What is Supply Chain Operations Reference?
Supply Chain Operations Reference (SCOR) is a widely recognized framework for supply chain management developed by the Supply Chain Council, now part of APICS (Association for Supply Chain Management). The SCOR model provides a common language, metrics, and best practices for organizations to design, plan, and execute their supply chain operations.
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To help organisations in improving the effectiveness of their supply chains, the Supply-Chain Council (SCC) designed a Supply Chain Operations Reference (SCOR) model. As the world’s leading supply chain framework, the SCOR model links business processes, performance metrics, skills and practices into a unified structure.
This is done to increase the speed of system implementations, support organisational goals and improve inventory turns. Thus, the SCOR model provides a process-based methodology to supply chain management.
The SCOR model helps an organization to address, improve and convey supply chain management decisions related to various entities within and outside the organization. Moreover, it illustrates processes in the entire supply chain and offers an outline to improve them.
This model incorporates business concepts for process re-engineering, standardization, and measurement in its framework. The SCOR model focuses on five stages of the supply chain.
Supply Chain Operations Reference Model (SCOR)
The SCOR model consists of five main management processes, each with three levels of detail:
This is the first stage in a supply chain, which includes the following activities:
- Planning and management of demand and supply
- Balancing various resources concerning requirements
- Establishing communication throughout the entire chain
- Designing the following business rules for enhancing and measuring supply chain effectiveness:
- Inventory rules
- Shipping rules
- Assets rules
- Authoritarian compliance rules
- Inventory rules
This is the second stage in which the organization sources the required infrastructure and acquires the material. This stage explains the following activities:
- How to handle inventory, the supplier system, supplier contracts, and competence
- How to deal with supplier payments
- When to receive, authenticate and transfer products
This is the third stage that focuses on manufacturing and production. It involves the following activities:
- Handling the production system, equipment, facilities, and shipment
This is the fourth stage that focuses on the administration of final inventories, assets, shipment, product life cycle, and import and export prerequisites. It includes the following activities:
- Order management
- Receiving orders from different customers
- Invoicing customers after they receive products
This is the final stage in a supply chain, where an organization manages the return of packaging, containers, or faulty products. It consists of the administration of the following:
- Business rules
- Return products
- Regulatory prerequisites
Benefits of SCOR Model
There are numerous benefits of the SCOR model, such as:
- It helps the organization to identify the efficiency of its supply chain.
- It enables the organization to understand how the five stages of the SCOR model are consistent and repetitive among the organization, its suppliers, and its customers. Each stage acts as a linkage in the supply chain, which is crucial for a product to successfully pass through each level.
- It helps to evaluate various supply chain problems.
- It provides the full impact of capital investment, development of a supply chain roadmap, configuration of business operations, and a standard range of two to six times Return on Investment (ROI).