Supply Chain Dashboards and Sensors - the SCOR Model

“The ability to simplify means to eliminate the unnecessary so that the necessary may speak.” – Hans Hofmann, 20th-century expressionist painter

What SCOR Is

The Supply Chain Operations Reference (SCOR®) is a model that provides a unique framework for defining and linking processes, performance metrics, and best practices into a unified structure across supply chain. This entry will provide a very high level overview of SCOR.  For more details please visit https://supply-chain.org .

SCOR is structured around five core supply chain processes: 

• Plan 

• Source 

• Make 

• Deliver 

• Return

A sixth process, Enable, was added to the Version 11 edition of the SCOR model in December 2012. 

Additionally, SCOR provides a set of supply chain performance attributes that correlate to a set of “Level 1” metrics. 

Performance Attribute	Definition	Level 1 Metric
Supply Chain Reliability	The performance of the supply chain in delivering the correct product, to the correct place, at the correct time, in the correct condition and packaging, in the correct quantity, with the correct documentation, to the correct customer.	Perfect Order Fulfillment
Supply Chain Responsiveness	The speed at which a supply chain provides products to the customer.	Order Fulfillment Cycle Time
Supply Chain Agility	The agility of a supply chain in responding to marketplace changes to gain or maintain competitive advantage.	Upside Supply Chain Flexibility
		Upside Supply Chain Adaptability
		Downside Supply Chain Adaptability
		Overall Value at Risk (VAR)
Supply Chain Costs	The costs associated with operating the supply chain.	Supply Chain Management Cost
		Cost of Goods Sold
Supply Chain Asset Management	The effectiveness of an organization in managing assets to support demand satisfaction. This includes all assets—fixed and working capital.	Cash-to-Cash Cycle Time
		Return on Supply Chain Fixed Assets
		Return on Working Capital

Each performance attribute contains three levels of metrics detail in a parent-child, cascading type of relationship structure.  SCOR accounts for different types of production environments including Make-to-Stock, Make-to-Order, and Engineer-to-Order.  The model goes into further detail defining how work is done.  It covers different types of flow through a company including material and information flows.

One of the powerful aspects of the SCOR model is the ability to link the interdependencies between various important metrics across a supply chain into an integrated system. 

What SCOR Is Not

SCOR does not provide active descriptions or measure for Research and Development, Sales and Marketing, Quality, or IT.

Additionally, SCOR metrics are diagnostic metrics.  This means the system alone does not tell you which changes to make or how to make changes.  Think of the vehicle you drive.  With a SCOR set of metrics embedded in your organization, you have sensors in your engine that provide you data.  The sensors alone are not all that valuable.  Those sensors needs to be connected to dials at your dashboard for you to look at as you are driving.  That is a step in the right direction but still not enough.  The limitation with SCOR metrics is they don’t tell you what to do.  Having a speedometer will tell you how fast you are going but it does not tell you how fast you should be going.  That is posted for you as a target.  You need all three: the sensor, the dashboard, and the right target.

Simplifying: Where SCOR Can Help

While SCOR can become a complicating end in itself for some organizations, there is an approach using SCOR that can simplify the understanding of real drivers for financial KPIs.  Executives need the right number of sensors connected to the right readouts on the dashboard.  The SCOR metrics will become important as we look at financial KPIs in future entries.  Many executives have dashboards but don’t have the connection to the sensor to point them toward proper corrections.  As an example, most organizations can calculate financial performance ratios from a cost accounting perspective. 

• Example: Gross Margin = Gross Profit/Revenue (dashboard)

Many organizations have yet to effectively tie together SCOR metrics to financial performance ratios to understand impacts to customers and to the business.  The measurement alone is not enough.  Some organizations measure way too much.  Measuring the right things and knowing what sensors are feeding data to the dashboards to get the desired results is the important, required link. 

• Example: Order Fulfillment Cycle Time impact to Gross Margin (sensor)

Again, the SCOR metrics are diagnostic metrics or sensors that are very good at indicating the reasons why things are the way they are. 

We will explore the link between the sensors and the dashboard.