CIPS Procurement Topic

Supply Chain Operations

Reference Model (SCOR)

One of the most recognised methods for

integrating supply chains and measuring
trading partner performance is use of
the Supply Chain Operations Reference
model (Wisner et al., 2008).

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Supply Chain Operations Reference Model (SCOR) - Procurement Topic

Introduction
The SCOR model was developed by the management consulting firm PRTM and was endorsed
by the Supply-Chain Council (SCC) as the cross-industry standard supply chain management
diagnostic tool. The tool can help companies understand, describe and evaluate supply chains
within and between all parties and provide a generic framework for measuring supply chain
performance and identifying areas for improvement (Allnoch, 1997). The model can be used
worldwide regardless of industry or location and was designed to provide organisations with a
common language to discuss supply-chain issues, develop benchmarking measurements and
give direction to the development of supply chain management software (Saccomano, 1998).
SCOR features an intentionally broad scope and definitions that can be adapted to the specific
supply chain requirements of any industry or application (Husby, 2007).
The SCOR model uses five key aspects to describe any supply chain: plan, source, make, deliver
and return (Venkataraman and Pinto, 2011). The model also includes three levels of process
detail. Level 1 defines the number of supply chains, the way their performance is measured
and competitive requirements. The configuration of planning and execution strategies in
material flow are defined at Level 2 by using standard categories (e.g. make-to-order, make-tostock, engineer-to-order). Level 3 defines system functionality and business processes in
relation to purchase, work and replenishment orders, return authorisation and forecasts.
Another two levels have been added to the process, but have not been formally included in
the model. These can refer to improvement implementation, process management, or
software configuration detail (Bollstorff and Rosenbaum, 2011).
Two additions have been made to the SCOR model: the customer chain operations reference
model (CCOR) and the design chain operations reference model (DCOR) (Bollstorff and
Rosenbaum, 2011).

Definition
Supply chain operations reference model (SCOR) is a consensus model that assists companies
in evaluating the supply chain performance of the extended enterprise. It helps companies to
identify weak areas, develop improvement solutions, define common supply chain
management processes and match these with best practice, benchmarked performance
measures and use of software (Stewart, 1997; Husby, 2007).

Successful application
Many researchers and practitioners agree that although the SCOR model is useful, it is often
limited in its application because it fails to 'model the interfaces between trading partners and
because ... [it] ignore[s] product development processes (Huang and Mak, 2000). The Supply
Chain Council also identi?ed that the model has deficiencies in relation to asset recovery,
maintenance, repair and customer service. These factors contribute to relatively low levels of
implementation reported (Stedman, 2000; Power, 2005).

Steps to successful application

1. Analyse the basis of competition to understand the current situation of the company under
investigation. This can be done by the use of SWOT analysis

Supply Chain Operations Reference Model (SCOR) - Procurement Topic

2. Configure a company's supply chain material flow by capturing and redesigning it. Material
flow can be captured by showing the location of supply chain members on a map including
the Level 2 process.
3. Align the performance levels, practices and systems of the companys information
workflow.
4. Implement the supply chain processes and system changes based on the design.
CCS (2005); SCM Operations

Hints and tips

Before the SCOR model can be used for risk assessment, there should be a risk management programme already in place (Harrington et al, 2010).
When implementing SCOR it is important to ensure that implementation/deployment
teams have a good understanding of the designs. In addition, it is essential to establish detailed requirement documentation and integrate team members in deployment teams
where possible (Francis, 2010).
For successful application of the SCOR model companies should identify and define the
number of SCOR metrics needed (Bolstorff, 2002).
Many larger companies use simulation software in SCOR model implementation project to
make improvement to material flow (SCM Operations).
Before applying the SCOR model, it is important to collect data, identify the companys
sources and collect appropriate benchmark data (Bolstorff, 2002).

Potential advantages
The SCOR model can help define standardised processes within the supply chain, thus helping companies 'speak the same language' (Overbeck, 2009).
The SCOR model can help identify performance gaps (SCC 2005).
The SCOR model can be used in risk management (Harrington et al, 2010).

Potential disadvantages
The SCOR model cannot engage the entire organisation in assessment, selection of projects
or implementation, thus failing to incorporate ideas of the entire team and to build a continuous improvement culture (Husby, 2007).
The SCOR model cannot be used in an unstable supply chain because it 'requires a high degree of continuity' (Overbeck, 2009).
The SCOR model does not address processes of sales and marketing, some aspects of service and support processes, such as human resources and technology development (Wisner
et al., 2008)

Performance monitoring
Reliability: metric category that contains value chain metrics focused on quality of product
and service. In the case of a service, it could refer to delivery, post sales service, or warranty, for example perfect order fulfilment (SCC, 2005).
Responsiveness: metric category that focuses on speed or velocity in responding to demand
events such as a customer order, new product introduction, service order, for example order fulfilment cycle time (SCC, 2005).

Supply Chain Operations Reference Model (SCOR) - Procurement Topic

Flexibility: metric category that allows the measurement of value chain adaptiveness to reliably meet demand variation both in short and long term, that is, upside supply chain flexibility (SCC, 2005).
Cost: metric category that enables the measurement of process performance of both direct
and indirect aspects of the value chain, including customer chain, supply chain, design chain
and aggregate measures, such as total returns warranty management costs (SCC 2005).
Asset management: metric category that measures the efficient use of assets including
fixed and working capital, for example cash-to-cash cycle time (SCC, 2005).

Case studies
Implementation of SCOR model in Merck Serono, a subsidiary of Merck KGaA, the worlds
oldest pharmaceutical and chemical company, helped Merck Serono to achieve a joint process understanding and feeling for dependences. Moreover, all employees became aware
of the processes.
Using the SCOR framework allowed ADVA Optical Networking reduce gross inventory from
59m to 38m in ten month. In addition, inventory days of supply were reduced by 47%
from the initial scorecard (Francis, 2010).
The use of the SCOR model by Raytheon IDS resulted in a 37% reduction in headcount and
increase in college-educated population to 66%. In addition, the company achieved a 75%
reduction in transactional processing for material acquisition, 25% improvement in SC Costto-Sales, US$57m in bottom-line savings and 98% supplier conformance to contract (Francis, 2010).

Further Resources/Reading
Web
logistics and the SCOR
summary of a study on identifying important activities within the SCOR process categories.
Week Magazine on
on SCOR model and its
SCOR for supply chain innovation: HP

Books
Supply Chain Excellence: A Handbook for Dramatic Improvement Using the SCOR Model ISBN
978-0814417713
Supply Chain Management and Advanced Planning: Concepts, Models, Software, and Case
Studies ISBN 978-3642093920
Logistics and Supply Chain Management ISBN 978-0077117382
Essentials of Supply Chain Management (Essentials Series) ISBN 978-0470942185
Application of the SCOR Model in Supply Chain Management ISBN 978-1934043233
CIPS and Knowledge Brief 2013

Supply Chain Operations Reference Model (SCOR) - Procurement Topic

References
Albores, P., Love, D.M., Weaver, M., Stone, J. and Benton, H. (2006) An Evaluation of SCOR
Modelling Techniques and Tools. In: Technology and Global Integration, Proceedings of Second
European Conference on Management of Technology (IAMOT), Aston Business School, 10-12
September.
Allnoch, A. (1997) Efficient Supply Chain Practices Mean Big Savings to Leading Manufacturers.
IIE Solutions, Vol. 29(7), pp. 8-9.
Bolstorff, P. (2002) How Does SCOR Measure Up? A Users Perspective on SCOR Metrics.
Supply Chain Technology News. Penton Media Inc.
Bollstorff, P. and Rosenbaum, R. (2011) Supply Chain Excellence: A Handbook for Dramatic
Improvement Using the SCOR Model. Amacom.
Harrington, L.H., Boyson, S. and Corsi, T.M. (2010) X-SCM: The New Science of X-treme Supply
Chain Management. Taylor & Francis, US.
Huang, G.Q. and Mak, K.L. (2000) WeBid: A Web-based Framework to Support Early Supplier
Involvement in New Product Development. Robotics and Computer-Integrated Manufacturing,
Vol. 16(2/3), pp. 169-179.
Husby, P. (2007). The Strengths and Limitations of the Supply Chain Operations Reference
(SCOR) Model. Material Handling and Logistics. [Online] Available at: .com/facilitiesmanagement/mhm_imp_5645/ [Accessed 10 December 2011].
Field, A. (2006). Keeping SCOR: The Supply Chain Operations Reference Model is More Useful
than Ever - And Finally Going Electronic. The Journal of Commerce, 5 June.
Francis (2010) SCC & SCOR Overview: Engen. Supply Chain Council. [Online] Available
at: .org/f/2010 SCC Engen Executive. Accessed [04 January 2012].
Oegretmen, F. (2010) The SCOR Model: An Implementation and Analysis by Merck Serono.
Supply Chain Council. 26 October. [Online] Available at: ua.scorlabs.org/f/23-Oegretmen-The
SCORModelAnImplementationandAnalysisbyMerckSerono.pdf Accessed [04 January 2012].
Overbeck, S. (2009) Supply Chain Management. A Critical Analysis. GRIN Verlag ohg.
Power, D. (2005). Supply Chain Management Integration and Implementation: A Literature
Review. Supply Chain Management: An International Journal, Vol. 10(4), pp. 252-263.
Saccomano, A. (1998) Keeping SCOR. Traffic World, Vol. 255(13), pp. 27-28.
SCM Operations. (No Date) SCOR Model for Supply Chain Management Improvement. [Online]
Available
at:
.scm-operations.com/2011/01/scor-model-supply-chain-improvement.
[Accessed 04 January 2012].
Stedman, C. (2000) Few Takers for Benchmarks from Supply Chain Council. Computerworld, 24
April, p. 46.
Stewart, G. (1997) Supply Chain Operations Reference Model (SCOR): The First Cross-industry
Framework for Integrated Supply Chain Management. Logistics Information Management, Vol.
10(2), pp. 62-67.
4

Supply Chain Operations Reference Model (SCOR) - Procurement Topic

Supply Chain Council (2005) Supply Chain Operations Reference Model (SCOR Model). Version
7. [Online] Available at: .supply-chain.org/default. [Accessed 10 December 2011].
Venkataraman, R.R. and Pinto, J.K. (2011) Cost and Value Management in Projects. John Wiley
and Sons.
Wisner, J.D., Tan, K.C. and Leong, G.K. (2008) Principles of Supply Chain Management: A
Balanced Approach (2nd ed.) South-Western.

Video
Expert interview on SCOR
://www.youtube.com/watch?v=

Supply Chain Operations Reference Model (SCOR) - Procurement Topic