SCOR Model Process
The Supply Chain Operations Reference Model, commonly known as SCOR, is a diagnostic tool for the Supply Chain Management. It lets the users know the various processes involved in a business and the important things that lead to customer satisfaction. The Supply Chain Operations reference model has been developed by the SCC, or the Supply Chain Council.
The SCOR Model is based on three very important factors. Another note to the reader here is that there are many theories written about the Supply Chain Management functionality, and the Supply Chain Operations Reference Model. Each theory very convincingly explains the model. Different theories quote different numbers of factors to explain the process to the reader. How ever many steps or pillars there are, when condensed they become these three important factors.
What are the factors crucial to the SCOR Model?
The first factor which is crucial to the Supply Chain Operations Reference model is the Process modeling factor, and the others are the performance measurement and best practices sharing. These could be called the pillars that hold the whole Supply Chain Operations Reference model on them. Why are these three the most important factors? Because the entire process is customer satisfaction centric. Right from the beginning of the process to the delivery, everything is geared towards keeping customer in mind. These factors design a comprehensive model for the business to successfully carry out their Supply Chain Management functions.
What happens in Process Modeling?
A business process and its functionalities are the building blocks for any business. These building blocks are very complex to understand, so the process modeling pillar eases these blocks and uses them to explain the business process. It standardizes the whole process using a familiar set of definitions and explanations.
There are various management processes in the SCOR model. There is a total of five, and they are Plan, Source, Make, Deliver and Return. These five processes further explain the business model and make it easy to understand. The Supply Chain Operations Reference Model however does not attempt to explain each and every functionality of the business model. What it attempts is to make itself a reference guide which standardizes all procedures so that they are easily understood. There is a subtle variation that exists for all businesses to comprehend.
The SCOR Model deals with many important factors of a business. The first one is Customer interaction, right from order entry to invoicing to delivery, and the second is all the products and transactions, from end to end from supplies, suppliers, and equipment. Every tangible form of material is all about market demands, right from understanding demand to the supplying of goods. The three levels for a company and a process reference model is developed to improve a company’s communications and make it work as a better business model.
What happens in the performance Measurement Model?
The performance measurement model in the Supply Chain Operations Reference model acts as a feeder for information, evaluation and feedback. It basically deals with a lot of data which helps in the assessment of the business model. The data is disintegrated at every level of the process, and even the metrics that are used to measure the performance of the Supply Chain Operations Reference model is hierarchical. The metrics at different levels are either lower or superior to each other.
Basically these metrics can be divided into Level 1, level 2… so on and are used along with the attributes of the performance measurement model. Again, these levels cannot be related directly to the levels in the SCOR Model such as Plan, Make, Source, Deliver and Return. These levels of metrics are used only in the performance measurement model. People exploring the SCOR Model and going through the Performance measurement model should be aware that these metrics are hierarchical in nature. An easy example to give would be that the Delivery performance is measured by taking into account the number of products delivered on time and in full to the customer.
What happens in the Best Practices Sharing Model?
After achieving the first two steps and understanding the process and measuring of the performance, it becomes apparent as to where the system lacks and what it is deficient of. Once these gaps are understood, it is time to introduce fillers for those gaps. These fillers have to be tested prior to their inception. They practically have to have a 100% ratio of success. How do we find such fillers? The best way to do that is with Best Practice Sharing. The Best Practice Sharing model accumulates information of what worked best with a business, and this is not limited to one business alone, but several businesses.
Therefore, the Supply Chain Operations Reference model has the whole industry experiences and successes to study and derive solutions from. Though it is not necessary for what has worked for others to work for you, the SCOR Model doesn’t entirely conceptualize on one theory of success. It studies multiple theories and concludes with every individual type of business. The SCOR Model here understands the current model in an ‘as-is ‘state, and using the Best Practice Sharing Model brings about futuristic changes.
What happens at different levels of the SCOR Model?
Plan, Source, Make, Deliver and Return are the five basic principles of the overall Supply Chain Operational Reference manual.
"Plan" consists of Demand/ Supply planning and Management. What this level basically does is establish a relationship between resources and requirements. Since they are directly proportional it studies both factors to establish if they are equal. After this it plans the demand and supply chain and communicates the plan to the whole supply chain, including the source, make, deliver and return. This process also involves managing business rules apart from data collection, capital assets, regulatory factors, and compliance. Basically this step aligns the Supply Chain Management plan to the financial plan.
"Source" consists of scheduling deliveries, receiving the stock, verifying them and transferring the product respectively. It also manages business rules, assesses the supplier’s performance and credibility, collects data and maintains it. In addition to this, it also keeps information pertaining to inventory management, products coming in, capital assets, import and export policies, supplier’s network, and their agreements.
"Make" schedules production activities, decides how much has to be produced, and it also deals with packaging, shipping, and finishing the product. Apart from these it also manages production issues, manages rules, performance data, production network, equipment and facilities provided for them. It also deals with transport issues and compliance for production.
"Deliver" is something which comes into contact with the customer. A good example of this is handling customer inquiries, deciding the volume that has to be delivered. This is a crucial step as the customer comes in contact with the Supply Chain Operations Reference model. Apart from this it also routes shipments and deals with warehouse management, receiving material and picking it up for shipping. If necessary, the business can receive the product and install it at the client’s site. This is called end-to-end servicing.
Returns may occur due to various circumstances in a business process. Most common of all is defective products. All defective products that are returned are put through different steps of evaluation after the return, and this includes identifying the product condition, disposing of the product, scheduling product shipment and returning the defective product. Sometimes it also involves the transferring of the defective product. All return maintenance of products and their repairs are sourced from the above steps of the return process.
A different category in the same returns process is excess products. This is where the Supply Chain Operation reference model plays a large role. The whole Supply chain management functions are finally used to cut down excess. Apart from damaged products and returns, even excess is a very large factor that contributes to returns. The whole study of the Supply Chain Management functionalities is on how to control these excesses. The excess is created at the inventory level, and the inventories are studied in detail. If the inventories are controlled using the demand and supply scale, then surplus can be cut down to a large extent, as much as 70% according to industry experts. Because there is less, you can spend more time and resources dealing with damaged products. The one thing that can be controlled is the production of excess.
From this understanding, the Supply Chain Operational Reference Model creates steps from the source such as identifying returned products, developing product authorization codes, and managing return business rules. Compliance is a stage that every process has to go through irrespective of the mode or the step. To summarize, the SCOR Model is like a language which communicates within the supply chain partners.
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