SCORing the Supply ChainAs businesses increasingly search for the best ways to maximise supply chain performance, important answers may lie in a unique model called SCOR. In the relentless search for ever improving returns on investment and market competitiveness, some of the world’s biggest corporations are applying a model that is known as SCOR — the Supply-Chain Operations Reference model — to maximise supply chain efficiency.
Siemens, Hewlett Packard, Intel, BASF, and Coca-Cola all use the SCOR model, because they know survival in today’s fierce markets demands detailed scrutiny and reengineering of every link in the supply chain — from the supplier’s supplier to the customer’s customer. Recognising the strength of the model, IBS has developed a stand alone software product to manage and analyse supply chain performance based on SCOR — IBS Business Intelligence — which has won the Supply Chain Council’s European award for Development Excellence.
This is SCOR
So what is the SCOR-model? And why should companies — not just the multi-nationals but any company with a significant supply chain — consider applying the SCOR model? According to the M.D. of Supply-Chain Council Europe (SCC), Jo Vegheim, it is the only tool available capable of generating the overview necessary to maximise supply chain efficiency. It provides, what Vegheim calls the helicopter view, a way of visualising the big picture.
“To reduce the SCOR-model down to its very essence,” says Vegheim, “we can say that it is a supply chain diagnostic tool that allows companies to examine and measure supply chain processes, determine where weak links exist, and identify how to make improvements.”
He continues:
“Crucially, SCOR creates a common framework by creating a common language of standardised metrics and mapping procedures for analysis.”
Comparisons by industry
SCOR makes it possible to make supply chain performance comparisons between companies by industry. It also provides mapping processes to make more effective relationships between partners, suppliers and customers: it is a tool for revitalising the supply chain internally and externally.
“It’s a key source of business intelligence, which is so vital to today’s business mix,” he says.
He says companies deploying SCOR have dramatically cut costs and boosted returns. Using the SCOR-model, Siemens Medical, for example, has been able to cut costs by 30 percent, reduce inventory by 60 percent, and cut order lead-times from 22 weeks to just two. “Costs down — returns, efficiency and productivity up; these are the big outcomes from successful implementation of the model,” says Vegheim — an enticing business formula.
Five key processes
The SCOR model is organised around five key management processes: Plan, Source, Make, Deliver and Return. Each of these processes is examined on three levels of detail. The first level is strategic, what the company wants from each process area. The second level maps out exactly what is currently happening within each process area. The third level examines the operational level of the process areas, the area where execution can be altered. As Vegheim says, it is about looking at what is, how it should be and how to get there.
Mapping weak links
SCOR doesn’t tell you what changes to make but it maps out where the weak links are. It is then necessary to apply appropriate execution adjustments specific to the particular chain.
Vegheim says that successful supply chain management also means ongoing monitoring at a very detailed level. “It’s about consistent scrutiny, getting real time information so you can react to less than optimal performance. It means getting quality business intelligence.”
“Companies that will be successful in the long run are those that realise the answer lies in maximising supply chain efficiency. And while a tool like SCOR is powerful, you must also employ the right people. Nokia is a company that understands these principles well.”
Recently, the SCC awarded IBS the European Development Excellence award for the design and launch of IBS Business Intelligence, a software application based on SCOR. Vegheim says it is “an excellent application for implementing SCOR, a welcome development.
“It’s a big advance in technology. The application provides detailed real time information — that is a vital ingredient for supply chain management and monitoring. Companies need business intelligence, and supply chain solutions providing this will be a trend in the next five years.”
Text: Davis Passey Photo: Erik Norrud
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