The document discusses the Supply Chain Operations Reference (SCOR) model. It was developed by the Supply Chain Council (SCC) to help standardize supply chain processes and enable effective communication. The SCOR model provides a framework to analyze supply chain performance, identify best practices, and benchmark against other companies. It covers key supply chain processes like plan, source, make, deliver, and return. The model has four levels that progressively break down processes and defines standard metrics to measure performance. Companies can use SCOR to evaluate their supply chains, improve operations, and align skills/tools with strategies. IKEA uses the SCOR model to gain efficiencies in areas like inventory planning, sourcing, manufacturing, and logistics.

1. 1

2. 2

3. 3

4. Objective Of SCC through SCOR
To develop a standard supply-chain process reference model that
enables effective communication and integration among the supply
chain partners, by
- Using standard terminology to better communicate and
learn the supply chain issues
-Using standard metrics to compare , benchmark and
measure their performances
that is applicable in every type of industry
2 Boston-based consulting firms:
Pit t iglio R abin Todd & McGrat h & A MR R esearch
d e c i d e d t o d e v e l o p a s t a n d a r d a p p r o a c h t o a n a l y z i n g a n d
d e s c r i b i n g a l l t h e a s p e c t s o f s u p p l y c h a i n p r o c e s s e s .
SC C f ormed – Independent Global N on - Pr ofit Or ganiz ation
founded in 1 9 9 6 by a c ons or tium of 69 member volunteer
or ganiz ations ; now c los e to 1000
SCOR Framework developed by the Supply Chain
Council (SCC)
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5. 5
SCOR-A Process Reference Model
Level 1- Process Type
Level 2- Configuration Level
Level 3- Process Element Level
Level 4- Implement Level

6. R a p i d A s s e s s m e n t o f S u p p l y C h a i n P e r f o r m a n c e
C l e a r i d e n t i f i c a t i o n o f p e r f o r m a n c e g a p s
E f f i c i e n t s u p p l y c h a i n n e t w o r k r e d e s i g n a n d o p t i m i z a t i o n
E n h a n c e d o p e r a t i o n a l c o n t r o l
S t r e a m l i n e d m a n a g e m e n t r e p o r t i n g & o r g a n i z a t i o n a l s t r u c t u r e
A l i g n e d s u p p l y c h a i n t e a m s k i l l s w i t h s t r a t e g i c o b j e c t i v e s
D e t a i l e d g a m e p l a n f o r l a u n c h i n g n e w b u s i n e s s e s & p r o d u c t s
S y s t e m a t i c s u p p l y c h a i n m e r g e r s c a p t u r i n g p r o j e c t e d s a v i n g s
6

7. Superior Customer
Service
Cost Control
Planning & Risk
ManagementSupplier/ Partner
Relationship
Management
Talent
SCOR DELIVERS VALUE ! 7

8. Characterize the
management
practices and
software
solutions that
result in “best-in-
class”
performance
Quantify the
operational
performance of
similar
companies and
establish internal
targets based on
“best-in-class”
results
Capture the “as-
is” state of a
process and
derive the
desired “to-be”
future state
How SCOR Works? It’sall aboutintegration& buildingrelationships
 Integrates Business Process Reengineering, Benchmarking, and Process Measurement into a cross-functional
framework.
 SCOR is one of the best known guidelines used by companies to examine the configuration of their supply
chains, identify and measure metrics in the chain, determine weak links and achieve best practices
Benchmarking
Best Practices
Analysis Process Reference
Model
Business Process
Reengineering
Capture the “as-is”
state of a process and
derive the desired
“to-be” future state
Quantify the
operational
performance of similar
companies and
establish internal
targets based on “best-
in-class” results
Characterize the
management
practices and
software solutions
that result in “best-
in-class”
performance
8

9. SCOR MODEL – SCOPE/
BOUNDARIESSCORcovers:
• All customer interactions, from order entrythroughpaid invoice.
• All product (physical material and service) transactions, from supplier’s supplier to customer’s customer, including
equipment, supplies, spare parts, bulk product, software, etc.
• All marketinteractions, from the understanding of aggregate demand to the fulfillment of each order
SCORdoes not attempt to describe every businessprocessoractivity, including:
• Sales and marketing(demand generation)
• Research and technology development
• Product development
• Some elements of post-delivery customer support
9

10. SCORcontains 4P’s:
Performance Measurement: Standardattributes & metrics tomeasure
process performance
Processes: Standarddescriptions ofmanagement processes
anda framework ofprocess relationships
Practices: Management practices that produce best-in-class
performance
People:Training and skills requirements aligned with processes, best
practices, andmetrics
E n a b l e s c o m p a n i e s t o :
 E v a l u a t e a n d c o m p a r e t h e i r p e r f o r m a n c e s w i t h o t h e r c o m p a n i e s
e f f e c t i v e l y ( b e n c h m a r k & a d o p t b e s t i n - c l a s s p r a c t i c e s )
 I d e n t i f y a n d p u r s u e s p e c i f i c c o m p e t i t i v e a d v a n t a g e s
 I d e n t i f y s o f t w a r e t o o l s b e s t s u i t e d t o t h e i r s p e c i f i c p r o c e s s
r e q u i r e m e n t s
PROCESSESPERFORMANCE
MEASUREMENT
PRACTICES PEOPLE
10

11. A metric is a standard for measurement of the performance of a process. SCOR
metrics are diagnostic metrics. SCOR recognizes three levels of predefined metrics:
• LEVEL 1 metrics are diagnostics for the overall health of the supply chain. These
metrics are also known as strategic metrics and key performance indicators (KPIs).
Benchmarking level 1 metrics helps establish realistic targets that support strategic
objectives.
• LEVEL 2 metrics serve as diagnostics for the level 1 metrics. The diagnostic
relationship helps to identify the root cause or causes of a performance gap for a level
1 metric.
• LEVEL 3 metrics serve as diagnostics for level 2 metrics.
The analysis of performance of metrics from level 1 through 3 is referred to as
decomposition.
Many metrics in the SCOR model are hierarchical, just as the process elements are
hierarchical. Decomposition helps identify the processes that need to be studied
further. (Processes are linked to level 1 and level 2 metrics.)
Supply Chain Council recommends that supply chain scorecards contain at least
one metric for each performance attribute to ensure balanced decision making and
governance.
Performance Metrics
11

12. Performance Attributes
Relationship Between Attributes And Metrics
12

13. Performance Attributes
Relationship Between Attributes And Metrics
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14. Return
Level
Description Schematic Comments
Top Level
(Process Types)
Level 1 defines the scope and content for the
Supply chain Operations Reference-model. Here
basis of competition performance targets are set.Source Make Deliver
Plan
1
#
Configuration Level
(Process
Categories)
A company’s supply chain can be “configured-
to-order” at Level 2 from the core “process
categories.” Companies implement their
operations strategy through the configuration
they choose for their supply chain.
2
Process Element
Level (Decompose
Processes)
Level 3 defines a company’s ability to compete
successfully in its chosen markets, and consists
of:
Process element definitions
Process element information inputs, and outputs
Process performance metrics
Best practices, where applicable
System capabilities required to support best
practices
Systems/tools
3
P1.1
Identify, Prioritize, and Aggregate
Supply-Chain Requirements
P1.2
Identify, Assess, and Aggregate
Supply-Chain Requirements
P1.3
Balance Production Resources with
Supply-Chain Requirements
P1.4
Establish and
Communicate
Supply-Chain Plans
Implementation
Level (Decompose
Process Elements)
4
Not
in Scope
Return
Three Levels of Process Detail
Companies implement specific supply-chain
management practices at this level. Level 4
defines practices to achieve competitive
advantage and to adapt to changing business
conditions.
SupplyChainOperationsReferenceModel
SCOR: PROCESSES
5
26
185
14

15. BASIC BUSINESS PROCESSES
15

16. PLAN(P)
(Processesthat
balance aggregate
demand and supply)
• Forecasting
• SensitivityAnalysis
• Balanceresourceswith
requirements
• Establish/communicate
plansforthewhole
supply chain
SOURCE(S)
(Processesthat procure
goods and services to
meet planned or actual
demand)
• Scheduledeliveries(receive,
verify,transfer)
MAKE(M)
(Processesthat
transform product
toa finished state
tomeetplanned or
actual demand)
• Scheduleproduction
DELIVER(D)
(Processesthatprovide finished
goodsand servicesto meet
plannedor actualdemand,
typically includingorder
management,transportation
management,anddistribution
management)
Warehousemanagementfrom
receivingandpickingproducttoload
andshipproduct.
LEVEL 1 -KEY PROCESSES EXPLAINED…..
RETURN (R) (Processes associated with returning or receiving returned
products)– ReverseLogistics
ManageReturnbusiness rules 16

17. LEVEL 2 - PROCESS TYPES AND DEFINITIONS
PLANNING
A process that aligns expected resourcesto meet expected demand requirements.
Balance aggregated demand and supply
Consider consistent planning horizon
(Generally) occurat regular,periodic intervals
EXECUTION
A process triggered by planned or actual demand that changesthe state of material goods.
Scheduling/sequencing
Transformingproduct
Moving product to the next process
ENABLE
A process that prepares, maintains, or manages information orrelationships on which planningand
execution processes rely
17

18. Level 2 Process Categories
 P 1 : P l a n S u p p l y C h a i n
 P 2 - P 5 : P l a n S C O R P r o c e s s
 S 1 : S o u r c e S t o c k e d P r o d u c t
 S 3 : S o u r c e E n g i n e e r - t o - O r d e r P r o d u c t
 S 2 : S o u r c e M a k e - t o - O r d e r P r o d u c t
 M 1 : M a k e - t o - S t o c k
 M 2 : M a k e - t o - O r d e r
 M 3 : E n g i n e e r - t o - O r d e r
 D 1 : D e l i v e r S t o c k e d P r o d u c t
 D 2 : D e l i v e r M a k e - t o - O r d e r P r o d u c t
 D 3 : D e l i v e r E n g i n e e r - t o - O r d e r
P r o d u c t
 D 4 : D e l i v e r R e t a i l P r o d u c t
 S R 1 / D R 1 : R e t u r n D e f e c t i v e P r o d u c t ( S o u r c e R e t u r n / D e l i v e r R e t u r n )
 S R 2 : S o u r c e R e t u r n M R O P r o d u c t ( M a i n t e n a n c e , R e p a i r a n d O v e r h a u l )
 D R 2 : D e l i v e r R e t u r n M R O P r o d u c t
 S R 3 / D R 3 : R e t u r n E x c e s s P r o d u c t ( S o u r c e R e t u r n / D e l i v e r R e t u r n )
 E P , E S , E M , E D , E R : E n a b l e c o r r e s p o n d i n g S C O R P r o c e s s e s 18

19. 19

20. 20

21. SCOR:BestPractices
21

22. 1. SCOR Supply Chain Risk Management
The systematic identification, assessment, and mitigation of potential disruptions (both within and
outside the supply chain) in logistics networks with the objective toreduce their negative impact on the
logistics network’s performance.
T h e R e l a t e d
S C O R
P r o c e s s e s
E P. 9 , E S . 9 ,
E M . 9 , E D . 9
& E R . 9
PROCESS
SCOR:BestPractices
22

23. SCOR:BestPractices
2.
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24. SCOR:People
1.Novice
2. Experienced Beginner
3.Competent
4. Proficient
5. Expert
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25. 25

26. WHY DOES IKEA USE SCORMODEL?
Legitimacy & Common Terminology (Integration) in supply chain for better
communication
Sustainable Supplier Relationship Management
Designing Performance Measurement
A framework for guidance & control
More holistic view for co-workers –
I-people need to become T-people
Designed by practitioners
Neutral
No need to invent the wheel
26

27. Supplier Raw Material Warehouse Factory Finished Goods Warehouse
IKEA Distribution
Center
The Customer
IKEA Store
27

28. 28

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32. 32

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34. 34

35. 35

36. IKEA INVENTORY PLANNING & FORECASTING
Cost-Per-TouchInventoryTactic
In-Store Logistics
Maximum/Minimum Settings
As Proprietary System
Usage Of High-Flow& Low-Flow
Warehouse Facilities
Do-It-Yourself Assembly
Lowers Packaging Costs
36

37. SOURCING AT IKEA
37

38. SOURCING AT IKEA
38

39. IKEA MANUFACTURING &
DISTRIBUTION NETWORK
39

40. Designs for furniture, lamps, kitchen
equipment and beds are logistically formed
The packaging also is designed to squeeze
as many units as possible into trucks
delivering inventory to the stores. “Air out,
product-in” – Loading Ledge technology
Once a product is designed and
manufactured, it can be checked for quality
by an independent firm whose location is as
proximate to the manufacturer as possible.
Example, Intertek in China
MANUFACTURING AT IKEA
40

41. IKEA LOGISTICS - WAREHOUSING
I K E A h a s a b o u t 4 0 d i s t r i b u t i o n c e n t e r s w o r l d w i d e i n 1 6
d i f f e r e n t c o u n t r i e s
C r o s s - D o c k i n g m e t h o d u s e d
A s t r o W M S a d o p t e d b y I K E A i n 2 0 1 0 i n c r e a s e s a n d
i m p r o v e s e f f i c i e n c y i n t h e i r d i s t r i b u t i o n c e n t r e .
A s t r o i s a n a u t o ma t e d w a r e h o u s e m a n a g e m e n t s y s t e m
t h a t a l l o w s f o r o r d e r i n g f u l f i l l m e n t a u t o m a t i c a l l y s o
r e d u c i n g m a n u a l c o s t w i t h a u t o m a t e d r e - o r d e r i n g p u r c h a s e
o r d e r s b e i n g s e n t t o s u p p l i e r s w h e n s t o c k l e v e l s a r e l o w .
41

42. IKEAproductsaretransportedby road,railandsea betweensuppliers,distributioncentersandIKEA
stores,andfromthestoresto customers.
IKEAtransportserviceprovidersmustcomplywiththerequirementsinthesuppliercodeof conduct
IWAY,includingindustry-specificrequirements.
IKEA LOGISTICS - DELIVERY
42

43. IKEA –RETURNPOLICY
IKEA takes returned products seriously.
Customers have atleast 30daysto bring backpurchased
productsfor a full refund regardless of the reason for the
return
Recovery team present ateach store
Afternecessary repairs, they offer them to customers in
store space tagged “As Is,”
More damaged products are broken down to their
components and recycled.
Every return and complaint is systematically
documented so that IKEA can analyze reasons for returns
and take action throughout the value chain when needed.
43

44. It launched a code of conduct called ‘IWAY’ as corporate sustainability standards
through the practice of following environmental responsibility in relation to customers,
co-workers and suppliers
Offer solutions and know-how that help customers live a more sustainable life
Use natural resources in a sustainable manner within the entire supply chain ;
careful waste management
Minimize the carbon footprint from all IKEA related operations
Be transparent to all stakeholders and communicate more to customers and co-
workers
IKEA’s sustainability effort, successfully spans across all major supply chain
processes from Source to Make, Deliver and Return, which demonstrates long-term
management commitment.
IKEA BEST PRACTICES
44

45. IKEA SUSTAINABILITY SCORECARD
45

46.  Rigorous safety alarm procedures
 Every IKEA store and national
Service Office has dedicated
resources working with safety alarm
procedures, and they receive regular
training.
 Proactive risk assessment and
extensive testing
 Special focus on children’s safety
 Using the safest possible
chemicals 46

47. “Our co-workers are our most valuable resource – when they grow, IKEA grows.”
V a l u e s - I K E A e m b r a c e s h u m a n r i g h t s a n d r e s p e c t f o r t h e i n d i v i d u a l ,
a n d t h e w a y w e w o r k i s b a s e d o n a s t r o n g a n d l i v i n g c o m p a n y c u l t u r e .
L i s t e n i n g t o o u r c o - w o r k e r s I K E A u s e s “ V O I C E ” – a c o m p a n y - wi d e
s u r v e y – t o m o n i t o r h o w c o w o r k e r s v i e w v a r i o u s a s p e c t s o f t h e i r
e m p l o y m e n t a t I K E A .
S a f e a n d h e a l t h y w o r k i n g c o n d i t i o n s
K e e p i n g c o - w o r k e r s i n v o l v e d
D i a l o g u e w i t h u n i o n s
S u p p o r t i n g w o r k - l i f e b a l a n c e
IKEA MANAGING
PEOPLE
47

48. IKEA MANAGING
PEOPLE
48

49. IKEA MANAGING
PEOPLE
49

50. IKEA MANAGING
PEOPLE
50

51. IKEA MANAGING
PEOPLE
51

52. 52

53. SCOR could be extended into a complete business process architecture, or even into
a complete process-centric enterprise architecture (HOLISTIC/ SYSTEM VIEW)
53

54. HOW DOES IT ALL COME TOGETHER AT
IKEA?
54

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