Supply Chain Operation Reference Model

June 29, 2012 by  Filed under: Management 

Supply Chain Operation Reference model (SCOR) as developed by the Supply Chain Council is the most common tool to analyze and improve performance of supply chain management; measuring effectiveness of total supply chain management from tier-n suppliers to tier-n customers. Performance measures through 3 cyclic frameworks: process modeling, performance measurement and best practices.

Process modeling focuses on horizon of Plan-Source-Make-Deliver-Return process; or simply a whole chain of activities to transform raw materials or knowledge to final products or service readily consumed by final customers. Planning plays a key role to ensure no further conflict in subsequent process. Big job in planning phase is staying with aggregate demand and sale forecast. Planning also implies risk management in order to have a secured supply; preventing interrupting ordinary business operation process; in which most attending area falling into supplier or partnership management and natural disaster. All these increase fragility of supply source once company seeks more outsourcing solutions as an opportunity to improve their bottom line. SCOR process preference model contain: performance metrics (identify critical process, develop measurement tools and measure performance against objectives); and benchmarking best in class performance in process, practice and people to provide the best framework for operational management.

Performance measurement focuses on attributes: reliability, responsiveness, agility, cost and assets. There’s a little need to explain all these criteria seem all revealed by their words but that ultimately provides a supply chain superior; cost control, excellent customer service, attracting pool talent; improving channel partnership. Key performance indicators respectively represent perfect order fulfillment; order fulfillment order time, flexibility and adaptability, cost of goods sold and supply chain management cost, cash to cash cycle time and return on fixed assets. The first three attributes reliability, responsiveness and agility is driven by customer orientation; focus and aim to best customer’s satisfaction while the other two concentrates to improve internal performance. These criteria make used by supply chain expert to measure and compare their business against internal and external benchmarking.

Best practices manages logistics process to accomplish unfulfilled business objectives through combination of various quality management tools including: lean manufacturing, six sigma, theory of constraints, ISO 9000, balanced scorecards and benchmarking; to enable process analyst, capture defects and root-cause problems. Best practice is also recognized in risk management to identify, assess, evaluate and monitor risk to prevent their concurrence and reduce impact. In terms of environmental sustainability, best practice requires a substantial consideration to GreenScor; providing framework for measuring carbon emission, air pollution, waste (liquid, solid and recycle) in quantitative terms for company to self-reflection.

The SCOR model explains their helpfulness through the full name; a reference model to enable company to look beyond their operating industry and compare with common practice, best practice or leading practice. SCOR model provides a benchmarking framework to define strategy, business structure, manage process and measure performance through 3 pillars: process modeling, performance measurement and best practice examination.


Kim Han Hoang – Logistics Bureau

Logistics Bureau specialises in helping organisations in all industries improve their Supply Chain Management and Logistics Operations.

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