The SCOR Model, also referred to as the Supply Chain Operations [pic]Reference model, is a type of tutorial used to improve your knowledge and usage of the [pic]Supply Chain Management system. It is more of a management tool. The Supply Chain Management Council has designed the SCOR Model in collaboration with other distributors, manufacturers, suppliers and logistics service providers, and therefore the model is best suited for people in this category of business. [pic][pic]
The SCOR Model compares itself with the best practices in the industry and constantly improvises techniques for distributors, manufacturers and logistic [pic]service providers. This allows the companies using the SCOR Model to compare and learn from their competetitor’s. The SCOR Model also has a number of additional abilities. The Supply Chain Reference Model can function as a performance model that has 4 levels, which are in turn shaped like a pyramid. These four levels can literally walk a company through each step of performance, and guides them through the model. This pyramid is the core of the Supple Chain [pic]Reference Model.
What Can the Supply Chain Reference Model do to help a Business grow? It can characterize the [pic]best practices and apply it to your [pic]business by further improvising it. It is futuristic in its functionalities, as it is already improvising on what is best in [pic]the industry. It also quantifies the performance of your competitors and compares them to you. It can establish targets for you based on this comparison. How does the Supply Chain Reference Model achieve this? It uses predetermined and standardized metrics to measure the values which are accurate. It works on a framework of established parameters. It aligns tself with software and current technologies. The main aim of the Supply Chain [pic]Reference Model revolves around the [pic]business and all the phases it needs to go through to attain customer satisfaction. The four levels in the pyramid are Plan, Source, Make and Deliver. They are all customer-centric, and work towards the goal of attaining customer satisfaction, which is the primary objective of any [pic]business. What is the scope of the Supply Chain Reference Model? The SCOR Model includes all the transactions at the customer level into its spectrum of functioning, from invoicing to product or service delivery, and market interactions.
The SCOR Model does not only address one section like the Sales, Marketing, or product development alone. It ranges across multiple and complex industries. There are three process levels, and none of these levels focus on how the [pic]business should go about conducting its operations or changing its functions. In fact, the SCOR Model makes the [pic]business expand its functions to the fourth level which extends some organization specific processes, systems and practices. Many businesses face challenges when it comes to keeping their customers happy in terms of supply.
Many manufacturers function traditionally by keeping high inventories which result in high costs. The Supply Chain [pic]Reference Model addresses this problem directly by integrating the best processes across [pic]the industry, and not only within the specific [pic]business window. When you have the experience of good companies , as well as successful companies at hand to compare and contrast, following their example could result in the cutting of inventories to less than 50%. You can easily avoid a surplus and cut costs, increasing the process of cost savings.
The SCOR Model establishes predetermined values for all the levels such as planning, sourcing, making deliveries, and even returns. The raw materials also go through the same process. The SCOR Model establishes the limits for each step in the process, and these limits are based on [pic]the industry standards which in turn are derived from the [pic]best practices shared across [pic]the industry. Even if products have to go through re-engineering, the benchmarks based on the [pic]best practices shared will develop standards for the re-engineering of products, processes involved and costs.
The entire model of the supply chain includes the plan, source, make and delivery that is steered by the customers supply and demand. The SCOR Model creates a buffer inventory based on the understanding of this demand and supply chain. The buffer will be created by a well planned and managed system which results in correct inventories and the avoidance of a surplus. [pic][pic] SCOR has attracted a lot of attention from many countries globally. Many businesses across several countries have incorporated the SCOR Model into their [pic]business model. They have implemented this model after studying and analyzing it.
After the continued of use of the SCOR Model, companies are now gaining the competitive edge over other companies not only locally, but also globally. China has set a precedent for adapting to the SCOR Model, and lot of Chinese companies today vouch for the model and stand behind it. 0What happens at different levels of the SCOR Model? Plan, Source, Make, Deliver and Return are the five basic principles of the overall [pic]Supply Chain Operational Reference manual. [pic][pic] “Plan” consists of Demand/ Supply planning and Management. What this level basically does is establish a relationship between resources and requirements.
Since they are directly proportional it studies both factors to establish if they are equal. After this it plans the demand and supply chain and communicates the plan to the whole [pic]supply chain, including the source, make, deliver and return. This process also involves managing business rules apart from data collection, capital assets, regulatory factors, and compliance. Basically this step aligns the [pic]Supply Chain Management plan to the financial plan. “Source” consists of scheduling deliveries, receiving the stock, verifying them and transferring the product respectively.
It also manages [pic]business rules, assesses the supplier’s performance and credibility, collects data and maintains it. In addition to this, it also keeps information pertaining to inventory management, products coming in, capital assets, import and export policies, supplier’s network, and their agreements. “Make” schedules production activities, decides how much has to be produced, and it also deals with packaging, shipping, and finishing [pic]the product. Apart from these it also manages production issues, manages rules, performance data, production network, equipment and facilities provided for them.
It also deals with transport issues and compliance for production. “Deliver” is something which comes into contact with the customer. A good example of this is handling customer inquiries, deciding the volume that has to be delivered. This is a crucial step as the customer comes in contact with the [pic]Supply Chain Operations [pic]Reference model. Apart from this it also routes shipments and deals with warehouse management, receiving material and picking it up for shipping. If necessary, the business can receive [pic]the product and install it at the client’s site. This is called end-to-end servicing.
Returns may occur due to various circumstances in a business process. Most common of all is defective products. All defective products that are returned are put through different steps of evaluation after the return, and this includes identifying [pic]the product condition, disposing of [pic]the product, scheduling product shipment and returning the defective product. Sometimes it also involves the transferring of the defective product. All return maintenance of products and their repairs are sourced from the above steps of the return process. A different category in the same returns process is excess products. This is here the [pic]Supply Chain Operation [pic]reference model plays a large role. The whole [pic]Supply chain management functions are finally used to cut down excess. Apart from damaged products and returns, even excess is a very large factor that contributes to returns. The whole study of the [pic]Supply Chain Management functionalities is on how to control these excesses. The excess is created at the inventory level, and the inventories are studied in detail. If the inventories are controlled using the demand and supply scale, then surplus can be cut down to a large extent, as much as 70% according to industry experts.
Because there is less, you can spend more time and resources dealing with damaged products. The one thing that can be controlled is the production of excess. [pic][pic] From this understanding, the [pic]Supply Chain Operational [pic]Reference Model creates steps from the source such as identifying returned products, developing product authorization codes, and managing return [pic]business rules. Compliance is a stage that every process has to go through irrespective of the mode or the step. To summarize, the SCOR Model is like a language which communicates within the [pic]supply chain partners.