Optimize your supply chain with the SCOR model

At a time when globalization, market versatility and increased competition are complicating supply chain management, companies are having to rethink the organizations that enable them to deliver their offering to customers.

Indeed, a supply chain needs to be constantly monitored in order to make potential improvements and maintain the flow of goods between manufacturer and customer.

So, adopting a supply chain process reference model such as the SCOR model is a must for today's companies wishing to gain a competitive edge by being more responsive, effective and efficient.

What is the SCOR model, and what are its challenges? What are its benefits and stages? How can you use it to improve your supply chain? Answers in this article.

See all software Supply Chain Management

What is the SCOR model?

SCOR model: definition

The SCOR model, or SCOR method, is a reference model for the analysis, evaluation and optimization of logistics process flows. Published in 1996 by the Supply Chain Council, it is represented as the standard diagnostic tool for supply chain management.

The SCOR (Supply Chain Operations Reference) model is a management tool that covers a company's suppliers vis-à-vis its customers. The method, which is rigorous and structuring, describes the business activities associated with all the phases involved in satisfying customer requests and needs:

• orders
• complaints,
• requests for information, etc.

The method is applicable to all sectors of the supply chain:

• food processing
• construction
• construction, etc.

SCOR model: objectives

The SCOR model (scor model) divides the supply chain into a number of typical business processes and ideal process categories. Thanks to its standardized structure, companies can analyze all flows of information, money and goods, and benefit from a number of advantages:

• short-, medium- and long-term planning is simplified,
• supply chain efficiency is considerably improved,
• processes between suppliers, manufacturers and customers are harmonized and easily comparable.

The SCOR model therefore has several distinct objectives :

• To establish a functional description of an organization's supply chain,
• Build a standardized benchmark through performance indicators,
• Benchmark the company's logistics.
• Facilitate supply chain analysis and monitoring.

The different levels of the SCOR model

Operational process level

The SCOR model details processes on three hierarchically organized levels: strategic, tactical and operational. The first level of the model (level 1) is considered to be the strategic level. It is made up of 5 fundamental processes:

Planning

It is at this stage that resources are determined and business objectives examined, taking into account several elements:

• inventory,
• legal requirements,
• resources,
• transportation, etc.

The company will also set up communication and distribution chains based on customer needs.

Procurement (source)

The organization will then, as its name implies, procure and purchase goods and services, taking into account a number of specific factors:

• demand and availability of goods,
• purchasing,
• receipt,
• and availability of raw materials.

Manufacturing (make)

The third process in the hierarchy consists of planning and manufacturing production, while controlling quality. This manufacturing stage will depend on the packaging required, and on the planning of the week's supply of market-ready products.

Delivery

This stage involves contract management and all operational processes related to the delivery of finished goods and services, such as :

• transportation
• storage
• distribution, etc.

Returns

Here, the company must pay close attention to all processes related to customer service; but also to the delivery service in connection with :

• return procedures,
• disposition of goods,
• merchandising (physical or virtual), etc.

Configuration level

The second level of the SCOR model (level 2) is tactically oriented. It aims to promote supply chain efficiency through performance indicators. This will enable companies to design a catalog of best practices independently of their specialization. It comprises three main types of process:

Planning

The company must make raw materials available to the parties concerned, and prepare planning periods to meet forecast needs and expected demand.

These forecast elements can be measured by means of KPIs.

Execution

The execution process will influence product status according to actual demand. For example, a product may be reoriented or transformed if actual demand does not match forecast demand.

Management (enable)

The "Management" section covers all the processes that prepare information and services between supply chain partners. This is achieved by analyzing and evaluating the various planning and performance data.

Design level

The third level (level 3) is operational. The company will further divide the processes of the configuration level into sub-processes. A performance measurement system will then evaluate and analyze the process elements and estimate the company's financial success. The elements can be :

• costs,
• capacity controls,
• business planning, etc.

Finally, the actual determination of the logistics flows of the various processes is the first step towards improving efficiency and optimizing the supply chain.

Application of the SCOR supply chain model

1 - Competitive positioning analysis

The first strategic step begins with a competitive positioning analysis. The company must :

• measure the level of performance required by the market,
• measure its current performance,
• analyze potential gaps,
• take stock of its current supply chain,
• draw up an optimization plan.

2 - Definition of an operational distribution target

The second step, at the operational level, consists of analyzing physical flows geographically and quantitatively. This will enable the company to define an operational distribution target, and thus better adapt its next actions and processes.

3 - Identify chain breaks

In the third, systemic stage, these same information flows are represented, and existing processes and targets already identified are described in greater detail. This description plays an important role in creating the task for the people involved, and highlights any chain breaks.

4 - Putting the optimized chain into production

The final step in implementing the SCOR model is to develop, test and put the optimized supply chain into production. It is also important for the company to take into account the various organizational aspects:

• contract management,
• results monitoring,
• task planning and monitoring,
• KPI measurement, etc.

💡 Adopting Supply Chain Management (SCM) software is a very good way for the company to control the entire production chain, while fully automating the procurement process. It fosters the exchange of information and customer relations, and improves the monitoring of your supply chain thanks to dashboards and reports updated in real time.

See all software Supply Chain Management

The SCOR model, a genuine product development tool

The SCOR model is a genuine product development tool, enabling you to constantly improve your offer and supply.

Thanks to its many distinct processes and stages, it harmonizes your logistics organization, reduces the risk of chain breaks, and ensures concrete results.

Now it's up to you to optimize your supply chain and make it run more smoothly!