice is a unique way to configure a process or a set of processes. The uniqueness can The performance or metrics section of SCOR focuses on understanding the outcomes of the
be related to the automation of the process, a technology applied in the process, special skills supply chain and consists of two types of elements: Performance Attributes and Metrics., and
applied to the process, a unique sequence for performing the process, or a unique method introduces the concept of Process/Practice Maturities.
for distributing and connecting processes between organizations. All practices have links to
one or more processes, one or more metrics and, where available, one or more skills. 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
SCOR Practices are classified to simplify identification of practices by area example: “The LX product needs to be leading the competition in reliability“ and “The XY-market
of interest: requires us to be among the top 10 agile manufacturers“. Metrics measure the ability to
achieve these strategic directions. SCOR recognizes 5 performance attributes:
n Business Process Analysis/Improvement n Planning and Forecasting
n Customer Support n Production Execution n Reliability n Cost
n Distribution Management n Product Lifecycle Management n Responsiveness n Asset Management Efficiency (Assets)
n Information Management n Purchasing /Procurement n Agility
n Inventory Management n Reverse Logistics
n Material Handling n Risk/Security Management A metric is a standard for measurement of the performance of a supply chain or process.
n New Product Introduction n Sustainable Supply Chain Management SCOR metrics are diagnostic metrics (compare to how diagnosis is used in a medical office).
n Order Engineering (ETO) n Transportation Management SCOR recognizes three levels of pre-defined metrics:
n Order Management n Warehousing
n People Management (Training) 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.
Special Applications
Level-2 metrics serve as diagnostics for the level-1 metrics. The diagnostic relationship
SustainableSCOR helps to identify the root cause or causes of a performance gap for a level-1 metric.
SustainableSCOR is based upon The GRI Sustainability Reporting Standards (GRI Standards)
that are within scope of the SCOR model. GRI Standards are free to use and are available at Level-3 metrics serve as diagnostics for level-2 metrics.
www.globalreporting.org/standards. The following strategic environmental metrics allow
the SCOR model to be used as a framework for environmental accounting: The analysis of performance of metrics from level-1 through 3 is referred to as metrics
decomposition, performance diagnosis or metrics root cause analysis. Metrics
n Materials Used n Air Emissions decomposition is a first step in identifying the processes that need further investigation.
(Weight or Volume) (Metric Tons or Equivalents) (Processes are linked to level-1, level-2 and level-3 metrics).
n Energy Consumed n Liquid and Solid Wastes
(Joules,Watt-hours or Multiples) (Gallons, Liters or Multiples, Weight
n Water Volume Withdrawn or Volume)
(Gallons, Liters or Multiples)

The SCOR framework ties emissions to the originating processes, providing a structure for
measuring environmental performance and identifying where performance can be
improved. The hierarchical nature of the model allows strategic environmental footprint
goals to be translated to specific targets and activities.

4 SCOR 12.0 Quick Reference Guide

Reliability Responsiveness Agility Cost Asset Management Efficiency
RL.1.1 - Perfect Order Fulfillment RS.1.1 - Order Fulfillment Cycle Time AG.1.1 - Upside Supply Chain Adaptability CO.1.1 - Total Supply Chain Management Costs AM.1.1 - Cash-to-Cash Cycle Time
RL.2.1 - % of Orders Delivered In Full RS.2.1 - Source Cycle Time AG.2.1 - Upside Adaptability (Source) CO.2.1 - Cost to Plan AM.2.1 - Days Sales Outstanding
RL.3.33 - Delivery Item Accuracy RS.3.8 - Authorize Supplier Payment Cycle Time AG.2.2 - Upside Adaptability (Make) CO.3.1 - Cost to Plan Supply Chain AM.2.2 - Inventory Days of Supply
RL.3.35 - Delivery Quantity Accuracy RS.3.35 - Identify Sources of Supply Cycle Time AG.2.3 - Upside Adaptability (Deliver) CO.3.2 - Cost to Plan (Source) AM.3.16 - Inventory Days of Supply ( Raw Material )
RL.2.2 - Delivery Performance to Customer Commit Date RS.3.107 - Receive Product Cycle Time AG.2.4 - Upside Return Adaptability (Source) CO.3.3 - Cost to Plan (Make) AM.3.17 - Inventory Days of Supply ( WIP )
RL.3.32 - Customer Commit Date Achievement Time RS.3.122 - Schedule Product Deliveries Cycle Time AG.2.5 - Upside Return Adaptability (Deliver) CO.3.4 - Cost to Plan (Deliver) AM.3.23 - Recycle Days of Supply
Customer Receiving
RS.3.125 - Select Supplier and Negotiate Cycle Time AG.1.2 - Downside Supply Chain Adaptability CO.3.5 - Cost to Plan (Return) AM.3.28 - Percentage Defective Inventory
RL.3.34 - Delivery Location Accuracy
RS.3.139 - Transfer Product Cycle Time
AG.2.6 - Downside Adaptability (Source) CO.2.2 - Cost to Source AM.3.37 - Percentage Excess Inventory
RL.2.3 - Documentation Accuracy
RS.3.140 - Verify Product Cycle Time CO.3.6 - Cost to Authorize Supplier Payment AM.3.44 - Percentage Unserviceable MRO Inventory
AG.2.7 - Downside Adaptability (Make)
RL.3.31 - Compliance Documentation Accuracy
RS.2.2 - Make Cycle Time CO.3.7 - Cost to Receive Product AM.3.45 - Inventory Days of Supply ( Finished Goods )
AG.2.8 - Downside Adaptability (Deliver)
RL.3.43 - Other Required Documentation Accuracy
RS.3.33 - Finalize Production Engineering Cycle Time CO.3.8 - Cost to Schedule Product Deliveries AM.2.3 - Days Payable Outstanding
RL.3.45 - Payment Documentation Accuracy
AG.1.3 - Overall Value at Risk (VAR)
RS.3.49 - Issue Material Cycle Time CO.3.9 - Cost to Transfer Product AM.1.2 - Return on Supply Chain Fixed Assets
RL.3.50 - Shipping Documentation Accuracy AG.2.9 - Supplier’s/Customer’s/ Product’s Risk Rating
RS.3.101 - Produce and Test Cycle Time CO.3.10 - Cost to Verify Product AM.2.4 - Supply Chain Revenue
RL.2.4 - Perfect Condition AG.2.10 - Value at Risk (Plan)
RS.3.114 - Release Finished Product to Deliver Cycle Time CO.2.3 - Cost to Make AM.2.5 - Supply Chain Fixed Assets
RL.3.12 - % Of Faultless Installations AG.2.11 - Value at Risk (Source)
RS.3.123 - Schedule Production Activities Cycle Time CO.3.11 - Direct Material Cost AM.3.11 - Fixed Asset Value (Deliver)
RL.3.24 - % Orders/Lines Received Damage Free AG.2.12 - Value at Risk (Make)
RS.3.128 - Stage Finished Product Cycle Time CO.3.12 - Indirect Cost Related to Production AM.3.18 - Fixed Asset Value (Make)
RL.3.41 - Orders Delivered Damage Free Conformance AG.2.13 - Value at Risk (Deliver)
RS.3.142 - Package Cycle Time CO.3.13 - Direct Labor Cost AM.3.20 - Fixed Asset Value (Plan)
RL.3.42 - Orders Delivered Defect Free Conformance AG.2.14 - Value at Risk (Return)
RS.2.3 - Deliver Cycle Time CO.2.4 - Cost to Deliver AM.3.24 - Fixed Asset Value (Return)
RL.3.55 - Warranty and Returns AG.2.15 - Time to Recovery (TTR)
RS.3.16 - Build Loads Cycle Time CO.3.14 - Order Management Costs AM.3.27 - Fixed Asset Value (Source)
RS.3.18 - Consolidate Orders Cycle Time CO.3.15 - Order Delivery and / or Install Costs AM.1.3 - Return on Working Capital
RS.3.46 - Install Product Cycle Time CO.2.5 - Cost to Return AM.2.6 - Accounts Payable (Payables Outstanding)
RS.3.51 - Load Product & Generate Shipping Documentation CO.3.16 - Cost to Source Return AM.2.7 - Accounts Receivable (Sales Outstanding)
Cycle Time
CO.3.17 - Cost to Deliver Return AM.2.8 - Inventory
RS.3.102 - Receive & Verify Product by Customer Cycle Time
CO.2.6 - Mitigation Costs
RS.3.110 - Receive Product from Source or Make Cycle Time
CO.3.18 - Risk Mitigation Costs (Plan)
RS.3.111 - Receive, Configure, Enter, & Validate Order Cycle Time
CO.3.19 - Risk Mitigation Costs (Source)
RS.3.116 - Reserve Resources and Determine Delivery Date
Cycle Time CO.3.20 - Risk Mitigation Costs (Make)
RS.3.117 - Route Shipments Cycle Time CO.3.21 - Risk Mitigation Costs (Deliver)
RS.3.120 - Schedule Installation Cycle Time CO.3.22 - Risk Mitigation Costs (Return)
RS.3.124 - Select Carriers & Rate Shipments Cycle Time CO.1.2 - Costs of Goods Sold
RS.3.126 - Ship Product Cycle Time CO.2.7 - Direct Labor Cost
RS.2.4 - Delivery Retail Cycle Time CO.2.8 - Direct Material Cost
RS.3.17 - Checkout Cycle Time CO.2.9 - Indirect Cost Related to Production
RS.3.32 - Fill Shopping Cart Cycle Time

RS.3.34 - Generate Stocking Schedule Cycle Time

RS.3.97 - Pick Product from Backroom Cycle Time

RS.3.109 - Receive Product at Store Cycle Time

RS.3.129 - Stock Shelf Cycle Time

RS.2.5 - Return Cycle Time

5 SCOR 12.0 Quick Reference Guide

About APICS
APICS is the association for supply chain management and the leading provider
of research, education and certification programs that elevate supply chain
excellence, innovation and resilience. The APICS Certified in Production and
Inventory Management (CPIM); APICS Certified Supply Chain Professional
(CSCP); APICS Certified in Logistics, Transportation and Distribution (CLTD);
and APICS Supply Chain Operations Reference-Professional (SCOR-P)
designations set the industry standard. With more than 45,000 members and
approximately 300 channel partners, APICS is transforming the way people do
business, drive growth and reach global customers.

For more information, visit apics.org/scor.

© APICS 2017. All rights reserved. SCOR is a registered trademark in the United States and Europe.
See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/223768747

Computer-Assisted Supply Chain Configuration Based on Supply Chain

Operations Reference (SCOR) Model

Article in Computers & Industrial Engineering · March 2005

DOI: 10.1016/j.cie.2005.01.001

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 Computers & Industrial Engineering 48 (2005) 377–394
www.elsevier.com/locate/dsw

Computer-assisted supply chain configuration based on supply

chain operations reference (SCOR) model
Samuel H. Huanga,*, Sunil K. Sheoranb, Harshal Keskara
a
Intelligent CAM Systems Laboratory, Department of Mechanical, Industrial and Nuclear Engineering,
University of Cincinnati, Cincinnati, OH 45221, USA
b
OpalSoft Inc., 3150 Almaden Expressway, Suite 205, San Jose, CA 95118, USA

Abstract
A supply chain is a network of facilities that procure raw materials, transform them into intermediate goods and
then final products, and deliver the products to customers through a distribution system. To achieve integrated
supply chain management, a number of researchers and practitioners have devoted their efforts in developing
models to describe the elements and activities of a supply chain. The supply chain council, supported by over 650
member organizations (both academia and industry) worldwide, has developed the supply chain operations
reference (SCOR) model. The SCOR model is a process reference model, which is intended to be an industrial
standard that enables next-generation supply chain management. It contains a standard description of management
processes, a framework of relationships among the standard processes, standard metrics to measure process
performance, management practices that produce best-in-class performance, and a standard alignment to software
features and functionality. This paper summarizes the SCOR model, its benefits along with illustrative case stories
and describes a computer-assisted tool to configure supply chain threaded diagram per SCOR specification.
q 2005 Elsevier Ltd. All rights reserved.

Keywords: Supply chain; Supply chain operations reference model (SCOR); Computer-assisted tool

1. Introduction

In today’s rapidly changing global economy, some companies are able to change with the times to
adapt and thrive in the increasing uncertain world of the early 21st century. They can be recognized by
their ability to anticipate and understand changes in the market, to recognize new opportunities, to
deliver new customer services, and to adapt their businesses rapidly to meet and exceed their customers’

* Corresponding author. Tel.: C1 513 556 1154; fax: C1 513 556 3390.
E-mail address: [email protected] (S.H. Huang).
0360-8352/$ - see front matter q 2005 Elsevier Ltd. All rights reserved.
doi:10.1016/j.cie.2005.01.001
378 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394

requirements. All these companies have recognized the importance of one key element, agility (or
flexibility) to change fast. Agile businesses view themselves as the center, or hub of networks of material
and information flows. These flows extend from the customer interface at marketing and sales through
production and procurement to the building of relationship with suppliers. These businesses achieve
agility through a constant review and realignment of these closely linked networks. Over the past
decade, a new term, supply chain management (SCM), has been coined to a management approach to
deliver this required agility to change while maintaining cost efficiency.
SCM is having profound impact on business results. It ‘encompasses all activities associated with the
flow and transformation of goods from the raw materials stage (extraction), through to the end user, as
well as the associated information flow’ (Handfield & Nichols, 1999). Clearly, the idea of SCM is to
view the chain as a total system and to fine-tune the decisions about how to operate the various
components (companies, functions, and activities) in ways, which will produce the most desirable
overall system performance in the long run. Doing so is extremely difficult due to the number and
complexity of the decisions to be made, as well as the inter- and intra-organization issues that must be
addressed. Never has so much technology and brainpower been applied to improving supply chain
performance. Examples include point-of-sale scanners that allow companies to capture the customer’s
voice. Electronic data interchange lets all stages of the supply chain hear that voice and react to it by
using flexible manufacturing, automated warehousing, and rapid logistics. Concepts such as quick and
accurate response, efficient consumer response, mass customization, lean manufacturing, and agile
manufacturing offer models for applying new technologies to improve performance.
One can argue that a proliferation of interpretations of what SCM means has led to some confusion
among researchers and practitioners. There should be some characteristics unique to supply chain
management that differentiates it from past research that fell under the aegis of integrated logistics.
Houlihan (1985) made it clear that the differentiating factor is the strategic decision making aspect in
managing the supply chain. SCM reaches out beyond the boundaries of cost containment and links
operating decisions to strategic considerations within and beyond the company. To assist organizations
in achieving better strategic decision making, a number of researchers and practitioners have devoted
their efforts to developing models to describe the elements and activities of a supply chain. Beamon
(1998) provided a literature review on multi stage-supply chain modeling, which consists of four
categories, namely, deterministic model (Voudouris, 1996), stochastic model (Tzafestas & Kapsiotis,
1994), economic model (Christy & Grout, 1994), and simulation model (Towill, 1991). The author
proposed a research agenda for supply chain design and analysis: (1) the evaluation and development of
supply chain performance measures, (2) the development of models and procedures to relate decision
variables to the performance measures, (3) consideration of issues affecting supply chain modeling, and
(4) the classification of supply chain systems to allow for the development of rules-of-thumb or general
techniques to aid in the design and analysis of manufacturing supply chains.
Although various supply chain models have been proposed, most of them emphasize on inventory
management and distribution logistic. As previously mentioned, strategic decision making is critical in
supply chain management, which requires a framework model that can serve as an industry standard.
The supply chain council (SCC), a not-for-profit organization established in 1996 that now has over 650
organization members worldwide, has taken the initiative in developing such a model—the supply chain
operations reference (SCOR) model. The SCOR model is intended to be an industrial standard that
enables next-generation supply chain management. It contains a standard description of management
processes, a framework of relationships among the standard processes, standard metrics to measure
 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394 379

process performance, management practices that produce best-in-class performance, and a standard
alignment to software features and functionality. This paper summarizes the SCOR model (Section 2),
presents a computer-assisted tool to configure supply chain threaded diagram per SCOR specification
(Section 3), demonstrates SCOR benefits with case history and illustrations (Section 4), discusses areas
where the SCOR model can be improved (Section 5), and points out future research issues (Section 6).

2. The supply chain operations reference model

2.1. Background

The SCOR model is a process reference model. Specifically, it is a model that links process elements,
metrics, best practice and the features associated with the execution of a supply chain in a unique format.
It provides a balanced horizontal (cross-process) and vertical (hierarchical) view as compared to the
classical process decomposition models, which are developed to address one specific configuration of
process elements. It is designed to be (re)/configurable and aggregates a series of hierarchical process
models. The use of a process reference model allows companies to communicate using common
terminology and standard descriptions of the process elements that help understand the overall supply
chain management process and the best practices that yield the optimal overall performance.
The SCOR model is the first model that can be used to configure the supply chain based on business
strategy. It provides unambiguous, standard descriptions for the thousands of activities within the supply
chain. It also identifies the performance measurements and supporting tools suitable for each activity.
This process reference model enables all departments and businesses involved in developing and
managing the integrated supply chain to collaborate effectively.
The SCOR model integrates the well-known concepts of business process reengineering,
benchmarking, and process measurement into a cross-functional framework. It captures the ‘as-is’
state of a process and then derives the desired ‘to-be’ future state. It quantifies the operational
performance of similar companies and establishes internal targets based on ‘best-in-class’ results. It also
characterizes the management practices and software solutions that result in ‘best-in-class’ performance.
The structural framework of the SCOR model is composed of the following elements:

† Standard descriptions of the individual elements that make up the supply chain processes.
† Standard definitions of key performance measures.
† Descriptions of best practices associated with each of the process elements.
† Identification of software functionality that enables best practices.

Since the model’s introduction in 1996, SCOR has undergone several major revisions based on
practical needs. The following paragraphs summarize the SCOR model based on materials presented in
Stephens (2001) and SCC (2001).

2.2. SCOR processes and levels

The SCOR model is originally founded on five distinct management processes, namely, Plan,
Source, Make, Deliver and Return which are called Level 1 processes. The processes are further
380 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394

Fig. 1. The SCOR infrastructure (Stephens, 1999).

decomposed into process categories (Level 2) depending on the type of environment in which
the SCOR model is applied. The process categories further contain process elements, which
is the third and the last Level in the SCOR model. At Level 3, the elements model
contains performance attributes, metrics, best practices and software features required for that
element. Fig. 1 shows the infrastructure of the SCOR model, while Fig. 2 shows the process levels
(Stephens, 2001).
The five management processes—Plan, Source, Make, Deliver and Return—are discussed first.
The Plan process consists of processes that balance aggregated demand and supply to develop a
course of action which best meets the business goals. Plan processes deal with demand/supply
planning, which include the activities to assess supply resources, aggregate and prioritize demand
requirements, plan inventory, distribution requirements, production, material, and rough-cut capacity
for all products and all channels. The Source process contains processes that procure goods and
services to meet planned or actual demand. Sourcing/material acquisition includes the jobs of
obtaining, receiving, inspecting, holding, and issuing material. Management of sourcing infrastructure
includes vendor certification and feedback, sourcing quality, in-bound freight, component
engineering, vendor contracts, and vendor payments. The Make process includes functions that
transform goods to a finished state to meet planned or actual demand. Make is the core process of the
system in which actual production execution takes place. It includes the jobs of requesting and
receiving material, manufacturing and testing product, packaging, holding and/or releasing the
product eventually. The Deliver process consists of processes that provide finished goods and
services to meet planned or actual demand. This typically includes the functions of order
management, transportation management, and distribution management. Managing the deliver
 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394 381

Fig. 2. The SCOR process levels (Stephens, 1999).

process includes managing channel business rules, ordering rules, managing deliver inventories, and
managing deliver quality. Return is the latest addition to SCOR model. It deals with managing
reverse flow of material and information related to defective, surplus and MRO products.
This includes authorizing, scheduling, receiving, verifying, disposing and replacement or credit for
the above types of materials. Each basic supply chain is a ‘chain’ of Source, Make, Deliver and
Return execution process. Each interaction of two execution processes is a ‘link’ in the supply chain.
Planning sits on top of these links and manages them.
As previously mentioned, the SCOR model contains three Levels of process detail. Level 1 is the top
level that deals with process types. Level 2 is the configuration level and deals with process categories.
Level 3 is the process element level and is the lowest level in the scope of the SCOR model.
Implementation levels that are below Level 3, in which we decompose process elements into tasks and
further activities in classical hierarchical manner, are not in scope of the SCOR model, but will be briefly
mentioned here.
Level 1 defines the supply chain using five key processes: Plan, Source, Make, Deliver and Return.
The SCOR model Level 1 metrics characterize performance from customer-facing and internal-facing
perspectives. Therefore, at Level 1, basis of competition is defined and broad guidelines are provided to
meet the competition. Specific tasks to be completed at Level 1 are: set business requirements and define
basis of competition, evaluate the performance of current operation vis-à-vis required performance, set
the SCOR model metrics and targets, and define the gap, set business priorities and state what needs to
change. Also at Level 1, current supply chain is modeled considering asset, product volume and mix, and
technology requirements and constraints.
382 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394

Level 2 defines different categories within the Level 1 processes. At this level, processes are
configured in line with supply chain strategy. At Level 2, internal redundancies can be identified and
eliminated:

† A business that has grown through acquisition typically finds multiple redundancies at this level, such
as overlapping planning processes, duplicated purchasing, or excessive intra-manufacturing transfers.
† Some businesses discover that customer orders are delayed at many points in the supply chain,
indicating a need for customer and supplier integration.
† Others may find that the same planning process is carried out both internally and by the customer. One
of them should be eliminated.

The goal at Level 2 is to simplify the supply chain and enhance its overall flexibility. At Level 2, the
SCOR model provides a tool kit of 22 process categories (version 5.0), as shown in Table 1. Any supply
chain configuration can be represented with this tool kit. Here the company should reconfigure the
supply chain configured in Level 1 to determine the expected performance. At Level 2, market
constraints, product constraints and company constraints are considered to configure the inter- and intra-
company process categories.
Level 3 allows businesses to define in detail the processes identified, as well as performance metrics
and best practices for each activity. The software functionality required to support best practices is
also identified, as well as the commercial software and tools currently providing required functionality.

Table 1
SCOR Level 2 process categories
Notation Process category
P1 Plan supply chain
P2 Plan source
P3 Plan make
P4 Plan deliver
P5 Plan return
EP Enable plan
S1 Source stocked products
S2 Source make-to-order products
S3 Source engineer-to-order products
ES Enable source
M1 Make-to-stock
M2 Make-to-order
M3 Engineer-to-order
M0 Make infrastructure
ED Enable deliver
D1 Deliver stocked products
D2 Deliver made-to-order products
D3 Deliver engineered-to-order products
R1 Return defective product
R2 Return MRO product
R3 Return excess product
ER Enable return
 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394 383

Inter- and intra-company process elements are also defined. Performance levels and practices are defined
for these process elements. Benchmarks and the required attributes for the enabling software are also
noted at this level. Specific tasks to be performed at this level include: develop process models that
support strategic objectives and work within the new supply chain configuration developed at Level 2,
set process metrics and performance targets, establish business practices at operating level, build system
requirements that support the supply chain configuration, processes and practices, and finally select
appropriate systems. At Level 3, inputs, outputs, and basic logic flow of process elements are captured.
Level 4 describes the detailed tasks within each of the Level 3 activities. These tasks, and their
interactions, are unique to each business. This level of detail is needed to implement and manage the
supply chain on a day to day basis. Level 4 process definition equates to quality process definition (e.g.
ISO 9000) in most companies. At Level 4, implementation of supply chain processes takes place. At this
level, immediate goals are set, intra- and inter-company supply chain improvements take place,
priorities are set and rapid results are expected and studied.
There are three types of processes in the SCOR model: planning, execution and enable. Planning
processes plan the whole chain along with planning specific type of execution process. Execution
processes cover all process categories of Source, Make, Deliver and Return except the enable process
categories. Enable process of a particular process type defines the constitution of that particular process
element. Using the four levels of the SCOR model, a business can quickly and unambiguously describe
its supply chain. A supply chain that is defined using this approach can also be modified and re-
configured rapidly as business and market requirements change. The SCOR model has a powerful role in
implementing supply chains. The SCOR model Levels 1 and 2 metrics keep management focused, while
Level 3 metrics support on-going diagnosis.

2.3. Metrics

Operating a supply chain is far different from running a stand-alone company, and so are the metrics.
The supply chain can be looked at as an externalization of business processes toward greater
profitability. Trading partners, to a greater or lesser degree of formality, are linking their productive
assets to gain efficiencies in cycle times, procurement, inventory, logistics, and cash flow. Given these
relationships, how the partners measure effectiveness of their intertwined processes becomes quite
different than assessing internal operations. Their shared metrics needed to achieve this balance call for
accepted common standards in the field, as well as issues of change management and company culture
for all partners.
The SCOR model endorses 13 performance metrics. A company cannot be best in all 13 of the Level 1
metrics, so it should wisely target its strength in several, those by which it differentiates itself in the
market, while ensuring that it stays competitive in the others. In practice most companies typically
choose among four to six of the 13 performance metrics to focus on. Those chosen tend to fall into five
defining categories: supply chain reliability, supply chain responsiveness, supply chain flexibility,
supply chain costs, and efficiency in managing assets (working and fixed capital) in the supply chain, as
shown in Table 2. A brief description of these metrics is given as follows:

† Delivery performance. Percentage of orders delivered on time with respect to the total number of
orders delivered. The components of delivery performance include total number of orders received,
number of orders scheduled to customer’s request date, total number of orders delivered, percentage
384 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394

Table 2
SCOR model level I performance metrics
Delivery reliability
Delivery performance
Fill rates
Perfect order fulfillment
Responsiveness
Order fulfillment lead times
Flexibility
Supply chain response time
Production flexibility
Cost
Cost of goods sold
Total supply chain management cost
Value-added employee productivity
Warranty/return processing costs
Assets
Cash-to-cash cycle time
Inventory days of supply
Asset turns

of orders delivered on time (to request date), number of orders delivered on-time to commit date, and
percentage of orders delivered on-time to customer commit date. It affects the balance sheet on
accounts receivable.
† Fill rate. Fill rate is percentage of ship-from-stock orders shipped within 24 h of order receipt. The fill
rate affects the balance on accounts receivable and is calculated as: [number of orders filled from
stock shipped within 24 h of order receipt]/[total number of stock orders].
† Order fulfillment lead time. The average actual lead time consistently achieved from customer
authorization of purchase order to final installation/order completion at customer end. It
affects the inventory on balance sheet. It is calculated as: [sum of lead time required for
each order fulfillment from purchase order authorization to final installation]/[total number of
orders].
† Perfect order fulfillment. The percentage of orders meeting deliver performance and with
complete and accurate documentation with no shipping damage. Components of perfect order
fulfillment include all items and quantities delivered on-time (using customer’s definition) and
documentation for packing slips, bills of lading, and invoices. It is calculated as: [total orders
shipped on time and in full-orders without faulty documentation—orders with shipping
damage]/[total orders].
† Supply chain response time. The time it takes the integrated supply chain to respond to abnormal
(significant) change in demand. It is calculated as [order fulfillment lead timeCsource cycle time] and
it affects the inventory on the balance sheet.
† Production flexibility. Production flexibility can be seen in two parts, upside flexibility and downside
flexibility. Upside flexibility is number of days required to achieve an unplanned sustainable 20%
increase in production. Downside flexibility is percentage order reduction sustainable at 30 days prior
 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394 385

to delivery with no inventory or cost penalties. The production flexibility is dependent upon
internal manufacturing capacity, direct labor and material availability and affects inventory on
balance sheet.
† Total logistics management cost. The sum of supply chain related costs for order management,
material acquisition, inventory carrying, finance and planning, and MIS costs. It is calculated as sum
of the costs. To see the cost elements in detail of categories mentioned here please consult official
documentation of the SCOR model (SCC, 2001).
† Cost of goods sold. The cost associated with buying raw materials and producing finished goods. This
cost includes direct cost (labor, material) and indirect cost (overhead)
† Value added productivity. It is calculated as: [Total Product RevenueKTotal Material Purchases]/
Total Employment (in full time equivalents).
† Warranty cost or returns processing cost. It includes materials, labor, and problem diagnosis for
product defects. A warranty cost has impact on inventory on balance sheet.
† Cash-to-Cash cycle time. Cash-to-Cash cycle time is a measure of the time required in
days to convert cash paid to suppliers into cash received from customers, including the
inventory required. It is calculated as [Inventory days of supplyCdays sales outstandingKdays of
payables]. It impacts inventory, accounts payable, accounts receivable, and total assets on the
balance sheet.
† Inventory days of supply. Total gross value of inventory at standard cost before reserves for excess
and obsolescence.
† Asset turns. Total turns of capital employed. It impacts inventory, accounts payable, accounts
receivable, and fixed assets on the balance sheet. It is calculated as total gross product revenue divided
by total net assets.

3. A computer-assisted configuration tool

The SCOR model can help upper management of an organization in designing and reconfiguring its
supply chain to achieve desired performance. The implementation consists of four steps as guided by the
roadmap shown in Fig. 3 (Stephens, 2001). The four steps are:

1. Analyze basis of competition.

2. Configure supply chain.
3. Align performance Levels, practices, and systems.
4. Implement supply chain processes and systems.

Supply chain configuration (Step 2) is one of the core concepts in supply chain management
philosophy. The configuration defines the structure of supply chain, which is one of the key success
factors in achieving desired supply chain performance. A computer-assisted tool has been developed to
configure ‘as is’ thread-diagram or ‘to be’ thread-diagram (per SCOR specification) of a particular
supply chain based on the user’s input. In the hands of supply chain professionals, this computer-assisted
tool can play an important role in making decisions regarding dynamics and structure of the chain.
The customized supply chain configuration diagram generated from the tool will help upper
management understand the interaction of the particular company with its alliances and partners.
386 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394

Fig. 3. The SCOR project roadmap (Stephens, 2001).

An example, the ALPHA Company taken from SCC’s SCOR workshop material, is used to illustrate
the computer-assisted configuration tool. When running the configuration tool, a welcome screen
appears first. The welcome screen contains general instructions along with the welcome message. It also
contains a button that, when clicked, leads to another screen where the user can develop a customized
SCOR Level 2 supply chain configuration. The user is prompted to enter the name of the company for
which the supply chain is to be designed. Once the user enters the company name, ALPHA, and clicks
the continue button, the screen shown in Fig. 4 appears. The screen is divided into three zones and
marked with name messages displayed in each zone, one each for the company, its suppliers, and for its
customers or warehouses, respectively. In this particular example, the warehouse is the downstream
node and is considered as the customer of the manufacturing facility. Here, the user gets to select the
type of manufacturing facility from three types, Make-to-Stock, Make-to-Order, and Engineer-to-Order,
as classified by the SCOR model.
In this example, the manufacturing facility type is Make-to-Stock (M1). It is placed on screen and the
information about the sourcing activity of the facility is requested. A particular type of manufacturing
may require any of the three types of sourcing activities classified by the SCOR model, i.e. source
stocked materials, source make-to-order materials, and source engineer-to-order products. The user has
the choice of selecting one or more of the options available depending on requirements of the particular
manufacturing facility.
In this example, two types of material are sourced for the make to stock manufacturing facility,
namely, source stocked materials (S1) and source make-to-order materials (S2). As the user inputs the
number of suppliers and clicks the continue button, the sources are generated based on the user input
(Fig. 5). The user is prompted with the question if he has information about the supplier’s manufacturing
facility. If the answer is no then the next part is skipped. In our example, the information about supplier
is available. The user is then prompted to input the number of sources for ALPHA’S suppliers.
 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394 387

Fig. 4. Snapshot of manufacturing type selection screen.

After the sources are generated, the user is prompted to enter the information about the warehouses
(Fig. 6). If the manufacturing facility supplies to multiple warehouses, the number of warehouses is
shown by the multiple arrows for the sourcing activity of warehouse and delivery activity of the
company. In addition to that, the number that is shown in the label (enclosed in the parenthesis) indicates
the number of warehouses.
As the user enters the warehouse information, in this particular example which is one, and clicks the
continue button, the customized supply chain configuration is generated without placement of
the planning activities. Fig. 7 is the screen capture of the supply chain configuration of ALPHA. Now the
user is prompted to place the Level 2 planning activities. P2 is placed on the sourcing activities, P3 on
make and P4 is placed on the delivery activities of ALPHA. The user is now prompted for the final step,
the placement of Level 1 planning activities. Fig. 8 shows the final screen capture which contains the
supply chain configuration for ALPHA along with Level 2 planning activities. The final step of placing
plan supply chain (P1) activity is completed here. P1 is placed in two zones—inter- and intra-company.
Intra-company P1 activity gets input from other Level 2 planning activities from the facility, whereas
inter-company P1 activity crosses the boundary of enterprise and reaches the alliances and partnerships,
which is the heart of supply chain management philosophy.
388 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394

Fig. 5. Snapshot of supply chain configuration—make.

4. SCOR benefits

The advantages of SCOR model has been widely publicized by Supply Chain Council with illustrative
case histories. The condensed generalized achievements of SCOR implementation in wide range of
industries worldwide can be cited as follows (Bolstorff & Rosenbaum, 2003):

† Cost reduction and customer service improvement, offering on average 3% rise in total operating
income.
† Within 12 months of project implementation, almost 2–6% improvement in return on investment
(ROI).
† Noticeable improvement in return on assets (ROA) because of cognizant decisions in capital
investment.
† Standard supply chain definitions and interpretations facilitating use of standard features of IT
systems, reducing the operating costs drastically.
† 1–3% profit step up through continuous improvements in supply chain management.

More specifically, Intel is one of the SCOR beneficiaries worldwide that were forced to improve their
complex and dynamic virtual supply chain networks, because of emergence of Business to Business
 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394 389

Fig. 6. Snapshot of supply chain configuration—make and source.

Integration (B2Bi). Intel Corporation suitably adapted and seamlessly integrated SCOR methodology in
their supply chain improvement efforts (Intel 2002). SCOR initiatives at Intel were intended to achieve
following objectives:

† Documentation of the supply chain and process improvement efforts currently in place.
† Identification of short term improvements.
† Identification of owners for long term improvements.
† Most importantly, learning and incorporating the SCOR methodology in the improvement efforts.

Intel developed SCOR BKM (‘Best Known Method’), their own methodology to implement
SCOR project road map. It consists of four face to face (FTF) meetings of cross-functional team
members. The members have to finish assigned tasks offline in between two meetings. SCOR based
simulation studies are introduced at early stage of projects to explore alternate configurations and
improvements.
The methodology facilitates mechanism for Intel to set benchmarks using best in class industry
performers. Performance indicators are aligned and customized at various operational and strategic
levels. Scorecard is used as standard mean for identifying performance improvement opportunities.
390 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394

Fig. 7. Snapshot of supply chain configuration—make, source, and deliver.

SCOR BKM created a structured way to identify and prioritize supply chain improvements.
It gave the management clear visibility across the supply chain which helped them prioritizing
and expediting the improvements projects currently in place. One of such projects, which dealt with
restructuring geographic inventory management and improving delivery performance, achieved great
results. SCOR facilitated managing geographic inventory levels through min–max control limits,
daily review, scheduling replenishment shipments, and assigning customer orders to the best point of
supply based on lead time and availability. It also provided the required delivery capability and
reliability in meeting customer commitments by improving planning of throughput time and
operating calendars, and by changing carrier contracts and execution to delivery date requested by
the customer.
In short, SCOR implementation improved Intel’s customer responsiveness and reliability, delivery
performance, and factory agility focused on building the right product, reducing the inventory carrying
and obsolescence costs and resource/space fluctuations.
Similarly, many other organizations like Avon, LEGO, Siemens Medicals to name a few,
pursued SCOR methodology and road map to achieve significant improvements in their supply
chains. Table 3 summarizes their achievements along with the best practices utilized by these three
organizations.
 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394 391

Fig. 8. Snapshot of final supply chain configuration.

5. Discussion

The SCOR model is developed to describe the business activities associated with all phases of
satisfying a customer’s demand. It uses a common set of definitions to describe supply chains that are
across multiple industries and are of various complexities. Therefore, it has the potential to become an
industry standard that can facilitate decision making by executive managers of a company. In contrast to
the mathematical models reviewed by Beamon (1998), the SCOR model is a framework model for
strategic decision making. It does not prescribe how a particular company should conduct its business.
We believe this is a wise decision by SCC since different companies have different supply chain
strategies that dictate their operations. After discussing the advantages of the SCOR model in Section 4,
now we will focus on discussing its weakness and providing insights on how SCC can enhance the
SCOR model. Specifically, we will address the two issues here, namely, customization/extension and
internet presence.

5.1. Customization and extension

The SCOR model needs to be provided as per the needs of a particular company. Not every company
is that capable and willing to explore opportunities offered by the SCOR model. This is the reason for
392 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394

Table 3
SCOR benefits illustrations
Company Achievements Prior Later Best practices
AVON Perfect order rate 62% 90% † Simplified processes and
networks
Cycle time Reduction † Optimizing the manufacturing
by 50% locations of different products
† Centralized managed
inventories
† Rationalized
supplier base

LEGO Delivery performance 70% 90–99% † Global ATP/Product allocation

Inventory days of supply 55 days 75 days † Performance measurement
Capacity Increase † Integration of IT
by 10% † Vendor managed inventory
† Automated order processing
Siemens medicals Delivery lead times 22 weeks 2 weeks † More direct distribution
systems
Delivery reliability 65% 99.5% † Increased percentage of made
to order goods
† KANBAN system

SCC’s moderate performance and slow acceptance of the SCOR model. Therefore, SCOR model should
be made easy to understand and implement. SCC website should provide a customized version of the
SCOR model for a particular company along with other supply chain services. The key customized
services that SCC needs to provide are:

† Customized organization structure. Every company has its unique organizational structure and
responsibilities assigned to individuals, in spite of the requirement of performing similar industry
operations. The SCOR model should be able to generate a customized organization structure for
individual companies.
† Customized task assignment. Supply chain management requires special expertise and needs
input from different departments of a company. Once the customized organizational structure is
defined based on the SCOR model, the tasks of supply chain management should be assigned
accordingly.
† Customized supply chain configuration. Supply chain configuration is one of the core concepts in the
SCM philosophy. The configuration of a chain is affected by conditions in every department of a
company. This is an area where the SCOR model has its strength, since standardization is desirable.
The configuration might require expertise of geographical data and Internet security for data
transmission, which requires outsourcing from the SCC.
† Customized metrics. Operating a supply chain is far different from running a standalone organization,
and so are the metrics. The SCOR model defines 13 Level I metrics. In practice, most companies
typically choose among four to six to focus on. The selection of level I metrics will vary from company
to company and SCC needs to facilitate this customized performance measure over the Internet.
 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394 393

In addition to customization, the SCOR model should provide extension capability. With the rapidly
growing ease of communication, the global markets cannot be ignored. Globalization is changing the
fabric of business from a patchwork of discrete national and regional markets to a global market. The
opportunities for growth and profit are growing exponentially; so are the potential risks. Companies
wishing to compete in this environment must adopt a global supply chain management operating
strategy. The principles to guide supply chain leaders in their new challenge are focusing on how to
satisfy the emerging global customer through supply chain integration and responsive operations. SCC
needs to pay special attention to companies doing business across the globe. Once certain models
developed in different parts of the world are adopted in different countries and/or regions, the task of
standardization becomes more difficult, because of varying marketing conditions and legal restrictions
among others. This timeliness is of utmost importance for SCC to provide a global SCOR model.

5.2. Internet presence

The Internet has emerged as the latest technology-enabling tool. Web technologies continue to be
developed which facilitate trade and simplify many business processes. Visibility between customers
and suppliers has been significantly enhanced, opening up opportunities for reduced response time and
significant savings for all players. The pace at which the Internet is reaching the customer base along
with the factors just mentioned urges us to believe ‘e-business or out of business.’ This principle also
applies to the SCOR model. The SCOR model in its current form is not easily understood and may not be
customized by a company. Almost all companies need human assistance in implementing the SCOR
model, which in turn put a huge burden on SCC in terms of highly skilled ‘technical managers.’ This
need can be significantly reduced through the adoption of Internet technologies.
We recommend that the SCC provide all services related to the SCOR model over the Internet. Along
with other factors, timeliness is extremely important. If the companies adopt their own models for
different supply chain networks, the SCOR model is going to miss the first mover advantage, which is
critical in Internet commerce. Standard and customized SCOR model description and supply chain
configuration generation should be provided over the Internet by SCC. Also, maintenance of the SCOR
model by SCC over the Internet will provide one common place to find all information about the SCOR
model. Model maintenance will be much easier as SCC needs to update at one place, as compared to take
care of numerous customer companies.
In addition, SCC should become a one-stop shop to help promote the SCOR model. Specifically, SCC
should use its expertise in supply chain, information technology, and strategic capabilities to provide
support service while endorsing the SCOR model as an industry standard. The important services that SCC
can provide to its customer companies are training and secure access to customer company’s resources.
Training has always been an important enabling concept in every kind of industry. It assumes more
important role in the complex field of supply chain management. SCC should bear the responsibility for
training its customer companies not only the SCOR model but also the related essential concepts.

6. Conclusion

The SCOR model, provided by SCC, is a useful strategic tool in the hands of upper management to
tackle the complexity in supply chain management. It provides a common supply chain framework,
394 S.H. Huang et al. / Computers & Industrial Engineering 48 (2005) 377–394

standard terminology, common metrics with associated benchmarks, and best practices; and can be used
as a common model for evaluating, positioning, and implementing supply chain application software. It
is in its growing stage of life cycle and enjoys a leverage to become a standard in supply chain
management.
Supply chain configuration is an integral part in SCOR project implementation. Currently, the
configuration of ‘as-is’ or ‘to-be’ threaded-diagram describing a supply chain is done manually. To
automate this process, a computer-assisted configuration tool has been developed and described in this
paper. The configuration tool can so far only deal with a single manufacturing facility of a company. It
does not take into account the interactions among multiple manufacturing facilities. This problem will be
dealt with in our future research and development effort. Furthermore, we will investigate how to
optimize supply chain configuration based on certain performance measures. Specifically, based on a set
of criteria, how to automatically generate ‘to-be’ threaded-diagram from ‘as-is’ threaded-diagram to
optimize supply chain performance.

References

Beamon, B. M. (1998). Supply chain design and analysis: Models and methods. International Journal of Production
Economics, 55(3), 281–294.
Bolstorff, P., & Rosenbaum, R. (2003). Supply chain excellence: A handbook of dramatic improvement using the SCOR model.
New York: AMACOM.
Christy, D. P., & Grout, J. R. (1994). Safeguarding supply chain relationships. International Journal of Production Economics,
36, 233–242.
Handfield, R. B., & Nichols, E. L. (1999). Introduction to supply chain management. Upper Saddle River, NJ: Prentice Hall.
Houlihan, J. B. (1985). International supply chain management. International Journal of Physical Distribution and Materials
Management, 15(1), 22–38.
Intel (2002). SCOR experience at Intel: Methods and tools for supply chain management. Intel Information Technology White
Paper.
SCC (2001). Supply-chain operations reference-model: Overview of SCOR version 5.0. Supply-Chain Council, Inc.
Stephens, S. (2001). Supply chain council & supply chain operations reference model overview, Supply Chain Council, Inc.
Towill, D. R. (1991). Supply chain dynamics. International Journal of Computer Integrated Manufacturing, 4(4), 197–208.
Tzafestas, S., & Kapsiotis, G. (1994). Coordinated control of manufacturing/supply chains using multi-Level techniques.
Computer Integrated Manufacturing System, 7(3), 206–212.
Voudouris, V. T. (1996). Mathematical programming techniques to debottleneck the supply chain of fine chemical industries.
Computers and Chemical Engineering, 20, S1269–S1274.

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Supply Chain Operations Reference Model

SCOR
Version 12.0
Visit apics.org/scor for more information regarding the SCOR framework. The SCOR v12 framework is
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© APICS 2017. All rights reserved. SCOR Version 12.0
Table of Contents
Introduction .................................................................................................................... i
Performance / Metrics.................................................................................................. 1
Reliability .................................................................................................................1.1
Responsiveness ......................................................................................................1.2
Agility ........................................................................................................................1.3
Cost ..........................................................................................................................1.4
Asset Management Efficiencey..............................................................................1.5
Processes....................................................................................................................... 2
Plan ..........................................................................................................................2.1
Source......................................................................................................................2.2
Make ........................................................................................................................2.3
Deliver ......................................................................................................................2.4
Return ......................................................................................................................2.5
Enable ......................................................................................................................2.6
Practices ........................................................................................................................ 3
Emerging..................................................................................................................3.1
Best ..........................................................................................................................3.2
Standard ..................................................................................................................3.3
People ............................................................................................................................ 4
Skills.........................................................................................................................4.1
Special Applications ...................................................................................................... 5
SustainableSCOR ....................................................................................................5.1

© APICS 2017. All rights reserved. SCOR Version 12.0

© APICS 2017. All rights reserved. SCOR Version 12.0
 Introduction

© APICS 2017. All rights reserved. SCOR Version 12.0

 Introduction to SCOR

The Supply Chain Operations Reference model (SCOR) provides methodology, diagnostic and
benchmarking tools that help organizations make dramatic and rapid improvements in supply chain
processes. The world of supply chain management never stops advancing, and nor do supply chain
professionals and their organizations. Supply chains require savvy operators, supervisors and leaders
with the knowledge and know-how on the global standards and practices that move the needle on
supply chain performance. APICS is the industry authority that develops supply chain talent and
elevates end-to-end supply chain performance. From education and certification, to benchmarking and
best practices, APICS sets the industry standard.

SCOR is a part of the APICS body of knowledge used to foster the advancement of end-to-end supply
chain management.

APICS Frameworks
The SCOR model is part of an enterprise portfolio describing the critical elements in a value chain.
Including SCOR, the APICS framework portfolio consists of the Product Life Cycle Operations
Reference model (PLCOR), Customer Chain Operations Reference model (CCOR), Design Chain
Operations Reference model (DCOR), and Managing for Supply Chain Performance (M4SC). For more
information, services, and training related to these frameworks, please contact APICS Corporate
Development at [email protected].

Graphic 1: APICS Frameworks and relationships; credit: Ericsson, Lars Magnusson

© APICS 2017. All rights reserved. ii SCOR Version 12.0

 The key focus of the APICS frameworks are:
• Product Life Cycle Operations Reference model – PLCOR
o Manages the activities for product innovation and product & portfolio management –
idea-to-portfolio
o Key capabilities: Plan, Enable, Ideate, Develop, Launch, Revise
• Customer Chain Operations Reference model – CCOR
o Manages the customer interaction process – lead-to-contract
o Key capabilities: Plan, Relate, Sell, Contract, Assist
• Design Chain Operations Reference model - DCOR
o Manages the product and service development process – portfolio-to-solution
o Key capabilities: Plan, Research, Design, Integrate, Amend
• Supply Chain Operations Reference model - SCOR
o Manages the business activities associated with all phases of satisfying a customer’s
demand – opportunity-to-payment
o Key capabilities: Plan, Source, Make, Deliver, Return, Enable
• Managing for Supply Chain Performance – M4SC
o The process that translates business strategies into supply chain execution plans and
policies – strategies-to-plans and procedures
o Key capabilities: Align Strategy, Networks, Processes, Resources

Graphic 2: This graphic illustrates the Level 1 processes for APICS frameworks

© APICS 2017. All rights reserved. iii SCOR Version 12.0

 SCOR Summary
The Supply Chain Operations Reference model (SCOR) is the product of APICS following the
merger between Supply Chain Council and APICS in 2014. The SCOR model was established in
1996 and updated regularly to adapt to changes in supply chain business practices. SCOR
remains a powerful tool for evaluating and comparing supply chain activities and performance.
SCOR captures a 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.

The APICS member base represents a broad cross-section of industries, including manufacturers,
distributors, and retailers. The vast APICS network is also comprised of technology suppliers and
implementers, academics, and government organizations that participate in APICS activities and
the development and maintenance of the SCOR model.

APICS is interested in providing the widest possible dissemination of SCOR, as the wide-spread
use of the model enables communication using common definitions and measurements, results in
better customer-supplier relationships, software systems that better support members through
the use of common measurements and terms, and the ability to rapidly adopt c o m m o n
practices.

Specific changes in Version 12.0 from 11.0 are outlined later in this Introduction.

Scope of SCOR

The SCOR model has been developed to describe the business activities associated with all
phases of satisfying customer demand. The model itself contains multiple tabbed sections and
is organized around the six primary management processes of Plan, Source, Make, Deliver,
Return and Enable (shown in Graphic 3). 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 nearly 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.

© APICS 2017. All rights reserved. iv SCOR Version 12.0

 SCOR Process

Graphic 3 - SCOR is organized around six major management processes

SCOR 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, SCOR does not address: sales and marketing
(demand generation), product development, research and development, however, these areas
are covered in detail in the other APICS frameworks.

As shown in Graphic 4, the model is designed to support supply chain analysis at multiple
levels. APICS has focused on the top three process levels, which are industry neutral.
SCOR does not attempt to prescribe how an organization should conduct its business or tailor its
systems/information flow. Every organization that implements supply chain improvements using
SCOR will need to extend the model, at least to Level-4, using industry, organization, and/or
location-specific processes, systems, and practices.

© APICS 2017. All rights reserved. v SCOR Version 12.0

 SCOR Process Hierarchy

Graphic 4 - SCOR is a hierarchical process model

It is important to note that this model describes processes not functions. In other words, the model
focuses on the activity involved; not the person or organizational element that performs the
activity.

SCOR Structure
SCOR is a process reference model. The purpose of a process reference model, or business
process framework, is to define process architecture in a way that aligns with key business
functions and goals. Architecture here references how processes interact and perform, how these
processes are configured, and the requirements (skills) on staff operating the processes.
The SCOR reference model consists of 4 major sections:

• Performance: Standard metrics to describe process performance and define strategic goals
• Processes: Standard descriptions of management processes and process relationships
• Practices: Management practices that produce significant better process performance
• People: Standard definitions for skills required to perform supply chain processes.

The SCOR model also contains a section for special applications. Section 5, Special Applications,
is used for suggested SCOR additions that have not yet been tested thoroughly for integration into
the model, but that APICS believes would be beneficial for SCOR users.

© APICS 2017. All rights reserved. vi SCOR Version 12.0

 Performance

The performance section of SCOR focuses on the measurement and assessment of the
outcomes of supply chain process execution. A comprehensive approach to understanding,
evaluating, and diagnosing supply chain performance consists of three elements: Performance
Attributes, Metrics, and Process / Practice Maturity. Elements, as distinct from the Levels in the
Process and Metrics hierarchies, describe different aspects or dimensions of performance:

• Performance Attributes: Strategic characteristics of supply chain performance used to

prioritize and align the supply chain’s performance with the business strategy
• Metrics: Discrete performance measures, themselves comprised of levels of connected
hierarchy
• Process/Practice Maturity: Objective, specific descriptions used a reference tool to
evaluate how well supply chain processes and practices incorporate and execute accepted
best-practice process models and leading practices.

Reliability The ability to perform tasks as expected. Reliability focuses on the

predictability of the outcome of a process. Typical metrics for the
reliability attribute include: On-time, the right quantity, the right quality.
Responsiveness The speed at which tasks are performed. The speed at which a supply
chain provides products to the customer. Examples include cycle-time
metrics.
Agility The ability to respond to external influences, the ability to respond to
marketplace changes to gain or maintain competitive advantage. SCOR
Agility metrics include Adaptability and Overall Value at Risk
Costs The cost of operating the supply chain processes. This includes labor
costs, material costs, and management and transportation costs. A
typical cost metric is Cost of Goods Sold.

Asset The ability to efficiently utilize assets. Asset management

Management strategies in a supply chain include inventory reduction and in-
Efficiency sourcing vs. outsourcing. Metrics include: Inventory days of supply
(Assets) and capacity utilization.

Table 1 - The SCOR Performance Attributes

Reliability, Responsiveness, and Agility are considered customer-focused. Cost and Asset
Management Efficiency are considered internal-focused. All SCOR metrics are grouped within
one of the performance attributes.

Each Performance Attribute has one or more level-1/strategic metrics. These level-1 metrics
are the calculations by which an organization can measure how successful it is in achieving its
desired positioning within the competitive market space.

© APICS 2017. All rights reserved. vii SCOR Version 12.0

 Reliability • Perfect Order Fulfillment (RL.1.1)
Responsiveness • Order Fulfillment Cycle Time (RS.1.1)
Agility • Upside Supply Chain Adaptability (AG.1.1)
• Downside Supply Chain Adaptability (AG.1.2)
• Overall Value at Risk (AG.1.3)
Cost • Total Supply Chain Management Costs (CO.1.1)
• Cost of Goods Sold (COGS) (CO.1.2)
Asset Management • Cash-to-Cash Cycle Time (AM.1.1)
Efficiency • Return on Supply Chain Fixed Assets (AM.1.2)
• Return on Working Capital (AM.1.3)

Table 2 - The SCOR Level-1 Metrics

The SCOR metrics are organized in a hierarchical structure. SCOR describes level-1, level-2 and
level-3 metrics. The relationships between these levels is diagnostic. Level-2 metrics serve as
diagnostics for level-1 metrics. This means that by looking at the performances of the level-2
metrics; performance gaps or improvements for level-1 metrics can be explained. This type of analysis
of the performance of a supply chain is referred to as metric decomposition or root-causing.
Similarly, level-3 metrics serve as diagnostics for level-2 metrics. The level of a metric is included in
the codification of the metric itself.

Metrics codification starts with the performance attributes: Reliability - RL, Responsiveness - RS,
Agility - AG, Cost - CO, and Asset Management - AM. Each metric starts with this two-letter code,
followed by a number to indicate the level, followed by a unique identifier. For example: Perfect
Order Fulfillment is RL.1.1 - a level-1 metric within the Reliability attribute. Perfect Condition is RL.2.4,
a Reliability metric at level-2.

Process / Practice Maturity provides a qualitative comparison of supply chain processes and practices
to descriptive representations of different levels of process and practice adoption and implementation.
This evaluation measurement of supply chain process and practice effectiveness typically follows
widely used models for Practice Maturity (sometimes referred to as Capability Maturity Models).
Numerous maturity models exist for supply chain management, which typically follow a “Stages of
Maturity” scale where “High Maturity” processes employ, and often extend, best practice and are
implemented with a high degree of discipline and compliance, while “Low Maturity” processes are
characterized by outdated practices and/or lack of discipline and consistency. SCOR does not
currently embed a prescribed maturity model framework and content directly into the SCOR model
document. The Performance section provides an overview of this important element of Supply Chain
Performance, and the SCOR user is encouraged to draw upon existing maturity models to develop
and tailor the content to their industry and company.

© APICS 2017. All rights reserved. viii SCOR Version 12.0

 Processes

The Process section in SCOR provides a set of pre-defined descriptions for activities most
companies perform to effectively execute their supply chains. The six macro-level SCOR processes
Plan, Source, Make, Deliver, Return and Enable are well-known and widely adopted. SCOR identifies
2 more levels of process. Level here indicates the span of the process: A level-3 process is focused
on a more detailed activity. A level-1 process spans multiple level-3 processes. Graphic 4 shows the
levels within the SCOR model processes.

Level-2 process categories determine the capabilities within the level-1 processes. The key level-2
processes are Make-to-Stock vs. Make-to-Order vs. Engineer-to-Order for Source, Make and
Deliver processes and Defective vs. MRO vs. Excess for the Return process. Level-3 processes are
process steps that are performed in a certain sequence in order to plan supply chain activities, source
materials, make products, deliver goods and services and handle product returns.

Companies may develop standard process descriptions of activities within the level-3 processes
-- so called level-4 processes. Level-4 processes are generally industry, product, location and/ or
technology specific. For example: Most if not all companies need to perform a task known as
"receive, enter and validate a customer order". This is a level-3 process (for example sD1.2). The
level-4 processes would describe the steps how the order was received. Examples would be EDI,
fax, telephone, and walk-in. Each of these may require a unique level-4 process description. Another
step you would describe how the order was entered. EDI maybe automatically loaded by certain
software, fax and phone orders are entered by the order desk, walk-ins are processed at the checkout
counter. And so on.

The level at which processes need to be described depends on the project. For most projects
level-2 process diagrams help identify structural issues in the supply chain: "Why do we have a
warehouse feeding a warehouse, feeding a warehouse?" or "Lead-time are long due to where we
source some of these materials". Level-3 process diagrams help identify decision points, triggers
and process disconnects. For example: A sourcing model where I only take inventory ownership
after I shipped it to my customer -- a.k.a. "consignment inventory" -- is described at level-3. Another
sourcing alternative vendor managed inventory is also defined at level-3. Both need the standard
level-3 processes, but the way these processes are sequenced and who performs them is the
differentiator.

Process codification differs by level. Level-1 processes are represented by a capital letter preceded
by the letter “s” (stands for SCOR): sP for Plan, sS for Source, sM for Make, sD for Deliver and sR
for Return. Level-2 processes add a number for most level-2 processes: sD1 for Deliver Stocked
Products, sP3 for Plan Make. Level-3 processes add a period followed by a unique number: sD1.1
for Process Inquiry and Quote, sD1.2 for Receive, Enter and Validate Order. Exceptions exist for
Return processes: Level-2 Return processes are split into Source Return (sSRx) and Deliver
Return (sDRx) processes to acknowledge the difference between returning something yourself or
receiving a return from your customer. The level-3 processes are aligned with these codes:
sDR1.1 is Authorize Defective Product Return.

© APICS 2017. All rights reserved. ix SCOR Version 12.0

 Practices

The practices section, formerly known as 'best practices', provides a collection of industry-neutral
practices companies have recognized for their value. 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 p r o c e s s , 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.
SCOR recognizes that several different qualifications of practices exist within any organization
(SCOR ID):

• Emerging practices (BP.E)

• Best practices (BP.B)
• Standard practices (BP.S)

SCOR recognizes the qualification of a practice may vary by industry or geography. For some
industries a practice may be standard, whereas the same practice may be considered an emerging or
best practice in another industry. The SCOR classification of practices has been established based
on input from practitioners and experts from a diverse range of industries. All SCOR practices
have been mapped to one or more classifications. SCOR 12 recognizes 21 classifications.
Classifications help identify practices by focus area, for example: inventory management or new
product introduction.

People

The People section of SCOR was introduced in SCOR 10 and provides 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: Experiences,
Trainings and Competency level. Competency level is not included in the framework descriptions.
SCOR 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 Experiences
and Training that define the Skills. All People elements start with a capital letter H followed by a
capital letter representing the element: S for Skills, E for Experiences and T for Trainings. These are
followed by a period and a four-digit number. For example, HS.0046 is the code for “ERP Systems”
skill, HT.0007 is the code for APICS CSCP training.

© APICS 2017. All rights reserved. x SCOR Version 12.0

 SCOR Improvement Program and SCOR Racetrack
The SCOR Racetrack model describes how to organize a SCOR improvement program using the
SCOR process and supporting methodologies

The methodology is described in 5 distinct steps:

• Pre-SCOR Program Steps: Prepare the organization for the mission critical SCOR
improvement program
• Set the Scope: Understand the business environment and define the scope of the supply
chain for a SCOR improvement program
• Configure the Supply Chain: Determine the performance metrics and processes of the
SCOR improvement program
• Optimize Projects: Establish the project portfolio including process scope, priority, and
anticipated benefits.
• Ready for Implementation: Implement projects in the portfolio and commence benefits
realization.

Please see Graphic 5 on the next page to see the SCOR Racetrack model in detail. The SCOR
Improvement methodology is currently described in full in the SCOR-P Training material.

© APICS 2017. All rights reserved. xi SCOR Version 12.0

 Graphic 5 - SCOR Racetrack

© APICS 2017. All rights reserved. xii SCOR Version 12.0

 SCOR v12 Updates
The SCOR model is developed and maintained by the voluntary efforts of APICS members and
supply chain industry subject matter experts. APICS depends on the contributions of its members
to actively advance the state of knowledge in supply chain by identifying required model changes,
researching and validating those changes, and developing the consensus regarding the proposed
changes. Similar to the Job Task Analysis (JTA) process that is used to update APICS certification
content, a research survey was distributed to nearly 60,000 supply chain professionals worldwide
to gauge wide-spread industry acceptance and/or adoption for new business process
methodologies and their associated activities. All SCOR framework updates were determined as a
direct result of the field’s importance ratings and the combined efforts of the subject matter expert
task force.

The following updates were included in this revision of the SCOR framework.

Performance
Reliability

• Perfect Order Fulfillment, RL.1.1, was definitionally updated to align with APICS Dictionary

Responsiveness

• Return Cycle Time, RS.2.5, was added as a Level 2 metric

Agility
The SCOR Agility Attribute hierarchy was updated due to duplicative nature in measuring agility
as a percentage as well as in a time frame.

• Upside Supply Chain Flexibility and supporting Level 2 metrics were omitted
• New Agility hierarchy now consists of:
o AG.1.1 Upside Supply Chain Adaptability
o AG.1.2 Downside Supply Chain Adaptability
o AG.1.3 Overall Value at Risk
• Time to Recovery, AG.2.15 was added as a Level 2 metric under Overall Value at Risk
(VaR), AG.1.3

Cost
The SCOR Cost Attribute hierarchy was updated due to the complexity of accurately measuring
Total Cost to Serve and its elements in a consistent fashion as cost allocations can significantly
differ by company.

• Total Cost to Serve was replaced with Total Supply Chain Management Costs
• New Cost hierarchy now consists of:
o CO.1.1 Total Supply Chain Management Costs
o CO.1.2 Costs of Goods Sold (COGS)

© APICS 2017. All rights reserved. xiii SCOR Version 12.0

 Process

All SCOR processes now have process workflows developed by the SCOR BPM Accelerator,
powered by ARIS and Visual Enterprise Architecture (VEA). This ensures all inputs, outputs, and
objects are accurately mapped. These new workflows will also now be included in the BPM
Accelerator. For more information on the BPM Accelerator, please contact APICS Corporate
Development at [email protected].

sM - Make

• Section definitions were updated to better align with the service industry and digital
environment

sD - Deliver

• New Best Practice, Omni-channel – BP.176, was aligned with all Deliver Process
activities under the associated Process hierarchy tables

sE – Enable

• Manage Supply Chain Network, sE7, was updated to include suppliers as a network
element
• Enable Supply Chain Procurement, sE10, was developed in in conjunction with
procurement standards outlined by the Chartered Institute of Procurement & Supply
(CIPS). For more information on globally recognized procurement and supply
practices please visit the CIPS website at www.cips.org
• Enable Supply Chain Technology, sE11, was developed to define, deploy, and
manage technology enablement in the supply chain.

Practices

All practices listed in v11 were carefully reviewed and rearranged into the appropriate section –
Emerging, Best, or Standard. Some practices were determined to be “declining” and were deleted
for the SCOR v12 update. All changes were validated by fielding supply chain subject matter
experts.
The following new practices were introduced in this version update:

Emerging Practice
BP.176 Omni-channel
BP.177 Additive Manufacturing
BP.178 Block Chain
BP.179 Demand Driven MRP
BP.180 Demand Driven S&OP
BP.181 Digital Supply Chain
BP.182 Internet of Things
BP.183 Integrated Business Planning
BP.184 Scenario Planning
BP.188 SCM Object Synchronization – “3/4-way Match”

Best Practice
BP.173 Supply Chain Risk Monitoring
BP.174 Supply Chain Risk Assessment
BP.175 Metadata
BP.185 Cost of Quality
BP.186 Data / Analytics
BP.187 Supply Chain Finance

© APICS 2017. All rights reserved. xiv SCOR Version 12.0

 People
Major updates in the SCOR People section include:

• Removal of Aptitudes
• Numerological lists were created for Experiences and Trainings
• Skills associated with the APICS CLTD body of knowledge adopted
• Additional APICS Certifications and Trainings adopted:
o APICS CLTD – Certified in Logistic, Transportation and Distribution
o APICS Principles trainings
▪ Distribution and Logistics
▪ Inventory Management
▪ Managing Operations
▪ Manufacturing Management
▪ Operations Planning

© APICS 2017. All rights reserved. xv SCOR Version 12.0

Special Application Update
GreenSCOR replaced by SustainableSCOR

SustainableSCOR is based upon The Global Reporting Initiative’s (GRI) Sustainability Reporting
Standards (GRI Standards) that are within scope of the SCOR model. The GRI Standards were chosen
as a reference because GRI has created a common language for organizations and stakeholders, with
which the economic, environmental, and social impacts of organizations can be communicated and
understood. The GRI Standards are designed to enhance the global comparability and quality of
information on these impacts, thereby enabling greater transparency and accountability of organizations.
GRI Standards are free to use and are available to the public at - www.globalreporting.org/standards.

SustainableSCOR uses the GRI definitions and measures when dealing with the sustainability
environmental topics (GRI 300 series topic-specific Standards). This approach is being used to help
supply chain professionals gain visibility of the environmental topics that are in their supply chain network
and value chain network, and enable them to model and manage these impacts. A value chain covers the
full range of an organization’s upstream and downstream activities, which encompass the full life cycle of
a product or service, from its conception to its end use.

Only GRI metrics that are within the realm of supply chain management, sourcing, and managing the risk
related to supply chain operations will be included in the scope of the SCOR model.

When the SCOR model uses an element that aligns with a GRI disclosure, the specific GRI disclosure
number will be cross-referenced. Please note that the GRI reporting guidelines shall be followed when
making any reporting claims by organizations.

SCOR 12.0 replaces GreenSCOR with an updated and expanded environmental accounting framework
(SustainableSCOR) that is based upon the GRI Standards. Care should be taken when transitioning from
GreenSCOR to SustainableSCOR.

The only metric that directly links from one framework to the other is Total Air Emissions. However,
GreenSCOR’s definition was not as precise as the SustainableSCOR definition for Total Air Emissions.

Other metrics to pay close attention to are as follows:

The Carbon footprint metric from the GreenSCOR model is similar to GHG emissions, but not completely
the same. SustainableSCOR, following the GRI Standards, has scope 1, 2 and 3 GHG emissions.
Additionally, there are also emissions of ozone-depleting substances (ODS).

GreenSCOR uses a % recycled metric. Recycled and reclaimed definitions that are used in
SustainableSCOR are very different than GreenSCOR and follow the GRI Standards.

GreenSCOR has liquid emissions. SustainableSCOR, following GRI, liquid emissions can be in the form
of water discharge, hazardous or non-hazardous emissions.

GreenSCOR measures solid emissions. SustainableSCOR, following the GRI Standards, measures
hazardous or non-hazardous emissions.

© APICS 2017. All rights reserved. xvi SCOR Version 12.0

 Contributors to SCOR v12.0

The development of SCOR depends on the support and input from SCOR practitioners, subject
matter experts, and APICS members. The following individuals have devoted time and effort to the
development of SCOR v12. Thank you!

Bruno Acosta, CPIM, CSCP, CLTD, SCOR-P, DDP, Jonah Douglas Kent

SAPIX / Technology and Logistics Experts PricewaterhouseCoopers (PwC)

Helen Alder, FCIPS Pamela G. Lindsey, CSCP

Chartered Institute of Procurement & Supply Ciena

David E. Angelow, CIS Lars Magnusson, SCOR-P

McCoy School of Business, Texas State University Ericcson, Sweden

Tracy Cheetham, CPIM, CSCP, SCOR-P, PLS Dave Morrow, CFPIM, SCOR-P

Pathfinder Logistics Solutions, South Africa United States Air Force

Ray Ernenwein, MBA Peter Murray, CIRM, SCOR-P

Walmart Rapid Ratings

Thomas Gaal, CSCP, SCOR-P, CBPMP, PMP Marie-Josée Schoemaker

RFS – Radio Frequency Systems Johnson & Johnson Supply Chain

Joanne Gorski, CFPIM, CSCP, CLTD, SCOR-P Peter Vanderminden, Professor

Sustainable Insights Lally School of Management,

Glenn Heywood Rensselaer Polytechnic Institute

PricewaterhouseCoopers (PwC) Debbie Wallbank, MCIPS

Brad Householder Chartered Institute of Procurement & Supply

B2i Inc.

Valerie Kaminski, MS

Starbucks

APICS Subject Matter Expert Staff Contributors

Carolyn Lawrence, SCOR-P

Melinda Spring, MBA, SCOR-P

A special note of thanks and remembrance is dedicated to Dan Swartwood for his contribution to advancing supply
chains worldwide through his leadership in the development, implementation and delivery of SCOR over the years.

© APICS 2017. All rights reserved. xvii SCOR Version 12.0