SCOR in the supply chain

SCOR stands for Supply Chain Operations Reference and is a model that allows describing, analyzing and optimizing the performance of supply chains. Developed by the non-profit organization Supply Chain Council (SCC), it has established itself as a standard for supply chain management that has been used since 1996, proving its effectiveness in a wide variety of business sectors. In this article we explain what the SCOR model is and its main concepts.

What is the SCOR model?

The SCOR model, or Supply Chain Operations Reference model, is a management tool that helps improve the performance of supply chains and the integration between the different links in them.
Taking into account that “you cannot manage what cannot be measured”, a common language is necessary so that the same metrics can be used throughout the different departments of an organization, and between the different actors in the chain with which that interacts (suppliers of raw materials, service providers, distributors, customers, collaborators, etc.).
By applying the SCOR model it is possible to describe supply chains following a standard, applicable to all business sectors. This allows the different actors and collaborators within a chain to share the same language and, with this, communication and collaboration is facilitated for its optimization.
SCOR specifies and classifies supply chains by describing predefined processes. It allows you to analyze, measure and compare your performance using standardized metrics. And it makes it easier to optimize the performance of a supply chain by following a set of good practices resulting from proven strategies and proven efficiency in the real world.
Using the SCOR model as a tool, solutions can be found to the main problems of the entire supply chain:

• Optimize the effectiveness of chain management, thus obtaining a top-quality customer service.
• Optimize costs, by using metrics to evaluate and compare different strategies.
• Optimize the management of relationships with suppliers and collaborators, facilitated by the use of a standardized common language.
• Optimize risk management in the supply chain, through planning tools, risk identification and coordination between the different links in the chain.
• Optimize human capital management, where experience and talent is increasingly important as supply chains become more complex and competitive.

Origin and evolution of the SCOR model

In 1996 several consulting firms in the logistics sector created the non-profit organization Supply Chain Council (SCC) including about 70 companies as voluntary members. Currently, SCC, whose official website is www.apics.org/sites/apics-supply-chain-council, has branches in almost all continents and more than a thousand members, including companies in the sector, academic institutions and government organizations. . In 2014, the Supply-Chain Council (SCC) merged with the American Production and Inventory Control Society (APICS) which, in turn, merged in 2015 with the American Society of Transportation and Logistics (AST&L).
The contributions of highly experienced professional volunteers helped define the SCOR framework applicable to real-world supply chains. The SCOR model, which is now in version 11, has not stopped evolving, adapting to new needs, trends and technologies applied to supply chain management. For example, in its version 10.0 the SCOR model introduced the “People” component, focused on human capital management as part of the supply chain. As another example of its evolution, the SCOR model contemplates standardization to assess the environmental aspects of supply chains, combining within GreenSCOR a set of metrics and good practices that cover aspects such as CO2 emissions, waste recycling, etc.

DCOR, SCOR y CCOR

There are aspects that the SCOR model does not cover, such as demand generation (sales and marketing), customer support services, product development, etc. In order to help better supply chain integration, two additions have been made to the SCOR model:

• The Customer Chain Operations Reference model (CCOR), which focuses on sales operations and customer support, including metrics for areas such as franchises, warranty costs, customer support, etc.
• The Design Chain Operations Reference model (DCOR), which focuses on areas such as R&D, design and product development.

Structure of the SCOR model

The SCOR reference model is made up of four main components. The first three, Performance (performance), Processes (processes) and Practices (good practices), already appeared in previous versions and, starting with version 10 of the SCOR model, the fourth component was incorporated: People (human capital).

Performance

The Performance component of the SCOR model standardizes a set of metrics that allow evaluating the performance of supply chain processes and defining strategic objectives.
The performance component of the SCOR model consists of two types of elements: Performance attributes and Metrics.

Performance attributes

Performance attributes, or performance attributes, do not represent measurable values ​​in themselves, but are groupings of metrics, which together allow defining a strategy.
For example, the Reliability attribute (reliability) includes metrics to measure the percentage of orders that have been prepared without errors, measuring aspects such as the percentage of orders that have been delivered without delays, the orders in which the merchandise has not suffered any damage , etc. By analyzing the values ​​of these metrics, you can evaluate the reliability performance of the supply chain, identify the root of the problems of poor performance and propose strategies to improve it.
The SCOR model defines five performance attributes:

1. Reliability refers to predictability. For example, when an order is placed with a supplier, it reaches us on time, in the right quantity and with the right quality.
2. Responsiveness refers to the speed with which tasks are performed. For example, the time required to prepare an order.
3. Agility (agility) refers to the ability to respond to changes due to external factors. For example, the ability to adapt to unexpected variations in demand, natural disasters, supplier closures, etc.
4. Cost (cost) refers to the operating costs of the supply chain. For example, personnel costs, transport costs, cost of raw materials, etc.
5. Assets, short for Asset Management Efficiency, refers to the efficiency with which resources and assets are used. For example, applying inventory reduction methodologies such as just-in-time, outsourcing processes with 3PL and 4PL operators, etc.

The Reliability, Responsiveness, and Agility performance attributes are customer-centric attributes, while the remaining two, Cost and Assets, are internal performance attributes.

Metrics

Metrics, or metrics in English, are standardizations to measure the performance of supply chain processes. The SCOR model metrics are organized into three hierarchical levels. Each of the level 1 metrics belongs to a certain performance attribute (Reliability, Responsiveness, Agility, Cost or Assets). Tier 2 metrics are disaggregated metrics detailing the Tier 1 metric to which they belong. Each level 2 metric is further broken down into more detailed level 3 metrics. This allows for performance diagnostics from one level to the next.
For example, for the Reliability attribute, a level 1 metric is defined, which is the percentage of orders that have been fulfilled and delivered without any errors. This Tier 1 metric is broken down into several Tier 2 metrics, such as percentage of orders fully delivered, on-time delivery performance, accuracy of order documentation, and merchandise that arrived undamaged.
Let’s take a Tier 2 metric, like the percentage of orders that have been fully delivered. This is further broken down into two more detailed level 3 metrics, such as the accuracy of the item references included in the order and the accuracy of the quantity of each item.
Thus, for example, a supply chain manager could analyze the metrics discovering that many errors are made including incorrect items in orders, despite the fact that the value of the quantities is correct. Globally, the metrics would indicate a low level of reliability at level 1. This could be the case, for example, of a store with a large part of its turnover based on Long Tail, handling a wide variety of SKUs, with articles that could be very similar. From there, one could consider optimizing slotting, placing very similar products on physically more separated shelves to reduce human errors during picking. Or the ATOX Soluciones Tecnológicas light-guided system could be implemented to prepare orders through pick-to-light operations and thus minimize picking errors.

Processes

The processes, or Processes in English, of the SCOR model are a set of standard descriptions of the activities that make up the operation of supply chains.
The definition of these processes is organized in several hierarchical levels. At the highest level, level 1, five processes are defined according to their scope:

• Plan (plan) refers to the planning of the activities necessary for the operation of the supply chain.
• Source (provision) refers to the orders to suppliers.
• Make refers to the conversion of raw materials or semi-finished products into new products. Make is actually broader than “manufacturing”, and in addition to production it includes processes such as repair, recycling, reconditioning of products, etc.
• Deliver (distribute) refers to the management, preparation and delivery of customer orders.
• Return refers to reverse logistics. It must be taken into account that Return includes both returns received from customers and returns made to suppliers.
• Enable (activate) refers to what is related to aspects of supply chain management. Includes processes related to information management, risk management, regulatory compliance, etc.

Within each level 1 process, a set of level 2 processes is defined, which specify the strategies of the operation. For example, manufacturing (Level 1 Make process) can be carried out according to a make-to-stock strategy (Level 2 Make-to-Stock process) or make-to-order (Level 2 Make-to-Order process). two).
In the level 3 process, the steps required to carry out each level 2 process are detailed. For example, within the Deliver processes, at level 2 we have the Deliver Stocked Product process, which refers to the delivery of a product based on a customer order. Its level 3 processes detail the steps of the operation, such as receiving and validating the order, reserving inventory and determining the delivery date, picking the product, packaging, etc.
Levels 1, 2 and 3 are clearly defined by the SCOR model, with a catalog of processes identified by a code and described in the standard specification. All these processes are independent of the business sector. That is, they are applicable to any industry, product or service. This allows the SCOR model to be used as a standardized language of supply chain management.
An additional level, level 4, refers to the implementation of the steps indicated in level 3. Here, the SCOR model does not define or impose any conditions, since the final implementation will be specific to each company, technology, geographical area, etc.
For example, the “Pick product” level 3 process, corresponding to the preparation of an order, could be implemented with pick-to-light operations using the light-guided system of ATOX Soluciones Tecnológicas, or implement automatic order preparation with Disban-H automatic dispensers.

People

The People component of the SCOR model defines standards for talent management in the supply chain. Standardizes the definitions of the skills, experience, aptitudes and training that are necessary to efficiently execute each of the supply chain tasks and manage their processes, in line with the set of metrics and good practices of the model .

Practices

The Practices component of the SCOR model consists of a set of good practices, of proven efficiency, that provide a significant increase in the performance of supply chain processes. It covers a wide range of common practices in supply chains, such as inventory management, maintenance tasks, order management, reverse logistics, warehousing, six-sigma methodology application, RFID traceability, inventory reduction strategies such as methodologies. just-in-time, and a long etcetera.