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What is the supply chain?
Why is the supply chain important?�
What challenges do companies face as they try to improve supply-chain management?�
What is the Supply-Chain Operations Reference-model (SCOR)?
What is a Process Reference Model?
How is SCOR used?
What is the Scope of SCOR?
Does the SCOR-model change?
What is the SCOR-model Structure?

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What is the supply chain?�

The supply chain -- a term now commonly used internationally -- encompasses every effort involved in producing and delivering a final product or service, from the supplier's supplier to the customer's customer. Supply Chain Management includes managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer.

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Due to its wide scope, supply chain management must address complex interdependencies; in effect creating an "extended enterprise" that reaches far beyond the factory door. Today, material and service suppliers, channel supply partners (wholesalers/distributors, retailers), and customers themselves, as well as supply-chain management consultants, software product suppliers and system developers, are all key players in supply-chain management.�

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Why is the supply chain important?�

In years past, manufacturers were the drivers of the supply chain -- managing the pace at which products were manufactured and distributed. Today, customers are calling the shots, and manufacturers are scrambling to meet customer demands for options/styles/features, quick order fulfillment, and fast delivery.�

Manufacturing quality -- a long-time competitive differentiator -- is approaching parity across the board, so meeting customers' specific demands for product delivery has emerged as the next critical opportunity for competitive advantage. Companies that learn how to improve management of their supply chain will become the new success stories in the global marketplace. Benchmarking studies show significant cost differences between organizations that exhibit best-in-class performance and those with average performance.

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What challenges do companies face as they try to improve supply-chain management?�

Improving a process as complex as the supply chain can be daunting, as companies are challenged with finding ways to meet ever-rising customer expectations at a manageable cost. To do so, businesses must identify which parts of their supply-chain process are not competitive, understand which customer needs are not being met, establish improvement goals, and rapidly implement necessary improvements.�

Industry has long lacked a standard way to measure supply-chain performance. Because of this, manufacturers and service providers were unable to use a common assessment tool -- benchmarking -- in the effort to improve their performance. Moreover, the lack of a common means to describe supply-chain processes rendered software selection difficult and usually expensive. Instead of finding the right tools for improving specific competitive gaps, businesses often made huge investments in software that failed to address their particular problem. All too often, available software products forced companies (often unwittingly) to revamp their supply-chain processes to suit some default criteria.

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What is the Supply-Chain Operations Reference-model (SCOR)?

The Supply Chain Operations Reference-model (SCOR) is a process reference model that has been developed by the SCC as the cross-industry standard for supply-chain management. SCOR is accessible via the Supply Chain Council's website to all members.

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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.
A Process Reference Model can:
� 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

A Process 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 software 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

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How is SCOR used?

The SCOR-model has been developed to describe the business activities associated with all phases of satisfying a customer's demand. The Model itself contains several sections and is organized around the four primary management processes of Plan, Source, Make, and Deliver. By describing supply chains using these process building blocks, the Model can be used to describe supply chains that are very simple or very complex using a common set of definitions. As a result, disparate industries can be linked to describe the depth and breadth of virtually any supply chain. The Model has been able to successfully describe and provide a basis for supply chain improvement for global projects as well as site-specific projects.

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What is the Scope of SCOR?

It spans all customer interactions (order entry through paid invoice), all physical material transactions (supplier's supplier to customer's customer, including equipment, supplies, spare parts, bulk product, software, etc.) and all market interactions (from the understanding of aggregate demand to the fulfillment of each order). It does not attempt to describe every business process or activity. Specifically, the Model does not address sales and marketing (demand generation), product development, research and development, or post-delivery customer support.

The Model is designed and maintained to support supply chains of various complexities and across multiple industries. The Council has focused on three process levels and does not attempt to prescribe how a particular organization should conduct its business or tailor its systems / information flow. Every organization that implements supply chain improvements using the SCOR-model will need to extend the Model, at least to Level 4, using organization-specific processes, systems, and practice.

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Does the SCOR-model change?

It should be noted that the scope of the Model has changed and is anticipated to change based on Council member requirements. In Version 3.1 of the Model, specific language is being introduced to expand the Model to include service transactions as well as physical material transactions based on Council member requirements to bundle goods and services in the offerings to their customers. Additionally, there is significant technical activity underway that is likely to lead to the evolution of the Model into post-delivery customer support.

It is important to note that this Model describes processes, not functions. In other words, the Model focuses on the activity involved, not the person or organizational element that performs the activity.

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What is the SCOR-model Structure?

Besides the four basic management processes (Plan, Source, Make, Deliver) that provide the organizational structure of the SCOR-model, it is useful to distinguish between the three process types in the Model: planning, execution, and enable (formerly infrastructure). A planning element is a process that aligns expected resources to meet expected demand requirements. Planning processes balance aggregated demand across a consistent planning horizon. Planning processes generally occur at regular intervals and can contribute to supply chain response time. Execution processes are triggered by planned or actual demand that changes the state of products. They include scheduling and sequencing, transforming materials and services, and moving product. Enable processes prepare, maintain, and manage information or relationships upon which planning and execution processes rely.

The SCOR-model contains 6 basic sections: Introduction, Plan, Source, Make, Deliver and a Glossary. The Plan and Execution (Source, Make, Deliver) sections are the heart of the Model while the Glossary provides a listing of the standard process and metrics terms that are used within the Model.

The Plan, Source, Make, and Deliver sections are organized similarly. At the beginning of each section, there are graphics that provide a visual representation of the process elements, their relationships to each other, and the inputs and outputs that are germane to each process element. Following the graphics are text tables that identify: 1) the standard name for the process element, 2) the notation for the process element, 3) SCC's "standard" definition for the process element, 4) performance attributes that are associated with the process element, 5) metrics that are associated with the performance attributes, 6) best practices that are associated with the process (candidates, not necessarily an exhaustive list), and features (generally technologically related) that can contribute to heightened performance of the process.

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Supply-Chain Council Inc
303 Freeport Road
Pittsburgh, PA 15215
Ph: +1 412 781 4101 Fax: +1 412 781 2871
Email: [email protected]