Know the SCOR model to build strong supply chain metrics

By following the SCOR model, manufacturers can put supply chain metrics in place to ensure enterprise-wide success.

The fashion world tells us that the 1990s are back again, but astute supply chain managers know that it never really went away. Unlike stonewashed jean jackets and neon parachute pants, the Supply Chain Operations Reference (SCOR) model of supply chain management has never gone out of style. Since its development by the Supply Chain Council (SCC) in 1996, SCOR has been used by manufacturers around the world to identify -- and adhere to -- mission-critical supply chain metrics.

When SCOR was first released, it was centered on four pillars of supply chain management: Plan, Make, Source and Deliver, according to Cindy Jutras principal of Windham, N.H.-based ERP consultancy Mint Jutras. Jutras sat on the Make discussion committee set up by the SCC during SCOR's development. The committees were made up of hundreds of volunteers from the industry, mostly from software vendors, she explained.

"Ninety percent of what we did was all about establishing the metrics," said Jutras. Despite establishing a hefty number of them -- today's count is at more than 150 -- the creation of SCOR was mostly smooth, she recalled. Jutras noted, however, that the committees fell short in the collaboration part of the process.

"One of the things where they fell into a trap was that it was pretty easy for each committee to go off on their own," she said, adding that this was partly due to the size of the organization. "There wasn't much coordination between Make, Source, Plan and Deliver."

The pillars of SCOR

The SCOR model has grown quite a bit since its inception, but many of the core metrics remain the same today, experts say.  Its three areas of focus are process modeling, performance measurements and supply chain best practices. Process modeling is defined as planning supply chain operations, sourcing goods or services, making or manufacturing products, delivering finished goods, and handling product returns. Supply chain best practices as defined by SCOR must meet four characteristics: current, structured, proven and repeatable. In addition, there are the many SCC-approved supply chain metrics, otherwise known as performance measurements.

Manufacturers should take particular interest in the metrics around Source, Make and Deliver, Jutras said. "Most companies are going to concentrate on metrics around their sources and keep holding their vendors' feet to the fire to conform to the kinds of functionality they're looking for. Source metrics have the biggest potential for increasing throughput and reducing cost," she said. "Customers, however, are going to want manufacturers to measure in terms of percent complete and on-time delivery. The whole concept of customer retention is sometimes something manufacturers don't pay attention to."

Lora Cecere, founder of Baltimore-based research and consulting firm Supply Chain Insights and author of the Supply Chain Shaman blog, stressed the importance of cross-functional training using SCOR metrics. "The best way to use [SCOR] is to help get organizations on one page," she said. "Only 17% of companies actually do cross-functional training, where the manufacturing people can learn about warehouses, the procurement can learn about manufacturing and so on. Like a marathon runner, companies need to know how to make tradeoffs."

Above all, SCOR is a starting place for achieving supply chain excellence, according to Simon Ellis, practice director of global supply chain strategies at IDC Manufacturing Insights, based in Framingham, Mass. "It's basically an operational approach, a set of principles that companies use to guide them. The fundamental view of the supply chain is still the same, but SCOR has evolved the thinking as far as key performance indicators go. "

Supply chain metrics should be the focus for vendors, customers

While Cecere believes that most software vendors are aware of SCOR and take it into account, she names some standouts: SAP -- particularly its BI and BW Accelerators -- JDA Software and i2 Technologies. "IT professionals will find that these metrics are premade for them, which is helpful," she said.

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Jutras pointed to Infor as another vendor that is keeping SCOR in mind, though she believes demand planning has taken much of the spotlight off of SCOR in recent years. She warned that manufacturers that disregard the need for defined supply chain metrics are setting themselves up for not getting the full value out of their technology or processes.

"It's important to establish a baseline of metrics, use continuous improvement and keep measuring them to get more benefits from your applications," Jutras said. "The underlying tenets that SCOR was built around are still there. SCOR is not rocket science. It puts structure, terminology and metrics in place to compare one company to the next. SCOR didn't introduce new processes -- it just created a model for consistent processes," she said.

Looking ahead, Cecere noted that SCOR principles could help manufacturers find new talent. "We are facing almost a crisis of management for supply chain talent," she said. "People don't have enough midmanagement planners for the upcoming years; one in five demand planning jobs today stay open for six months. The SCOR model helps companies really work on this HR, cross-functional, team-building training mindset. It's a first step."

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This was first published in November 2012

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