Beverage Industry

Scor Model: Supply Chain operations Reference Model

August 1, 2004

Scor Model: Supply Chain operations Reference Model

As you have been following my series of logistics articles, which I know you all have, there may have been an occasional point when you thought to yourself, “Like all of Ned’s articles, this subject is very interesting, but it really doesn’t apply to my particular situation.” Therefore, as I was on the beach last week knocking down a few cold b---s, I mean sodas, I was trying to think about a topic that could apply to anyone in any supply chain situation. I wracked my brain thinking through all past conferences, client meetings and phone calls I have had over the years to find a universal topic. And just like that, it hit me... standards and structure. It was one of those instances we have all experienced where the answer was so close I could not see it. Every conversation I engage in, it seems, has some level of standards and structure subplot. With all of this said, I feel that the SCOR Model, a globally accepted standard in the supply chain arena, was the logical choice to discuss with you.
Although I had heard of the SCOR Model on several occasions, I didn’t really understand SCOR or think about how to apply the SCOR Model to the beverage industry until I met Peter Bolstorff. Peter is the president and chief executive officer of SCE Ltd., a supply chain education consulting firm, and one of the nation’s leading experts on the SCOR Model. Peter has undertaken numerous client assignments to train organizations on its application. Until I was exposed to the components and application of the SCOR Model by Peter, I was of the mindset that supply chain improvement initiatives should always begin with a thorough logistics network analysis, as described in my August 2003 article, “First and Foremost, Evaluate Your Distribution Network.” The logic described in that article is still fundamentally sound if an organization has control of its existing supply chain. Often, however, this is not the case. If an organization does not have control of its supply chain or the support from senior management to fund supply chain improvement initiatives, then the place to begin is with a SCOR Model. Here are the highlights of the SCOR Model.
What is the SCOR Model?
The SCOR Model is a process reference model that the Supply Chain Council developed and endorsed as the cross-industry standard for supply chain management.
Approximately 70 of the world’s leading manufacturing companies participated in SCOR’s development. SCOR provides a glossary of definitions, metrics and process elements. It defines a supply chain as the integrated processes of Plan, Source, Make and Deliver, spanning your suppliers’ supplier to your customers’ customer, aligned with operational strategy, material, work and information flows.
The creation of public application of the SCOR Model followed in the form of the SCOR Project Road Map. The SCOR Project Road Map has four process elements, all of which exist in beverage organizations. Process elements include:
Plan: Demand/supply planning elements of supply resources, demand requirements, plan inventory, distribution require- ments, production, material and rough-cut capacity for all prod - ucts and all channels.
Source: Sourcing infrastructure and material acquisition.
Make: Production and execution elements.
Deliver: Order management, warehouse management and transportation/installation com- ponents.
A fifth process element, Return, which by circumstance is critical to beverage companies using the direct-store-delivery go to market strategy, was added later.
The roadmap is divided into four segments:
Analyze your basis of competition,  which focuses on operations strat- egy.
Configure your supply chain material flow.
Align performance levels, practices  and systems of your information workflow.
Implement the supply chain changes based on the design.
What is the value of the SCOR Model?
As a process reference model, SCOR combines the well-known concepts of business process reengineering with benchmarking, best practices and process measurement into a “one-stop shopping” framework for executing a supply chain project. It is a reliable methodology with predictable cost/benefits such as:
-Two to six times return on invest- ment within 12 months
-Full leverage of capital investment  in systems
-Creation of an investment road map
-Alignment of business require- ments with central functions
Self-funding of technology invest- ments
But in my mind, the most important aspect is the ability to measure strategy. Some companies are good at creating strategy, but very few are good at measuring the success or failure of strategy. Measuring strategy, of course, implies that you develop a strategy and follow it. I have participated in many projects over the years that have a component in their strategy for measuring success or failure. However, rarely did someone actually conduct such a measurement. That is one of the primary values of the SCOR Model — it’s an effective tool for translating strategy into supply chain performance goals. It helps prioritize supply chain needs, drives implementation and links performance metrics to the profit and loss statement.
How will the SCOR Model improve supply chain performance?
The SCOR Model is an extremely effective tool for translating strategy into supply chain performance goals. It helps prioritize supply chain needs, drives implementation and accelerates ROI by linking performance metrics to the profit and loss statement. SCOR helps identify and fix current issues that are vital to a company’s strategic goals. By following the SCOR project road map, you will identify disconnects in your supply chain planning process that you must resolve through supply chain optimization methods.
Standards, benchmarking, best practices, continuous improvement, synergy, collaboration … the list goes on and on. Companies talk about performance improvement initiatives across many fronts with a vehicle to get them where they want to go. Developing a SCOR Model is a vehicle to attack many fronts and provide the foundation to achieve supply chain efficiency. BI