Supply Chain Management involves coordinating, scheduling and controlling procurement, production, inventories and deliveries of products and services to customers. Improving efficiencies in supply chain management improves customer service, reduces costs and inventory cycle times.
In 1996, Pittiglio Rabin Todd and McGrath and AMR Research developed SCOR (supply chain operations reference) model to analyze and describe all the aspects of supply chain processes. SCOR helps companies to address supply chain issues, measure performance, identify performance improvement objectives, and power the development of SCM software. SCOR includes all the supply chain metrics, the formulae associated with the metrics and a reference to best practices and their associated technology.
There are three levels in the SCOR model, they are
SCOR Level 1:
At this level a company makes basic strategic decisions regarding its operation in the areas like delivery performance, order fulfillment performance, order fulfillment lead time, perfect order fulfillment, supply chain response time, production flexibility, total supply chain management cost Value added productivity, warranty cost or returns processing, inventory days of supply and asset turns.
Companies need to decide on which of the above area they need to focus to improve their supply chain efficiencies.
SCOR Level 2:
This step defines how the supply chain type is configured and the first step in SCOR is to create a physical layout of the supply chain and after configuring the supply chain, companies measure their supply chain metrics and work to achieve the industry’s best practice standards.
SCOR Level 3:
This step gives the fine grained details that allow the companies to tune supply chain processes.
Companies by using SCOR have achieved significant improvements in supply chain efficiencies and they could cut down the number of supply chain partners. SCOR has helped them in identifying inefficiencies and configure the supply chain. The SCOR model has been undergoing continuous revision to keep pace with the changing industry requirements and practices.