Supply-Chain Operations

Reference-model
Overview of SCOR Version 5.0
Su p p l y - C h ai n C o u n c i l , I n c .
3 0 3 F r eep o r t R o ad
Pi ttsb u r gh , PA 1 5 2 1 5
w w w . su p p l y - c h ai n . o r g
Source
Plan
Make
Deliver
Make Deliver
Source
Plan
Return
Return
. . . . . . . .. . . . . . . . . . . . . . . . . . . .
Return
The Supply Chain Operations Reference-model (SCOR) has been developed and endorsed by the
Supply-Chain Council (SCC), an independent not-for-profit corporation, as the cross-industry standard
for supply-chain management. The SCC was organized in 1996 by Pittiglio Rabin Todd & McGrath
(PRTM) and AMR Research, and initially included 69 voluntary member companies. Council
membership is now open to all companies and organizations interested in applying and advancing
state-of-the-art supply-chain management systems and practices.
Member companies pay a modest annual fee to support Council activities.
All who use the SCOR-model are asked to acknowledge the SCC in all documents describing or
depicting the SCOR-model and its use.
All who use SCOR are encouraged to join the SCC, both to further model development and to obtain
the full benefits of membership. Further information regarding the Council and SCOR can be found
at the Councils web site, www.supply-chain.org.
Supply-Chain
Operations Reference-model
Overview Version 5.0
CONTENTS
What is a Process Reference Model?
Model Scope and Structure
Applying the Model
The Concept of Configurability
Configuring Supply-Chain Threads
Developing Process Maps
Summary
Copyright 2001 Supply-Chain Council
1
Capture the as-is
state of a process
and derive the
desired to-be
future state
Quantify the
operational
performance of
similar companies
and establish
internal targets
based on
best-in-class
results
Characterize the
management
practices and
software solutions
that result in
best-in-class
performance
Capture the as-is state of a
process and derive the desired
to-be future state
Quantify the operational
performance of similar companies
and establish internal targets
based on best-in-class results
Characterize the
management practices
and software solutions
that result in best-in-class
performance
Business
Process
Reengineering Benchmarking
Best Practices
Analysis
Process
Reference Model
What Is a Process
Reference Model?
Process reference models integrate the well-known concepts of business process
reengineering, benchmarking, and process measurement into a cross-functional
framework.
2
AProcess Reference Model Contains:
Standard descriptions 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
Standard alignment to features and functionality
Once a Complex Management
Process is Captured in Standard Process
Reference Model Form, It can Be:
Implemented purposefully to achieve competitive advantage
Described unambiguously and communicated
Measured, managed, and controlled
Tuned and re-tuned to a specific purpose
AProcess Reference Model
Becomes a Powerful Tool in the Hands
of Management
3
The Boundaries of Any
Model Must Be Carefully Defined
From your suppliers supplier to your customers customer
SCOR spans:
All customer interactions, from order entry through paid invoice
All product (physical material and service) transactions, from your suppliers supplier to your
customers customer, including equipment, supplies, spare parts, bulk product, software, etc.
All market interactions, from the understanding of aggregate demand to the fulfillment of
each order
SCOR does not attempt to describe every business process or activity, incuding:
Sales and marketing (demand generation)
Research and technology development
Product development
Some elements of post-delivery customer support
Links can be made to processes not included within the models scope, such as product development,
and some are noted in SCOR.
SCOR assumes but does not explicitly address:
Training
Quality
Information Technology (IT)
Administration (non SCM)
SCOR is Based on Five Distinct Management Processes
Deliver Deliver Deliver
Deliver
Source Source
Source
Source Make Make
Make
Plan
Suppliers
Supplier
Supplier
Your Company
Customer
Customers
Customer
Internal or External Internal or External
Return
Return
Return
Return Return Return Return
Return
Plan
Plan
4
Demand/Supply Planning and Management
Balance resources with requirements and establish/communicate plans for the whole supply chain,
including Return, and the execution processes of Source, Make, and Deliver.
Management of business rules, supply chain performance, data collection, inventory, capital assets,
transportation, planning configuration, and regulatory requirements and compliance.
Align the supply chain unit plan with the financial plan.
Sourcing Stocked, Make-to-Order, and
Engineer-to-Order Product
Schedule deliveries; receive, verify, and transfer product; and authorize supplier payments.
Identify and select supply sources when not predetermined, as for engineer-to-order product.
Manage business rules, assess supplier performance, and maintain data.
Manage inventory, capital assets, incoming product, supplier network, import/export
requirements, and supplier agreements.
Make-to-Stock, Make-to-Order, and Engineer-to-Order
Production Execution
Schedule production activities, issue product, produce and test, package, stage product, and release
product to deliver.
Finalize engineering for engineer-to-order product.
Manage rules, performance, data, in-process products (WIP), equipment and facilities,
transportation, production network, and regulatory compliance for production.
Order, Warehouse, Transportation, and Installation
Management for Stocked, Make-to-Order, and
Engineer-to-Order Product
All order management steps from processing customer inquiries and quotes to routing
shipments and selecting carriers.
Warehouse management from receiving and picking product to load and ship product.
Receive and verify product at customer site and install, if necessary.
Invoicing customer.
Manage Deliver business rules, performance, information, finished product inventories,
capital assets, transportation, product life cycle, and import/export requirements.
Return of Raw Materials (to Supplier) and Receipt of Returns
of Finished Goods (from Customer), including Defective
Products, MRO Products, and Excess Products
All return defective product steps from authorizing return; scheduling product return; receiving,
verifying, and disposition of defective product; and return replacement or credit.
Return MRO product steps from authorizing and scheduling return, determining product condition,
transferring product, verifying product condition, disposition, and request return authorization.
Return excess product steps including identifying excess inventory, scheduling shipment, receiving
returns, approving request authorization, receiving excess product return in Source, verifying excess,
and recover and disposition of excess product.
Manage Return business rules, performance, data collection, return inventory, capital assets,
transportation, network configuration, and regulatory requirements and compliance.
Scope of SCORProcesses
Make
Deliver
Source
Plan
Return
5
AProcess Reference
Model Differs fromClassic
Process Decomposition Models
SCOR is a process reference model that provides a language for
communicating among supply-chain partners
Level
1
2
3
4
Contains:
Process
Process Element
Process Element
Task
Task
Activities
Activities
Provide a balanced
horizontal (cross-process)
and vertical (hierarchi-
cal) view
Designed to be
(re)configurable
Used to represent many
different configurations
of a similar process
Aggregate a series of
hierarchical process
models
Process decomposition models are developed to address
one specific configuration of process elements
6
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in
Scope
Level 1 defines the scope and content
for the Supply Chain Operations
Reference-model. Here basis of
competition performance targets are set.
A companys supply chain can be
configured-to-order at Level 2 from 30
core process categories. Companies
implement their operations strategy
through the configuration they choose
for their supply chain.
Level 3 defines a companys ability to
compete successfully in its chosen mar-
kets, and consists of:
Process element definitions
Process element information
inputs, and outputs
Process performance metrics
Best practices, where applicable
System capabilities required to
support best practices
Systems/tools
Companies fine tune their Operations
Strategy at Level 3.
Companies implement specific
supply-chain management practices at
this level. Level 4 defines practices to
achieve competitive advantage and to
adapt to changing business conditions.
Top Level
(Process Types)
Configuration
Level (Process
Categories)
Process Element
Level
(Decompose
Processes)
Implementation
Level
(Decompose
Process
Elements)
P1.1
Identify, Prioritize, and
Aggregate Supply-Chain
Requirements
P1.2
Identify, Assess, and
Aggregate Supply-Chain
Resources
P1.3
Balance Production
Resources with Supply-
Chain Requirements
P1.4
Establish and
Communicate
Supply-Chain Plans
Level
# Description Schematic Comments
1
2
3
4
SCORContains
Three Levels of Process Detail
Source
Plan
Make
Deliver
Return Return
7
Definitions
Processes that balance aggregate demand and supply to develop a course of
action which best meets sourcing, production and delivery requirements
Processes that procure goods and services to meet planned or
actual demand
Processes that transform product to a finished state to meet planned or
actual demand
Processes that provide finished goods and services to meet planned or actual
demand, typically including order management, transportation management, and
distribution management
Processes associated with returning or receiving returned products for any reason.
These processes extend into post-delivery customer support
Process
Type
Process
Category
Planning
Execution
Enable
P1 P2 P3 P4 P5
S1- S3 M1- M3 D1 - D3 R1-R3
EP ES EM ED ER
Plan Source Make Deliver Return
SCOR Process
SCOR Configuration Toolkit
Level 1 Process Definitions
SCOR Is Based on Five Core Management Processes
Process Categories
Defined by the Relationship Between a SCOR Process and a Process Type
Practitioners select appropriate process categories from the SCOR configuration toolkit to represent their
supply-chain configuration(s).
SCOR Process
Plan
Source
Make
Deliver
Return
8
Performance Attribute
Delivery performance
Fill Rate
Perfect order fulfillment
Order fulfillment lead time
Supply-chain response time
Production flexibility
Supply chain management cost
Cost of goods sold
Value-added productivity
Warranty cost or returns processing cost
Cash-to-cash cycle time
Inventory days of supply
Asset turns
Reliabilty Responsiveness Flexibility Cost Assets

SCOR
Process Type
Planning
Execution
Enable
A process that aligns expected resources to meet expected demand requirements.
Planning processes:
Balance aggregated demand and supply
Consider consistent planning horizon
(Generally) occur at regular, periodic intervals
Can contribute to supply-chain response time
A process triggered by planned or actual demand that changes the state of material
goods. Execution processes:
Generally involve -
1. Scheduling/sequencing
2. Transforming product, and/or
3. Moving product to the next process
Can contribute to the order fulfillment cycle time
A process that prepares, maintains, or manages information or
relationships on which planning and execution processes rely
Characteristics
At Level 2, Each SCOR Process Can Be Further
Described by Process Type
Level 1 Performance Metrics
Customer-Facing Internal-Facing
9
SCOR Version 5.0 Level 2 Toolkit
Has 30 Process Categories
10
S1.4
S1.1
SCOR Level 3
Presents Detailed Process Element Information for Each
Level 2 Process Category
Process flow
Inputs and outputs
Source of inputs
Output destination
Level 3 Example S1 Source Stocked Product
S1 Source Stocked Product
An Example of SCOR Level 3 Process Element Logic Flow
Inputs
Process
Elements
Outputs
(P2.4) Sourcing Plans
(ES.2) Source Execution Data
(ES.6) Logistics Selection
(M1.1, M2.1, M3.2) Production Schedule
(M1.2, M2.2, M3.3, D1.3) Replenishment Signals
(M) (D) Product Pull Signals
(ES.4) Product Inventory Location
(EM) WIP Inventory Location
(ED) Finished Goods Inventory Location
(Supplier)
Sourced
Products
Schedule
Product
Deliveries
Receive
Product
S1.2
Verify
Product
S1.3
Procurement Signal (Supplier)
Sourced Product on Order
(P2.2), (ES.9)
Scheduled Receipts (M1.1,
M2.1, M3.2, D1.8)
Material on Order
Receipt Verification
(ES.1, ES.2, ES.6, ES.8)
Inventory Availability (P2.2, ES.4,
M1.2, M2.2, M3.3, D1.8)
Inputs, outputs, and basic logic flow of process elements
are captured.
Transfer
Product
Authorize
Supplier
Payment
S1.5
Receipt Verification
(ES.1, ES.2)
(ES.9) Payment
Terms
11
Examples:
SCOR Level 3 Standard Process
Element Definition, Performance Attributes and Accompanying Metrics
SCOR Level 3 Best Practices and Features
Process Element: Schedule Product Deliveries
Process Element Definition
Scheduling and managing the execution of the individual deliveries of product against an existing contract or purchase order.
The requirements for product releases are determined based on the detailed sourcing plan or other types of product pull signals.
Performance Attributes Metric
Reliability
Responsiveness
Flexibilty
Cost
Assets
% Schedules Generated within Suppliers Lead Time
% Schedules Changed within Suppliers Lead Time
Average Release Cycle of Changes
Average Days per Schedule Change
Average Days per Engineering Change
Product Management and Planning Costs as a % of Product
Acquisitions Costs
None Identified
Process Element: Schedule Product Deliveries
Best Practices Features
Utilize EDI transactions to reduce cycle time and
costs
VMI agreements allow suppliers to manage
(replenish) inventory
Mechanical (Kanban) pull signals are used to notify
suppliers of the need to deliver product
Consignment agreements are used to reduce assets
and cycle time while increasing the availability of
critical items
Advanced ship notices allow for tight synchroniza-
tion between SOURCEand MAKEprocesses
EDI interface for 830, 850, 856, and 862 transactions
Supplier managed inventories with scheduling interfaces
to external supplier systems
Electronic Kanban support
Consignment inventory management
Blanket order support with scheduling interfaces to
external supplier systems
Process Number: S1.1
Process Number: S1.1
12
Receive
Order
Enter
Order
Check
Credit
Validate
Price
Process Element - D1.2
AccessCredit
Screen
Contact
Accounting
Communicate
Resultsto
Customer
Clear Order Check Credit
Availability
Task - D1.2.3
1. Contact customer account rep.
2. Look up customer history
3. If necessary, account rep. calls
salesmanager to authorize
additional credit
4a. Account rep. clearscredit issue
4b. Account rep. refusescredit request
Level 4
Level 5
Level 6
Tasks
Activities
Below Level 3, each
process element is
described by classic
hierarchical process
decomposition
Implementation of Supply-Chain Management Practices
within the Company Occurs at Level 4 (and below)
FromMake
or Source
D1.6
Route
Shipments
D1.5
Plan &
Build
Loads
D1.4
Consolidate
Orders
D1.3
Reserve
Inventory &
Determine
Delivery
Date
D1.2
Receive,
Enter &
Validate
Order
D1.1
Process
Inquiry &
Quote
D1.8
Receive
Product at
Warehouse
D1.9
Pick
Product
D1.10
Load Vehicle,
Generate
Ship Docs,
Verify Credit
& Ship
D1.11
Receive &
Verify
Product at
Customer
Site
D1.12
Install
Product
D1.13
Invoice
D1.7
Select
Carriers
& Rate
Shipments
D1
Deliver
Stocked
Product
13
The Concept
of Configurability
A supply-chain configuration is driven by:
Plan levels of aggregation and information sources
Source locations and products
Make production sites and methods
Deliver channels, inventory deployment and products
Return locations and methods
SCOR must accurately reflect how a supply-chains configuration impacts
management processes and practices.
Each intersection of two execution processes (Source-Make-Deliver) is a link in the supply chain
Execution processes transform or transport materials and/or products
Each process is a customer of the previous process and a supplier to the next
Planning processes manage these customer-supplier links
Planning processes thus balance the supply chain
Every link requires an occurrence of a plan process category
Each Basic Supply-Chain is a Chain of
Source, Make, and Deliver Execution Processes
Plan
Source Make Deliver
Plan Plan Plan
Configurability
Customer and Supplier Customer and Supplier Customer and Supplier
14
Plan Source
Respond to Order or Plan Signal
Transform and Move Product
Source, Make, Deliver
Planning
Process
Type
Execution
Process
Type
Sourcing Plan
Production Plan
Delivery Plan
How SCOR Logic Supports Horizontal Process Integration
Return Plan
Plan Make Plan Deliver Plan Return
15
Plan Source
Source
Customer Order
Signal
Delivered
Product
Customer Order
Signal
Delivered
Product
Make Deliver
Plan Make Plan Deliver
Plan Source
Source Make Deliver
Plan Make Plan Deliver
How SCOR Describes One SCM Trade-off
Make-to-Stock Configuration
Common SCM objective achieve market-winning fulfillment time with the least inventory risk. Example: pure
make-to-stock configuration. Plan Deliver and Deliver activities are taken upon receipt of Customer Order.
Common SCM objective achieve market-winning fulfillment time with the least inventory risk.
Example: replenish-to-order Deliver network. Plan Deliver activities are already in place and ready to be
executed when Customer Order Signal is received.
16
Plan Source
Source
Customer Order
Signal
Delivered
Product
Customer Order
Signal
Delivered
Product
Make Deliver
Plan Make Plan Deliver
Plan Source
Source Make Deliver
Plan Make Plan Deliver
How SCOR Describes One SCM Trade-off
Make-to-Order Configuration
Common SCM objective achieve market-winning fulfillment time with the least inventory risk. Example: make-
to-order configuration. Plan Make and Plan Deliver activities are already in place and ready to be executed when
Customer Order Signal is received.
Common SCM objective achieve market-winning fulfillment time with the least inventory risk. Example: make-
to-order configuration that extends through the Source process. All inter-enterprise planning functions are already in
place and ready to be executed when Customer Order Signal is received. This scheme requires some degree of
intra-enterprise P1 Planning. See page 23.
17
Configuring
Supply-Chain Threads
Configuring a supply-chain thread illustrates how SCOR configurations are
done. Each thread can be used to describe, measure, and evaluate supply-chain
configurations.
1. Select the business entity to be modeled (geography, product set, organization)
2. Illustrate the physical locations of:
Production facilities (Make)
Distribution activities (Deliver)
Sourcing activities (Source)
3. Illustrate primary point-to-point material flows using solid line arrows
4. Place the most appropriate Level 2 execution process categories to describe activities at each location
S1 Source Stocked Product
S2 Source Make-to-Order
Product
M1 Make-to-Stock
M2 Make-to-Order
M3 Engineer-to-Order
D1 Deliver Stocked Product
D2 Deliver Make-to-Order
Product
D3 Deliver Engineer-to-
Order Product
Source Make Deliver
S3 Souce Engineer-to-
Order Product
18
Supply Chain Threads are Developed from the
Geographic Product Flow
S1
S1
S1
S1
Warehouse
S1, D1
Warehouse
S1, D1
Warehouse
S1, D1
Warehouse
S1, D1
Other Suppliers
D1
Latin American
Suppliers
D1
European Supplier
M2, D2
Manufacturing
M1, D1
Consumers
Suppliers
Warehouse
Production Site
S1
S2
19
P2 P3
P4
S1
SCOR Process Maps are Used as a Basis for
Evaluating/Understanding the Supply Chain
5. Describe each distinct supply-chain thread
A supply-chain thread ties together the set of Source-Make-Deliver supply-chain processes that a given product
family flows through
Develop each thread separately to understand common, and distinct, execution process categories
Consider end-to-end threads in the inter-company case
6. Place planning process categories, using dashed lines to show links with execution processes
7. Place P1, if appropriate
P1 - Plan Supply Chain aggregates outputs from P2, P3, and P4
Raw Materials (RM) Suppliers ALPHA
Alpha Regional
Warehouse
Consumer
Key Other
RM Suppliers
European RM
Suppliers
P1
D1 M1 S1
D2 M2 S2
D1 M1 S2
P2
P3
P4
P1
D1 S1
P2
P4
P1
S1
20
Change in Supply
(e.g. machine line breakdown)
Entity 4
Entity 5
Entity 7
Entity 6
Entity 8
Entity 9
Source
Source
Make
Make
Plan Plan Plan
Plan
Plan Plan
Plan
Deliver
Deliver
In a Classic Logistics World
A change in a supply chain often ripples through each linkage, affecting other areas.
Effective Supply-Chain Management
Requires Balancing Multiple Links Concurrently
Entity A Entity B Entity C Entity D Entity E
Entity F
Deliver Source Make Make Deliver Source
Develop plan that aligns
supply resources to
meet demand
Aggregate all
sources of supply
Aggregate all
sources of demand
P1 Plan Supply Chain
The impact of a change can be felt both up and down the supply chain
A change in supply caused by a production planner may impact a materials planner and an inventory
planner
Further, such a change may impact both your customers and suppliers supply-chain planning
SCOROverview:
Summary
SCOR is a process reference model designed for effective communication
among supply-chain partners.
A standard language helps management to focus on management issues
As an industry standard, SCOR helps management focus across inter-company supply chains
SCOR is used to describe, measureand evaluate
Supply-Chain configurations
Describe: Standard SCOR process definitions allow virtually any supply-chain to be configured.
Measure: Standard SCOR metrics enable measurement and benchmarking of supply-chain
performance.
Evaluate: Supply-chain configurations may be evaluated to support continuous improvement and
strategic planning.