SUPPLY-CHAIN

OPERATIONS
REFERENCE-MODEL
Ideas for today and tomorrow
 Standard descriptions
Process Reference Model 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 features and
functionality
 Process Reference Model
Process Reference Model

Business Process Capture the “as-is” state of

Reengineering Benchmarking Best Practices Analysis a process and derive the
desired “to-be” future state
Capture the “as-is” Quantify the
operational Characterize
state of a process the management Quantify the operational
performance of
and derive the
similar companies practice and performance of similar
desired “to-be” software solutions companies and establish
future state and establish
internal targets that result in internal targets based on
based on “best-in- “best-in-class” “best-in-class” results
class” results performance

Characterize the management

practice and software
solutions that result in “best-
in-class” performance
Process reference model, or business process framework: The ability
to describe process architecture in a way that makes sense to key
business partners. It is especially useful for describing value chains
that cut across multiple departments and organizations, providing a
common language for managing such processes.
Supply Chain Operations Reference (SCOR®) Model

• The Supply Chain Operations Reference (SCOR®) model provides a

unique framework that links performance metrics, processes, best
practices, and people into a unified structure. The framework supports
communication between supply chain partners and enhances the
effectiveness of supply chain management, technology, and related
supply chain improvement activities.

• SCOR® is a consensus model. It was developed and continues to evolve

with the direct input of industry leaders who manage global supply
chains and use it daily to analyze and improve the performance of their
organizations. It features an intentionally broad scope and definitions
that can be adapted to the specific supply chain requirements of any
industry or application.
 Supply Chain Operations Reference (SCOR®) Model :
Conception and Evolution
• The Supply Chain Operations Reference (SCOR®) has been developed and endorsed by the Supply–Chain
Council (SCC) as the cross-industry standard for supply chain management.

All best practices

have clarified
descriptions and
Version 10.0 Version 11.0 of the are linked to
SCOR® introduced SCOR-model is the processes and
introduction in skills/people thirteenth revision Enable processes
metrics
1996

Cost metrics were

Cost metrics were redefined
introduced
Organizational benefits of adopting the SCOR® model

• Rapid assessment of supply chain performance

• Clear identification of performance gaps
• Efficient supply chain network redesign and optimization
• Enhanced operational control from standard core processes
• Streamlined management reporting and organizational structure
• Alignment of supply chain team skills with strategic objectives
• A detailed game plan for launching new businesses and products
• Systematic supply chain mergers that capture projected savings

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SCOR® solves supply chain challenges
• Superior Customer Service
The SCOR model provides a framework for measuring and understanding current supply chain conditions and
performance and creates a foundation for improvement.

• Cost Control
SCOR metrics provide the basis for an organization to measure how successful it is in achieving its desired
objectives. SCOR metrics are designed to be used in conjunction with supply chain performance attributes,
making it easier to compare different supply chains and different supply chain strategies.

• Planning And Risk Management

SCOR helps users establish rules and strategies, assign responsibilities, coordinate responses, and monitor
current conditions.

• Supplier/Partner Relationship Management

SCOR provides a common language for supply chain classification and analysis. Using a common language and
framework makes it easier for teams to communicate, speeds benchmarking efforts, and enhances the evaluation
of best practices.

• Talent
The SCOR skills management framework complements process reference, metrics reference, and practice
reference components with baseline skills, experience, aptitudes, and training.
Scope of SCOR® model

SCOR® includes all customer

interactions from order entry
through paid invoice; all product
(physical material and service)
transactions, including
equipment, supplies, spare
parts, software, etc.; and all
market interactions, from
understanding aggregate
demand to the fulfillment of each
order.
SCOR® Boundaries ALL MARKET
INTERACTIONS

From the understanding of

aggregate demand to the
fulfillment of each other ALL CUSTOMER
INTERACTIONS

From order entry through

paid invoice

ALL PHYSICAL
MATERIAL
TRANSACTIONS
From supplier’s supplier
to customer’s customer
Including equipment,
supplies, spare parts,
bulk product, software,etc.
 PERFORMANCE METRICS:
SCOR® Contents: Standard metrics to measure
process performance

PROCESSES: Standard
descriptions of management
processes and a framework
The SCOR® process of process relationships
reference model
contains:
PRACTICES: Management
practices that produce best-
in-class performance

PEOPLE: Training and skills

requirements aligned with
processes, best practices,
and metrics
SCOR® Contents: Performance

Performance Attributes

• A performance attribute is a group of metrics used to express a strategy.

An attribute itself cannot be measured; it is used to set strategic
direction. Metrics measure the ability of a supply chain to achieve these
strategic attributes.
• SCOR® identifies five core supply chain performance attributes:
Reliability, Responsiveness, Agility, Costs, and Asset Management.
Consideration of these attributes makes it possible to compare an
organization that strategically chooses to be the low-cost provider
against an organization that chooses to compete on reliability and
performance.
 The ability to perform tasks as expected. Reliability focuses on the
Reliability predictability of the outcome of a process. Typical metrics for the reliability
attribute include: On-time, the right quantity, the right quality.

The speed at which tasks are performed. The speed at which a supply
Responsiveness chain provides products to the customer.
Examples include cycle-time metrics.

The ability to respond to external influences, the ability to respond to

Agility marketplace changes to gain or maintain competitive advantage. SCOR
Agility metrics include Flexibility and Adaptability

The cost of operating the supply chain processes. This includes labor
Costs costs, material costs, management and transportation costs. A typical cost
metric is Cost of Goods Sold.

The ability to efficiently utilize assets. Asset management strategies in a

Asset Management
supply chain include inventory reduction and in-sourcing vs. outsourcing.
Efficiency (Assets) Metrics include: Inventory days of supply and capacity utilization.
SCOR® Contents: Performance

Metrics

• A metric is a standard for measurement of the performance of a process.

SCOR® metrics are diagnostic metrics. SCOR® recognizes three levels of
predefined metrics:
• • Level 1 metrics are diagnostics for the overall health of the supply
chain. These metrics are also known as strategic metrics and key
performance indicators (KPIs). Benchmarking level 1 metrics helps
establish realistic targets that support strategic objectives.
• • Level 2 metrics serve as diagnostics for the level 1 metrics. The
diagnostic relationship helps to identify the root cause or causes of a
performance gap for a level 1 metric.
• • Level 3 metrics serve as diagnostics for level 2 metrics.
SCOR® Metrics
SCOR® Contents: Process

• The Process section in SCOR® provides a

set of pre-defined
descriptions for activities most companies perform
to effectively execute their supply chains. SCOR®
identifies the unique processes a supply chain requires to support the
objective of fulfilling customer orders. By definition, a process is a
unique activity performed to meet predefined outcomes.
• SCOR® processes help standardize the description of the supply chain
architecture (level 1 and level 2 processes) and the implementation of the
architecture (level 3 processes). SCOR® provides standards down to the
level where process descriptions are applicable across a range of
industries. Further detail is industry and organization specific (level 4
and below).
 Levels of SCOR® Processes

Level 1 Description Schematic Comments

Plan
Level 1 defines the scope and
Source Make Deliver content for the Supply Chain
Top Level
Operations Reference-model.
(Process Types)
Here basis of competition
Return Return Performance targets are set.

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Scope of SCOR® Processes

Plan Source Make Deliver Return

Demand/Supply Planning and Management

Balance resources with requirements and establish/communicate plans for the whole supply chain.

Management of business rules, supply chain performance, data collection, inventory, capital assets,
transportation, planning configuration, and regulatory requirements and compliance.

Align the supply chain unit plan with the financial plan
Scope of SCOR® Processes

Plan Source Make Deliver Return

Sourcing Stocked, Make-to-Order, and Engineer-to-Order Product

Schedule deliveries; receive, verify, and transfer product; and authorize supplier payment

Identify and select supply sources when not predetermined, as for engineer-to-order product.

Manage business rules, assess supplier performance, and maintain data.

Manage inventory, capital assets, incoming product, supplier network, import/export requirements,
and supplier agreements.
Scope of SCOR® Processes

Plan Source Make Deliver Return

Make-to-Stock, Make-to-Order, and Engineer-to-Order Production Execution

Schedule production activities, issue product, produce and test, package, and release product
to deliver.

Finalize engineering for engineer-to-order product.

Manage rules, performance, WIP, equipment and facilities, transportation, production network,
and regulatory compliance for production.
Scope of SCOR® Processes

Plan Source Make Deliver Return

Order, Warehouse, Transportation, and Installation Management for Stocked,

Make-to-Order, and Engineer-to-Order Product

All order management steps from processing customer inquiries and quotes to routing shipments
and selecting carriers.
Warehouse management from receiving and picking product to load and ship product.

Invoicing customer.

Manage deliver business rules, performance, information, finished product inventories,

capital assets, transportation, product life cycle, and import/export requirements.
Scope of SCOR® Processes

Plan Source Make Deliver Return

Return of Raw Materials and Receipts of Returns of Finished Goods

All returns from materials and finished goods.

Manage return business rules, performance, data collection, return inventory, capital assets,
transportation, network configuration, and regulatory requirements and compliance.
Scope of SCOR® Processes

• Recently added as the last of the six Macro-level process, Enable

processes support the realization and governance of
the
planning and execution processes of supply chains.
• The processes associated with establishing,
maintaining and
monitoring information, relationships, resources,
assets, business rules, compliance and contracts
required to operate the supply chain.
• Enable processes interact with processes in other domains (for example:
Financial processes, HR (Human Resource) processes, I(C)T
(Information, Communication & Technology) processes, facilities
management processes, product & portfolio management processes,
product and process design processes and sales and support processes).
 Levels of SCOR® Processes

Level 2 Description Schematic Comments

A company’s supply chain can be

“configured-to-order” at Level 2
Configuration
from 30 core “process categories”.
Level
Companies implement their
(Process
operations strategy through
Categories)
the configuration they choose
for their supply chain.

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Levels of SCOR® Processes

Level 2 Toolkit P1 Plan Supply Chain

Plan
P2 Plan Source P3 Plan Make P4 Plan Deliver P5 Plan Return

Customers
Source Make Deliver
Suppliers
D1 Deliver Stocked
S1 Source Product
M1 Make-to-Stock
Stocked Product
D2 Deliver Make-
to-Order Product
S2 Source Make-
M2 Make-to-Order
to-Order Product D3 Deliver Engineered-
to-Order Product
S3 Source Engineer-
M3 Engineer-to-Order D4 Deliver Retail
to-Order Produst
Product

Source Return Deliver Return

SR1 Return Defective Product DR1 Return Defective Product
SR2 Return MRO Product DR2 Return MRO Product
SR3 Return Excess Product DR3 Return Excess Product

MRO : Maintenance Repair and Operating

Levels of SCOR® Processes

Process Categories are defined by the relationship between a SCOR® Process and Process Type

“SCOR® Configuration Toolkit”

SCOR® Process

Plan Source Make Deliver Return

Planning P1 P2 P3 P4 P5

Process Process
Execution S1–S3 M1–M3 D1–D3 R1–R3
Type Category

Enable EP ES EM ED ER

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 Levels of SCOR® Processes

Level 3 Description Schematic Comments

Level 3 defines a company’s ability

Process Element to compete successfully in its chosen
Level markets, and consists of:
(Decompose
Process) • Process element definitions
• Process element information
P1.1
inputs, and outputs
Identify, Prioritize,
and Aggregate
• Process performance metrics
Supply-Chain
Requirements P1.3
• Best practices, where applicable
Balance Supply-Chain
Resources with
P1.4
Establish and • System capabilities required to
Communicate
P1.2
Supply-Chain
Requirements
Supply-Chain Plans support best practices
Identify, Assess,
and Aggregate
• Systems/tools
Supply-Chain
Resources

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Levels of SCOR® Processes
Level 3 Detailed Process Element Information

Source
S1 Source
Stocked Product

S2 Source Make-
to-Order Product

S3 Source Engineer-
to-Order Produst
 Levels of SCOR® Processes

Level 4 Description Schematic Comments

Companies implement specific

Implementation supply-chain management
Level practices at this level.
(Decompose Level 4 defines practices to
Process achieve competitive advantage
Elements) and to adapt to changing
business conditions.

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Levels of SCOR® Processes

Level 4 Implementation of Supply-Chain Management Practices

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Levels of SCOR® Processes

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Levels of Process

Each intersection of two execution processes (Source-Make-Deliver)

is a “link” in the supply chain
Execution processes transform or transport materials and/or products
Each process is a customer of the previous process and a supplier to the next
Planning processes manage these customer-supplier links
Planning processes thus “balance” the supply chain
Every link require an occurrence of a plan process category

Each basic supply-chain is a “Chain” of Source, Make, and Deliver

Execution Processes

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SCOR® Practices : Supply Chain Risk Management
 SCOR® Practices : Supply Chain Risk Management
The systematic identification, assessment, and mitigation of potential disruptions (both within and outside the supply
chain) in logistics networks with the objective to reduce their negative impact on the logistics network’s performance.

Define and document the objective and scope Collect and document all potential risk
(internal and external) for managing risk. Establish events that may impact the organization
from meeting its goals.
Context
Identify Risk

Continuously monitor effectiveness

of mitigation plans; identify emerging Collect and document for each
risks and changes in internal and
Monitor Risk potential risk the causes, probability,
external context. Assess Risk and consequences (Understand the
Value at Risk).

Determine the actions required to Mitigate Risk

eliminate, reduce, or accept and Evaluate Risk
monitor the risks (Risk Mitigation Plan). Determine for each risk whether mitigation
actions are required or the risk is acceptable;
prioritize risks.
SCOR® People
a skill or type of behavior
through instruction
Skill – A Skill is the capacity to
deliver predetermined results with
minimal input of time and energy
Experience – Experience is the
knowledge or ability acquired by
observation or active participation.
Aptitudes – A natural, acquired,
learned, or developed ability to
perform a certain kind of work at a
certain level.
Training – Training develops
Competency – Competency
levels describe the level or
state of qualification to
perform a certain role or tasks.
Novice – Untrained beginner, no
experience, requires and follows
detailed documentation to be able to
perform the work.
Experienced beginner – Performs the
work; limited situational perception.
Competent – Understands the work
and can determine priorities to reach
organizational goals.
Proficient – Oversees all aspects of
the work and can prioritize based on
situational aspects.
Expert – Intuitive understanding.
Experts can apply experience patterns
to new situations.
SCOR® Special Applications :GreenSCOR®

Sustainable business models and environmental accounting are growing business concerns. However, there
are multiple approaches to measuring the total environmental footprint of an organization or supply chain
with no agreed upon standards.

• The SCOR® Model, which is a proven framework for defining

supply chain scope and process operations as well as measuring
supply chain performance, provides an excellent foundation for
environmental accounting in the supply chain.
• The following strategic environmental metrics allow the SCOR® model to be used
as a framework for environmental accounting:
• • Carbon Emissions (Tons CO2 Equivalent)
• • Air Pollutant Emissions (Tons or kg)
• • Liquid Waste Generated (Tons or kg)
• • Solid Waste Generated (Tons or kg)
• • Recycled Waste (Percent)
SCOR® Case Study
Ranked 20th in “The
A Sweden based Fortune’s “100 Best World’s Most
retail chain which Companies to attractive Employers
deals in furniture work for” list 2011’ in the
and house decor (three consecutive Universum Awards,
years) an employer
items
Branding event

345 branches
in 42 countries. Training magazine’s Working Mother
annual “Top 100” magazine’s annual
ranking of companies list of the “100 Best
that excel in human Companies for
capital development Working Mothers”
Four consecutive Four Consecutive
years)
years
Why does IKEA use SCOR® model?

• Legitimacy & Common Terminology (Integration) in supply chain for

better communication

• Sustainable Supplier Relationship Management

• Designing Performance Measurement

• A framework for guidance & control

• More holistic view for co-workers –

• I-people need to become T-people

• Designed by practitioners

• Neutral

• No need to invent the wheel

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IKEA Performance Goals (FIVE YEAR PLAN)
QUALITY -Meet the specifications
-Supplementary
Services
SPEED -Unique Store
Layout
Performance Objectives

-Automation
(conveyor belts)

Competitiveness
DEPENDABILITY -Hub and Spoke

Market
Model to ensure
availability
FLEXIBILITY Global Sourcing to Mix and Match to avail
adjust for volume large variation in
changes offerings
COST -Automation (Less re-
work)
-Self Service
-Flat packs (less space)
Capacity Supply Network Process and Technology

Operations Decisions Shape

Competencies and Constraints
IKEA Performance Goals
IKEA Journey to SCOR®

• Cost Saving in Furniture Design

• Sustainable Relationships with suppliers
• Combining Retail and Warehousing Processes
IKEA Business Process Flow
IKEA Inventory Planning and Forecasting
• Cost-Per-Touch Inventory Tactic
• In-Store Logistics
• Maximum/Minimum Settings as Proprietary System
• Usage Of High-Flow & Low-Flow warehouse facilities
• Do-It-Yourself Assembly lowers Packaging Costs

• Ikea currently has:

• 1046 suppliers in 52 countries,
• 9500 different products,
• 40 distribution centers in 16 countries.

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 Manufacturing at IKEA
• Designs for furniture, lamps, kitchen equipment and beds are logistically formed
• The packaging also is designed to squeeze as many units as possible into trucks delivering
inventory to the stores. “Air out, product-in” – Loading Ledge technology

Once a product is designed and manufactured, it can be checked for quality by an independent
firm whose location is as proximate to the manufacturer as possible.
 Logistics at IKEA
• IKEA has about 40 distribution centers worldwide in 16 different countries
• Cross-Docking method used
• Astro WMS adopted by IKEA in 2010 increases and improves efficiency in their
distribution centre.

IKEA products are transported by road, rail and sea between suppliers, distribution centers
and IKEA stores, and from the stores to customers.

IKEA transport service providers must comply with the requirements in the supplier code of
conduct IWAY, including industry-specific requirements
 Return Policy at IKEA
• IKEA takes returned products seriously.

• Customers have at least 30 days to bring back purchased products for a full
refund regardless of the reason for the return

• Recovery team present at each store

• After necessary repairs, they offer them to customers in store space tagged
“As Is,”

• More damaged products are broken down to their components and recycled.

• Every return and complaint is systematically documented so that IKEA can

analyze reasons for returns and take action throughout the value chain when
needed.
 Return Policy at IKEA
• It launched a code of conduct called ‘IWAY’ as corporate sustainability standards
through the practice of following environmental responsibility in relation to
customers, co-workers and suppliers

• Offer solutions and know-how that help customers live a more sustainable life

• Use natural resources in a sustainable manner within the entire supply chain ;
careful waste management

• Minimize the carbon footprint from all IKEA related operations

• Be transparent to all stakeholders and communicate more to customers and co-

workers

• IKEA’s sustainability effort, successfully spans across all major supply chain
processes from Source to Make, Deliver and Return, which demonstrates long-
term management commitment.

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Best Practices at IKEA (RISK MANAGEMENT)

• Rigorous safety alarm procedures

• Every IKEA store and national Service Office has dedicated resources
working with safety alarm procedures, and they receive regular training.

• Proactive risk assessment and extensive testing

• Special focus on children’s safety

• Using the safest possible chemicals

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Managing People as a resource at IKEA

“Our co-workers are our most valuable resource – when they grow, IKEA
grows.”

• Values - IKEA embraces human rights and respect for the individual,
and the way we work is based on a strong and living company culture.

• Listening to our co-workers IKEA uses “VOICE” – a company-wide

survey – to monitor how coworkers view various aspects of their
employment at IKEA.

• Safe and healthy working conditions

• Keeping co-workers involved

• Dialogue with unions

• Supporting work-life balance

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 GREEN SCOR® at IKEA
o Ikea Sustainability Product Score Card Criteria:
-More is Less
-Renewable material
-Recycled Material
-Environmentally better material
-Separable and recyclable material
-Product quality
-Transport efficiency (number of products per container)
-Energy efficiency production
-Renewable energy production
-Raw material utilization at suppliers
-Product use (less use of energy and water and less waste in customers’ homes)
How does it all come together at IKEA?
 Conclusion
SCOR® is a process reference model that provides a language for communicating
among the supply-chain partners.
• A standard language helps management to focus on management
issues.
• As and industry standard, SCOR® helps management focus across
inter-company supply chains.

SCOR® is used to describe, measure and evaluate Supply-Chain configurations.

• Describe : Standard SCOR® process definitions allow virtually any supply-
chain to be configured.
• Measure : Standard SCOR® metrics enable measurement and benchmarking
of supply-chain performance.
• Evaluate : Supply-chain configurations may be evaluated to support
continuous improvement and strategic planning.

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