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Background documentation The SCOR Model 

APO KPIs were developed according to the Supply Chain Operational Reference (SCOR) model, the standard reference process model developed by the Supply Chain Council (SCC) that has become the cross-industry standard for supply chain management.

The SCOR model depicts the basic supply chain, ranging from supplier's supplier to customer's customer, as a series of linked source -> make -> deliver execution processes managed by a series of planning processes.

The SCOR Model's Supply Chain

This graphic is explained in the accompanying text

Ó 1998 Supply Chain Council

The SCOR model describes:

·  Standard management processes

·  Relationships between standard processes

·  Standard metrics to measure process performance

·  Management practices that produce best-in-class performance

Performance and diagnostic metrics together drive performance improvement. To evaluate supply chain performance, the SCOR model advocates a set of measurements comprising a combination of the following metrics:

·  Cycle time (production cycle and cash-to-cash cycle)

·  Cost (cost per shipment and cost per warehouse pick)

·  Service and quality (on-time shipments, defective products)

·  Asset (inventories)

Example of SCOR Metrics

The following table defines the top level SCOR processes and supplies the corresponding metrics used to measure performance in each area.

Level 1 SCOR Management Processes and Equivalent Metrics

 

SCOR Process

Definition

Functions

Metrics (KPIs)

Plan

Processes that balance aggregate demand and supply to develop a course of action which best meets established business rules

Demand/supply planning:

Assess supply (categorization)

Prioritize demand

Plan inventory, distribution, production, material and capacity for all products and channels

Manage planning infrastructure:

Decide to make or buy

Configure supply chain

Plan long-term capacity and resources

Phase products in/out

Manage product line

Demand and shipment forecast accuracy

Adherence to plans

Inventory turnover

Planning cycle time

Source

Processes that procure goods and services to meet planned or actual demand

Material acquisition:

Obtain, receive inspect, hold, issue material

Manage sourcing infrastructure:

Manage vendor contracts, payments, certification and feedback

Control sourcing quality

Engineer components

 

 

Vendor lead times

Materials quality

Materials inventories

Make

Processes that transform goods to a finished state to meet planned or actual demand

Production Execution:

Request/receive material

Manufacture/test product

Package/release product

Manage make infrastructure:

Manage facilities/equipment

Track production status

Control production quality

Schedule operations

Plan short-term capacity

 

Production costs

Product quality

Changeover items

Capacity utilization

Deliver

 

Processes that provide finished goods and services to meet planned or actual demand

 

Order management

Warehouse management

Transportation management

Distribution management

On-time shipment

On-time delivery

Order fulfillment time

Returns

 

Benchmarking Techniques

Performance targets are set using one of the following methods, or a combination:

·  Historical benchmarking is the most common and easiest method to implement since the targets are based on historical baseline levels. Baseline measures attempt to establish the current performance level of  a company, product, process, and so on, and should be established before improvement activities are initiated. For example, a company that currently has an order fill rate of 90% might set its performance target at 95%.

·  Internal benchmarking is the most popular approach. In this method, comparable departments, products, facilities are measured within a company, with a separate set of metrics being used for warehousing, manufacturing, customer service, and so on. The best-of-class is determined in each area and their metrics are used as a basis for establishing performance targets for the others.

·  External benchmarking is the most difficult method since it involves collecting performance data from other companies. This method is usually accomplished with external professional help.

·  Theoretical target-setting involves a company-wide analysis to determine how supply chain performance could theoretically be improved. The performance targets are based on estimates generated during the analysis. This method is far from easy to perform because only a very thorough analysis can determine how a decision will impact various aspects of the supply chain. However, this method is the surest way of developing a balanced set of metrics.