Supply Chain Operations Reference Model

In our last article we have introduced the term supply chain, its elements, and types of lows. Also we have addressed the importance of having a supply chain model in any business. In this article, we are going to discuss a brief overview of supply chain operations reference (acronym SCOR Model).

Supply chain operations reference model can be described as a management tool defines the mandatory business processes, and how to improve them, to satisfy a customer’s demands. SCOR model was first established in 1996 by some world leading organizations and was recognized by the Supply Chain Council. SCOR model was introduced as the standard strategy, process improvement, and performance management investigative instruments for supply chain management to be adopted across the industry.

Supply chain operations reference model’s structure focuses on five areas of the supply chain: plan, source, make, deliver, and return. Along the supply chain, these areas are continuously repeating for all supply chain entities starting from the supplier’s supplier to the customer’s customer. Explaining SCOR model’s structure areas in details,

·         Plan: including supply and demand planning and balancing between organization’s limited resources and customers’ requirements. Also, selecting standards to measure the supply chain efficiency and provide ways to improve. Furthermore, aligning supply chain plan with the organization’s financial plan to achieve maximum profit.  

·         Source: including the acquisition of raw materials, goods, and services needed to meet planned and actual customer’s demand. Besides, it includes the full process of procurement, vendor management, and material management.

·         Make: including the production process of transforming raw materials into finished product to meet planned and actual customer’s demand. Moreover, it includes determination of production environment, i.e. make to stock, make to order, or engineered to order, process types, equipment and facilities

·         Deliver: including the full cycle of providing the finished products to customer as per planned demand. Additionally, this includes order management, warehousing, distribution, and transportation management.

·         Return: including the returns from customer for any reason, i.e. defective products, and returned containers and packages. Furthermore including the business rules management and regulatory requirements.

The SCOR model has recognized to assist companies to detect its supply chain problems. It is a multi-level analysis that goes into many levels of details. It explains how many times the five areas of supply chain operations reference model are continuously repeating between entities of supply chain. Every area gains its importance from being critical in the process of delivering the resources from level to level.