Optimise your supply chain with the SCOR model

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

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

So, adopting a supply chain process reference model such as the SCOR model is a must for today's companies that want 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? Find out in this article.

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What is the SCOR model?

SCOR model: definition

The SCOR model, or SCOR method, is a reference model for analysing, evaluating and optimising 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 structured, describes the commercial activities associated with all the phases involved in satisfying the customer's requests and needs:

• orders
• complaints
• requests for information, etc.

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

• the food industry
• construction
• construction, etc.

SCOR model: objectives

The SCOR model divides the supply chain into a number of typical business processes and ideal process categories. Thanks to its standardised structure, it is possible for companies to analyse all flows of information, money and goods, and thus reap a number of benefits:

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

The SCOR model therefore has several distinct objectives :

• To establish a functional description of an organisation's supply chain,
• To build a standardised benchmark using 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 organised 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 are examined, taking into account a number of factors:

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

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

Supply (source)

Next, as the name suggests, the organisation will source and purchase goods and services, taking into account a number of specific factors:

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

Manufacture (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 the planning of the week's supply of market-ready products.

Delivery

This stage involves managing contracts and all operational processes relating to the delivery of finished goods and services, such as :

• transport
• storage
• distribution, etc.

Returns

Here the company must pay close attention to all the processes linked to customer service, but also to the delivery service in relation to :

• return procedures
• how the goods are disposed of
• 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. In this way, companies will be able to design a catalogue of best practices independently of their specialisation. 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 using KPIs.

Execution

The execution process will influence the state of products 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" part concerns all the processes that prepare information and services between the partners in the supply chain. This is done by analysing and evaluating the various planning and performance data.

Design level

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

• costs
• capacity controls
• business planning, etc.

Finally, the effective determination of the logistical flows of the different processes is the first step towards improving the efficiency and optimisation of the supply chain.

Application of the SCOR model to the supply chain

1 - Analysis of competitive positioning

The first strategic stage begins with an analysis of competitive positioning. The company must :

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

2 - Defining an operational distribution target

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

3 - Identifying chain breaks

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

4 - Putting the optimised chain into production

The final stage in implementing the SCOR model involves developing, testing and putting the optimised supply chain into production. It is also important for the company to take into account the various organisational 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 supply process. It also encourages dialogue and customer relations, and improves the monitoring of your supply chain thanks to dashboards and reports that are updated in real time.

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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 your supply.

Thanks to a number of clearly defined processes and stages, it harmonises your logistics organisation, reduces the risk of chain breaks and guarantees you concrete results.

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