Got Milk? SCOR?

Got Milk? SCOR?

As I write this column, the first in a new series addressing various supply chain topics, it seems fitting to set the stage with one of the most revolutionary movements in supply chain thinking to occur in the past 20 years: the Supply Chain Operations Reference model, or SCOR. This model is a critical tool in your skill set toolbox!
 

Chris Oleksy

Unlike models that are more conceptual in nature, SCOR is a powerful process reference model that helps an organization understand and configure the mission’s critical elements in its business model. When used properly, this model becomes a part of an individual’s daily vocabulary and thought process. True adopters use it so regularly that they don’t need to think about applying the model—it happens naturally.  

The SCOR model was created in 1996 through an unprecedented team effort to develop a standard process reference model for supply chain management. Participants included 69 leading companies encompassing industry segments such as retail, pharmaceutical, chemical, logistics and medical device. The model was facilitated by two outstanding organizations, Advanced Manufacturing Research (AMR) and Pittiglio Rabin Todd & McGrath (PRTM).

A nonprofit supply chain council (SCC) and member companies maintain this model, and it is now a worldwide, cross-industry standard. More information is available at www.supply-chain.org, including course listings and user group sessions that can help you familiarize yourself with SCOR.

The SCOR model encompasses five major management processes: Plan, Source, Make, Deliver and Return. In a future column, I will elaborate on how other elements of the “Value Chain” synchronize with SCOR and provide real-life examples of how these processes have been used.

Following are high-level descriptors of the tenets of SCOR.

 

PLAN: Demand and Supply Planning, Management

Planning is the most underappreciated area of an organization’s supply chain process. Planning is like planting seeds for a harvest—if you don’t plan(t), you won’t harvest. In this management area, you balance resources (encompassing the four other management processes, Source/Make/Deliver/Return) with requirements for the entire supply chain. An upcoming column will elaborate on outsource planning, which more times than not is done reactively instead of proactively.

SOURCE: Sourcing of Stocked, Make to Order and Engineer to Order Product

In this realm, the organization manages its sourcing processes, which encompass areas such as supplier selection/performance, inventory, import/export considerations, contracts and strategic alliances. In a future column, I will elaborate on this area with special focus on sourcing alliances.

MAKE: Make to Stock, Make to Order, Engineer to Order Production Execution

This tenet focuses on facets such as production scheduling, performance management, manufacturing, regulatory compliance, work in process, production networks and data. One of my future articles will explain why “a picture speaks a thousand words.” Using SCOR can be powerful in color-coding your supply chain elements to identify where synergies can be gained or redundancies and excessive costs could be lurking in your production/supply network.

DELIVER: Transportation, Warehousing, Order Processing, Installation Management of Stocked Product, Make to Order and Engineer to Order Product

Deliver focuses on all areas of “order management”—eg, quoting, routing, customer inquiries, invoicing and delivery performance. A future column will focus on a frequently debated topic in this section: to own or not to own. When does it make sense to outsource or vertically own components of the delivery window?

RETURN: Return of Raw Materials or Finished Goods

Unfortunately, finished goods and effective raw materials must be returned from time to time. This section covers items such as returned goods authorization, receipt of product, returned inventory disposition and product condition identification.

How SCOR Works

Figure 1 shows a representation of these management processes. This Supply Chain Council graphic portrays the supply chain proposition of a “Chain of Chains.” This commonly is the most confusing portion of SCOR for many people—ie, realizing that every organization is a component of a chain of chains. It is extremely important that we recognize our proper place in the food chain.
 

Figure provided courtesy of the Supply Chain Council. SCOR is a registered trademark of the Supply Chain Council.

In future articles, I will use the chain of chains to discuss many topics; one of utmost importance is “Partner Management: Friend or Foe.” This is where understanding the importance of an outsourced supply chain’s delineation of responsibilities becomes very important. Misconfiguration of these responsibilities could spell doom for your supply chain.

I had the distinct honor and privilege of being one of the founding authors in the creation of SCOR and for nine years have effectively used it in my daily vocabulary at Dow Corning, Medtronic and ATEK.

This column’s description of the foundation of SCOR is only an attempt to whet your supply chain appetite, so that you can benefit from this knowledge in your day-to-day activities. Future articles will focus more in depth on each SCOR tenet and, from time to time, include input from colleagues who are experts in applying the supply chain thinking.

My ultimate goal in this series is to help you better understand how to implement supply chain thinking and take the mystery out of a topic that often confuses many.

Chris Oleksy is executive vice president and general manager of ATEK Companies, headquartered in Minneapolis, MN. Chris has more than 20 years of leadership and supply chain experience in the medical device and manufacturing industries. You can contact Chris with comments, ideas for column topics or requests for advice (for possible inclusion in a future column) on supply chain execution by emailing [email protected].