Process Model Building Within The Supply Chain (SCOR Model
PROCESS MODEL BUILDING WITHIN THE SUPPLY CHAIN
Greg Peck, StreamlineSCM
This paper presents background and application information of a model that has been developed within an area referred to as the
“Supply Chain”. The idea of creating a model was originally created by a group at MIT called the Integrated Roundtable. One
conclusion was that in order for the various disciplines that make up the Supply Chain to come together and create synergy in the
Enterprise, it would require a working model. Such a model would be built using agreed upon terminology and definitions that
identify inputs, processes and outputs within the Enterprise. In essence, the model would become a methodology that would be used
within the world of the Supply Chain.
The most significant contribution coming from the Integrated Roundtable was the conclusion that in order to successfully integrate
various supply chain disciplines it required a working model. This decision would put the group on the path to building a unified,
deductive methodology (cross functional) rather than an individual, inductive approach (multi functional). A unified approach allows
one to focus on the “interrelatedness” of the various disciplines. “The deductive and unified aspects are related in the following way.
Propositions are deduced from models and are then combined in ways that produce further deduced propositions. Particular cases or
particular applications are then given names. Depending on the situation, either additional propositions are generated or additional and
more specialized models are constructed. This process continues until a substantial scope … is encompassed”.1
This author believes, without supporting documentation, that the foundation of the model has its roots in General Systems Theory
since many contributors to General Systems Theory come from MIT. This belief is supported by the fact that the foundations for
building a unified model using General Systems Theory concepts, employ an INPUT-PROCESS-OUTPUT approach. In 1995, from
the Integrated Roundtable, emerged what is known today as the Supply Chain Council and the SCOR-model that was instituted as its
primary building block.
The present Version 5.0 of the SCOR-model is the fifth major revision since the Model’s introduction in 1996.2 This version of the
Model extends the Return processes that were introduced in Version 4.0. Additionally, this Model release begins the introduction of
eBusiness best practice and begins a major restructuring of the metrics that is to be continued in updated versions.
The Model is the product of the Supply-Chain Council (SCC), an independent, not-for-profit, global corporation with membership
open to all companies and organizations interested in applying and advancing the state-of-the-art in supply-chain management systems
and practices. The SCC was organized in 1996 by Pittiglio Rabin Todd & McGrath (PRTM) and AMR Research, and initially
included 69 voluntary member companies. At the time of this release, the Council has approximately 750 members worldwide and has
established international chapters in Europe, Japan, Korea, Latin America, Australia/New Zealand and Southeast Asia with additional
requests for regional chapters pending. The majority of the SCC’s members are practitioners and represents a broad cross-section of
industries, including manufacturers, distributors, and retailers. Equally important to the Council and the advancement of the SCOR-
model are the technology suppliers and implementers, the academicians, and the government organizations that participate in Council
activities and the development and maintenance of the Model.
The Supply-Chain Council is interested in providing the widest possible dissemination of the SCOR-model. The wide-spread use of
the Model results in better customer-supplier relationships, software systems that can better support members through the use of
common measurements and terms, and the ability to rapidly recognize and adopt best practice no matter where it originates. SCC
requests that all who use the SCOR-model provide attribution to the Supply-Chain Council. Additionally, members are encouraged to
monitor the members section of the SCC website to ensure that they are using the latest version of SCOR.
A major challenge facing the Enterprise, in its ability to implement SCOR, is reducing the existing power structure within empire or
silo walls. By its nature the SCOR-model is interdisciplinary in that it brings together a number of discipline areas that have not
commonly shared in business processes. Each discipline brings its own perceptions, biases and attitudes of its own importance to the
Enterprise. SCOR establishes a new framework for the Enterprise in which to operate and requires a significant amount of
communication between these areas to be successful. A great deal emphasis in the initial implementation procedures for SCOR is
aimed at developing a strategy for bringing SCOR into the Enterprise that includes shedding silo walls. The concept of Collaboration
receives a great deal of attention within the Supply Chain Council community because of the basic necessity to communicate across
different areas. Effective implementation of the SCOR-model requires that it is applied by taking advantage of the tools designed for
planning, process analysis, execution and collaboration.
The Enterprise must recognize the new wave of process management as a business asset, learn the new cultures and methodologies for
modeling and begin to leverage process management as it emerges.3 SCOR is a new paradigm that establishes a model identifying a
company’s complex internal and external applications in order to understand their present state of existence. The SCOR-model has
been applied in a number of businesses throughout the world with success. The following are a couple of cases of SCOR execution.
Hewlett-Packard/Compaq Computer 4
At Compaq Computer (now Hewlett-Packard/Compaq) SCOR is considered to be a foundation for Strategy Management, and at
Compaq was called Accelerated Enterprise Operations Strategy. After the merger of Compaq Computer with Hewlett Packard SCOR
became a tool to assist them in identifying processes that required a high degree of attention in bringing the two companies together.
The model is used for Strategy Management in the areas of Process Modeling, Process Measurement, Simulation, Benchmarking, and
creation of Libraries.
Process Modeling: SCOR facilitates the description of the existing processes and linkage to organizations and systems.
Process Measurement: SCOR identifies the process performance by measurement or simulation that leads to identification of gaps
Simulation: SCOR facilitates the identification of root causes for performance gaps and analyzing the impact of a proposed change
that is metrics driven.
Benchmarking: SCOR facilitates the ability to perform comparison to internal and external entities on relevant processes.
Libraries: A repository for similar processes and best practices whereby sub-processes in the library are available for re-usage in
solution modeling. These can be propositions that come from deduction of observations based on previous deductions.
Recently, Compaq computer completed an extension of the model integrating the design chain whereby product design, sales
Ford Motor Company 5
Ford Motor Company employed SCOR under its existing program called PS&L (Parts, Supply and Logistics) to design a system that
more clearly defines forecasting, inventory planning, electronic supplier communication and management. Ford’s supply chain is
extremely complex with hundreds of thousands of SKU parts, a vehicle base in the millions of models from past years, thousands of
suppliers and dealers, and plans to increase the network. Within the functional silo areas of purchasing, supply, distribution and
customer fulfillment millions of bits of data exist that are not integrated for decision making purposes. Ford’s primary purpose in
implementing SCOR was to break down business barriers and unify business operations thus creating greater operational efficiency
through decision making.
Ford identified a series of business and technology challenges for the company before implementing SCOR:
• Poor updating of analytical data, was being updated weekly at best
• Highly reactive: focus on backorders and blame assessment
• High amount of processing time and forecast error led to high inventory for safety
• Increasing complex supply chain of external partners, sources and non traditional channels
• Different cultures, processes and practices at each node
• Metrics are out of alignment and data is not common
• Material expedition is very costly at headquarters
• Little ability to prioritize actions that are critical for decision making
• Technology has improved some business efficiency, but many operational problems still exist
• A home grown ERP system that does little to integrate information to improve operations
• Past inventory information are spread across multiple depots
• No unified platform for analysis, alerting, and collaboration
A series of requirements were established for SCOR to solve the above challenges that included culture change, improved
predictability, better prioritization of processes concerning parts and inventory, enhanced metric analysis and reporting, effective
management of new and current operations, more clearly identify disconnects and improved support.
Expected results from integrating the existing PS&L into the supply chain using SCOR consisted of the following:
• Delivery Performance 16% to 28% improvement
• Inventory Reduction 25% to 60% improvement
• Fulfillment Cycle Time 30% to 50% improvement
• Forecast Accuracy 25% to 80% improvement
• Overall Productivity and Supply Chain Improvement 10% to 16% improvement
• Fill Rates 20% to 30% improvement
The resulting ROI for Ford in its SCOR execution were very favorable. In the Supply Chain performance, daily metrics and trending
link planning is done on every SKU, everyday; variability of inventory is monitored, altered and managed; and the system
dynamically responds to demand fluctuations. This has led to reduced inventories; improved customer service levels; less overtime
and expediting; and higher profit margins. The overall Business Value has resulted in, a one time and recurring inventory reductions; a
20% reduction in open back orders; improved customer satisfaction; a 30% reduction in total cycle time; 25% to 30% reduction in
forecast inaccuracies. In six months the ROI was calculated to be five times the cost of the system.
In its present form, the Model is presented to its members in a word document listing the input-output process elements, best practices
and metrics. In order to effectively use and implement the Model there is an enormous amount of time and resources that need to be
allocated by the company. One of the reasons for such a large investment is that there is difficulty in applying the model to a
company’s operation from the text document. Tom Mercer, of StreamlineSCM, recognized the complexity in the applying the model
to an operation and proceeded to shift the model from a text document into a relational database. In so doing, the interrelationship of
the variables could be more easily applied to a specific application. Also, the database assisted in identifying redundant and
disconnected variables located in the word document and established a means to create a visual representation of the model on a single
page chart, similar to the Periodic Table.
What has emerged from the exercise of turning SCOR into a relational database is a solution called Strategia that consists of an
application database and wall chart of the SCOR-model. In the structure of an application database it is much easier to identify and
maintain the input-output process elements, best practices and metrics of the SCOR-model. The database gives the user the ability to
more easily apply SCOR to his operational application and generate reports and visual diagrams in the form of metrics and
benchmarking. Also, building the SCOR-model in a relational database allows for the Model to be easily extended beyond the
boundaries of the supply chain.
Presently, the SCOR-model is undergoing a transformation to satisfy a strong desire to integrate the “Design Chain” including Product
Development Management (PDM) and Product Lifecycle Management (PLM) processes. By extending the Model into the design
chain, it will become evident that processes from other discipline areas such as Sales, Marketing, Support, Accounting and Human
Resources will become a necessity. StreamlineSCM is working in conjunction with Dassault Systemes, a PLM company, utilizing the
framework and taxonomy of the SCOR-model to build what it we are calling the Enterprise Transaction Model (ETM). The Enterprise
Transaction Model will become a more inclusive process model allowing more extensive analysis of the overall transaction elements
throughout the Enterprise.
At the macro level the ETM considers primary discipline areas of Supply Chain Management (SCM), Product Lifecycle Management
(PLM), Customer Relations Management (CRM), and Enterprise Resource Planning (ERP) that require integration into the Model.
Each of these areas has overlapping and separate business processes that can be brought into practical applications.
Kuhn, Alfred, The Logic of Social Systems. Josey Bass Publishers. San Francisco, 1974
Supply-Chain Operations Council Overview, 2001.
Francis, Joe. Presentation of Compaq Computer at Supply Chain North American Conference, 2002.
Merkle, Roger. Presentation of Ford Motor Company at Supply Chain North America Conference, 2002.