SCOR Model: How to Standardise Your Supply Chain Processes 

Progressing towards a more efficient—and ultimately, better—supply chain relies on optimising the processes within your company. However, to optimise something, we must first be able to describe it and understand the sub-processes that comprise it.

To achieve this description, the supply chain field often uses reference models to detail the activities in a supply chain from an information-processing perspective. The SCOR (Supply Chain Operations Reference) model is one such reference model, and in this article, we will cover everything you need to know.

What is the SCOR Model?

The SCOR model describes the processes required to meet customer demand within a supply chain, categorising them into five key processes that may already sound familiar if you follow our blog regularly.

We’re talking about Planning, Sourcing, Manufacturing, Delivery, and Return. Let’s take a closer look at each.

The 5 Key Processes of the SCOR Model

1. Planning

This process focuses on developing strategies to balance supply and demand. It includes gathering requirements and available resources, capacity planning, and identifying corrective actions when there are gaps between supply and demand.

2. Sourcing

This phase addresses all activities related to supplier management, including issuing purchase orders, receiving and storing products, and validating invoices.

3. Manufacturing

This process covers the conversion of raw materials into finished products, encompassing a wide range of activities, such as assembly, chemical processing, recycling, and, where applicable, reprocessing. The most distinctive feature of this phase is that it transforms materials, changing their product identifiers.

4. Delivery

Involves all activities related to creating and delivering customer orders, from order receipt and validation to delivery planning, packing, and shipping.

5. Return

Deals with the reverse flow of products, managing returns of defective or unnecessary items.

What Are the Benefits of the SCOR Model?

The SCOR model offers multiple benefits for companies that implement it, among which we can highlight the following:

• Process Standardisation: Facilitates communication between business partners by using common definitions and metrics.
• Continuous Improvement: By providing a framework for evaluating and benchmarking activities, the SCOR model encourages the adoption of best practices, leading to ongoing improvements.
• Adaptability: The SCOR model can be applied to both simple and complex supply chains, making it suitable for global or specific projects.

Supply Chain Performance: Metrics and KPIs

A primary goal of SCOR is to contribute to the continuous improvement of the supply chain. To this end, it sets out clear, precise metrics that allow companies to measure supply chain performance across five key variables:

1. Reliability

Assesses the ability to meet expectations through KPIs such as OTIF (On Time In Full: delivering orders on time and in full).

2. Responsiveness

Measures the speed with which a supply chain can fulfil customer orders, with the key metric here being Order Fulfilment Cycle Time.

3. Agility

Assesses the ability to adapt to market changes and respond to disruptions, such as a sudden supplier closure, a natural disaster, or a geopolitical issue affecting the supply chain. A key KPI here is Value-At-Risk.

4. Cost

Monitors costs associated with supply chain operations, such as labour and transport costs.

5. Asset Management

Optimises the use of assets within the supply chain, with metrics such as CCC or Cash Conversion Cycle, and Days Inventory Outstanding.

Types of Practices in the SCOR Model

In addition to describing processes and establishing KPIs, the SCOR model also highlights certain practices, classified into three main categories: emerging practices, best practices, and standard practices.

These practices are designed to improve supply chain efficiency, with their implementation depending on each organisation’s specific needs and sector.

Emerging Practices

These practices introduce new technologies or innovative approaches that can transform supply chain management. While implementing them can involve high risk, they also offer substantial benefits, redefining how processes are organised within the industry.

An example of an emerging practice is using artificial intelligence for demand forecasting, which could revolutionise how companies plan their inventories and production.

Best Practices

Considered structured, repeatable, and proven practices, these have shown a positive impact on supply chain performance. They are widely adopted across various industries and organisations, offering consistent results with moderate risk.

For example, the use of Sales and Operations Planning (S&OP) is a recommended best practice in SCOR to align demand with production.

Standard Practices

Standard practices are those historically used by most companies, though they may not offer a significant competitive advantage. While they do not yield major benefits, they remain effective.

For example, using traditional ERP systems for inventory management and resource planning continues to be a common and effective standard practice.

Each SCOR practice is linked to one or more processes, metrics, and skills, allowing companies to select and apply the most suitable practices according to their specific context. The model’s flexibility enables organisations to adapt these practices to their unique needs.

Talent Management in the SCOR Model

Another notable aspect of the SCOR model is its approach to talent management. This area provides a framework for managing the skills and competencies employees need to efficiently carry out supply chain processes.

Supply Chain Skills

The SCOR model identifies key skills for each supply chain process, designed to enhance staff capability in each critical area:

• Basic Skills: The minimum skills required to correctly execute each supply chain process, such as demand planning or inventory management.
• Critical Skills: Distinguishing team leaders from those operating at a basic level, these skills include risk management, operations optimisation, and effective team leadership.

Experience and Training

In addition to skills, SCOR emphasises the importance of:

• Experience: Refers to the capability acquired through observation and practice in real situations, such as handling hazardous products or cross-docking.
• Training: Involves skills development through education or on-the-job training. Examples include SCOR-P certification and other supply chain training programmes.

Competency Levels

The SCOR model classifies staff competency levels into five categories, from novice to expert:

• Novice: A beginner with no prior experience who follows detailed instructions to perform tasks.
• Beginner: Has a basic understanding of the work but limited situational awareness.
• Competent: Understands the work and can prioritise to achieve objectives.
• Advanced: Oversees all aspects of the work and prioritises based on the situation.
• Expert: Has an intuitive understanding of the supply chain and can apply expertise to new situations.

SCOR Model: A Reference Model for a More Efficient Supply Chain

The SCOR model is an effective method that not only improves operational efficiency within the supply chain but also helps companies manage talent and adopt best practices.

Through an integrated approach covering processes, metrics, practices, and people, SCOR provides a flexible framework to drive continuous improvement and competitiveness in the market. Organisations implementing this model can expect improved performance at each stage of their supply chain, from planning to delivery and product return.