Operations Management II- SCOR is he world’s leading supply chain framework, linking business processes, performance metrics, practices and people skills into a unified structure. The presentation justifies this tool used in one of the leading furniture brands 'Ikea' and implemented into their process flow.

1. Ideas for today and tomorrow
SUPPLY-CHAIN
OPERATIONS
REFERENCE-MODEL

2. Standard descriptions
of management
processes
A framework of
relationships among the
standard processes
Standard metrics
to measure process
performance Management practices
that produce best-in-
class performance
Standard alignment
to features and
functionality
Process Reference Model

3. Process Reference Model
Process reference model, or business process framework: The ability
to describe process architecture in a way that makes sense to key
business partners. It is especially useful for describing value chains
that cut across multiple departments and organizations, providing a
common language for managing such processes.
Business Process
Reengineering
Capture the “as-is”
state of a process
and derive the
desired “to-be”
future state
Benchmarking
Quantify the
operational
performance of
similar companies
and establish
internal targets
based on “best-in-
class” results
Best Practices Analysis
Characterize
the management
practice and
software solutions
that result in
“best-in-class”
performance
Process Reference Model
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
practice and software
solutions that result in “best-
in-class” performance

4. • The Supply Chain Operations Reference (SCOR®) model provides a
unique framework that links performance metrics, processes, best
practices, and people into a unified structure. The framework supports
communication between supply chain partners and enhances the
effectiveness of supply chain management, technology, and related
supply chain improvement activities.
• SCOR® is a consensus model. It was developed and continues to evolve
with the direct input of industry leaders who manage global supply
chains and use it daily to analyze and improve the performance of their
organizations. It features an intentionally broad scope and definitions
that can be adapted to the specific supply chain requirements of any
industry or application.
Supply Chain Operations Reference (SCOR®) Model

5. • The Supply Chain Operations Reference (SCOR®) has been developed and endorsed by the Supply–Chain
Council (SCC) as the cross-industry standard for supply chain management.
Supply Chain Operations Reference (SCOR®) Model :
Conception and Evolution
SCOR®
introduction in
1996
Version 11.0 of the
SCOR-model is the
thirteenth revision
Cost metrics were
introduced
Cost metrics were
redefined
Enable processes
All best practices
have clarified
descriptions and
are linked to
processes and
metrics
Version 10.0
introduced
skills/people

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• Rapid assessment of supply chain performance
• Clear identification of performance gaps
• Efficient supply chain network redesign and optimization
• Enhanced operational control from standard core processes
• Streamlined management reporting and organizational structure
• Alignment of supply chain team skills with strategic objectives
• A detailed game plan for launching new businesses and products
• Systematic supply chain mergers that capture projected savings
Organizational benefits of adopting the SCOR® model

7. • Superior Customer Service
The SCOR model provides a framework for measuring and understanding current supply chain conditions and
performance and creates a foundation for improvement.
• Cost Control
SCOR metrics provide the basis for an organization to measure how successful it is in achieving its desired
objectives. SCOR metrics are designed to be used in conjunction with supply chain performance attributes,
making it easier to compare different supply chains and different supply chain strategies.
• Planning And Risk Management
SCOR helps users establish rules and strategies, assign responsibilities, coordinate responses, and monitor
current conditions.
• Supplier/Partner Relationship Management
SCOR provides a common language for supply chain classification and analysis. Using a common language and
framework makes it easier for teams to communicate, speeds benchmarking efforts, and enhances the evaluation
of best practices.
• Talent
The SCOR skills management framework complements process reference, metrics reference, and practice
reference components with baseline skills, experience, aptitudes, and training.
SCOR® solves supply chain challenges

8. SCOR® includes all customer
interactions from order entry
through paid invoice; all product
(physical material and service)
transactions, including
equipment, supplies, spare
parts, software, etc.; and all
market interactions, from
understanding aggregate
demand to the fulfillment of each
order.
Scope of SCOR® model

9. ALL CUSTOMER
INTERACTIONS
From order entry through
paid invoice
ALL MARKET
INTERACTIONS
From the understanding of
aggregate demand to the
fulfillment of each other
ALL PHYSICAL
MATERIAL
TRANSACTIONS
From supplier’s supplier
to customer’s customer
Including equipment,
supplies, spare parts,
bulk product, software,etc.
SCOR® Boundaries

10. PERFORMANCE METRICS:
Standard metrics to measure
process performance
The SCOR® process
reference model
contains:
PROCESSES: Standard
descriptions of management
processes and a framework
of process relationships
PRACTICES: Management
practices that produce best-
in-class performance
PEOPLE: Training and skills
requirements aligned with
processes, best practices,
and metrics
SCOR® Contents:

11. • A performance attribute is a group of metrics used to express a strategy.
An attribute itself cannot be measured; it is used to set strategic
direction. Metrics measure the ability of a supply chain to achieve these
strategic attributes.
• SCOR® identifies five core supply chain performance attributes:
Reliability, Responsiveness, Agility, Costs, and Asset Management.
Consideration of these attributes makes it possible to compare an
organization that strategically chooses to be the low-cost provider
against an organization that chooses to compete on reliability and
performance.
SCOR® Contents: Performance
Performance Attributes

12. Reliability
Responsiveness
Agility
Costs
Asset Management
Efficiency (Assets)
The ability to perform tasks as expected. Reliability focuses on the
predictability of the outcome of a process. Typical metrics for the reliability
attribute include: On-time, the right quantity, the right quality.
The speed at which tasks are performed. The speed at which a supply
chain provides products to the customer.
Examples include cycle-time metrics.
The ability to respond to external influences, the ability to respond to
marketplace changes to gain or maintain competitive advantage. SCOR
Agility metrics include Flexibility and Adaptability
The cost of operating the supply chain processes. This includes labor
costs, material costs, management and transportation costs. A typical cost
metric is Cost of Goods Sold.
The ability to efficiently utilize assets. Asset management strategies in a
supply chain include inventory reduction and in-sourcing vs. outsourcing.
Metrics include: Inventory days of supply and capacity utilization.

13. • 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.
Metrics
SCOR® Contents: Performance

14. SCOR® Metrics

15. • The Process section in SCOR® provides a set of pre-defined
descriptions for activities most companies perform
to effectively execute their supply chains. SCOR®
identifies the unique processes a supply chain requires to support the
objective of fulfilling customer orders. By definition, a process is a
unique activity performed to meet predefined outcomes.
• SCOR® processes help standardize the description of the supply chain
architecture (level 1 and level 2 processes) and the implementation of the
architecture (level 3 processes). SCOR® provides standards down to the
level where process descriptions are applicable across a range of
industries. Further detail is industry and organization specific (level 4
and below).
SCOR® Contents: Process

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Top Level
(Process Types)
Level 1 Description Schematic
Level 1 defines the scope and
content for the Supply Chain
Operations Reference-model.
Here basis of competition
Performance targets are set.
Comments
Plan
DeliverMakeSource
Return Return
Levels of SCOR® Processes

17. Scope of SCOR® Processes
Plan Source Make Deliver Return
Balance resources with requirements and establish/communicate plans for the whole supply chain.
Demand/Supply Planning and Management
Align the supply chain unit plan with the financial plan
Management of business rules, supply chain performance, data collection, inventory, capital assets,
transportation, planning configuration, and regulatory requirements and compliance.

18. Plan Source Make Deliver Return
Schedule deliveries; receive, verify, and transfer product; and authorize supplier payment
Sourcing Stocked, Make-to-Order, and Engineer-to-Order Product
Manage business rules, assess supplier performance, and maintain data.
Identify and select supply sources when not predetermined, as for engineer-to-order product.
Manage inventory, capital assets, incoming product, supplier network, import/export requirements,
and supplier agreements.
Scope of SCOR® Processes

19. Plan Source Make Deliver Return
Schedule production activities, issue product, produce and test, package, and release product
Make-to-Stock, Make-to-Order, and Engineer-to-Order Production Execution
Finalize engineering for engineer-to-order product.
Manage rules, performance, WIP, equipment and facilities, transportation, production network,
and regulatory compliance for production.
to deliver.
Scope of SCOR® Processes

20. Plan Source Make Deliver Return
All order management steps from processing customer inquiries and quotes to routing shipments
Order, Warehouse, Transportation, and Installation Management for Stocked,
Make-to-Order, and Engineer-to-Order Product
Manage deliver business rules, performance, information, finished product inventories,
capital assets, transportation, product life cycle, and import/export requirements.
Warehouse management from receiving and picking product to load and ship product.
and selecting carriers.
Invoicing customer.
Scope of SCOR® Processes

21. Plan Source Make Deliver Return
Return of Raw Materials and Receipts of Returns of Finished Goods
Manage return business rules, performance, data collection, return inventory, capital assets,
transportation, network configuration, and regulatory requirements and compliance.
All returns from materials and finished goods.
Scope of SCOR® Processes

22. • Recently added as the last of the six Macro-level process, Enable
processes support the realization and governance of the
planning and execution processes of supply chains.
• The processes associated with establishing, maintaining and
monitoring information, relationships, resources,
assets, business rules, compliance and contracts
required to operate the supply chain.
• Enable processes interact with processes in other domains (for example:
Financial processes, HR (Human Resource) processes, I(C)T
(Information, Communication & Technology) processes, facilities
management processes, product & portfolio management processes,
product and process design processes and sales and support processes).
Scope of SCOR® Processes

23. Configuration
Level
(Process
Categories)
Level 2 Description Schematic
A company’s supply chain can be
“configured-to-order” at Level 2
from 30 core “process categories”.
Companies implement their
operations strategy through
the configuration they choose
for their supply chain.
Comments
23 / 28
Levels of SCOR® Processes

24. Plan
Level 2 Toolkit
Customers
Suppliers
P1 Plan Supply Chain
Source Return
SR1 Return Defective Product
SR2 Return MRO Product
SR3 Return Excess Product
P2 Plan Source P3 Plan Make P4 Plan Deliver P5 Plan Return
S1 Source
Stocked Product
S2 Source Make-
to-Order Product
S3 Source Engineer-
to-Order Produst
M1 Make-to-Stock
M2 Make-to-Order
M3 Engineer-to-Order
D1 Deliver Stocked
Product
D2 Deliver Make-
to-Order Product
D3 Deliver Engineered-
to-Order Product
Deliver Return
DR1 Return Defective Product
DR2 Return MRO Product
DR3 Return Excess Product
D4 Deliver Retail
Product
Source Make Deliver
MRO : Maintenance Repair and Operating
Levels of SCOR® Processes

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“SCOR® Configuration Toolkit”
Enable
Execution
Planning
Process
Type
EP
P1
ES
S1–S3
P2
EM
M1–M3
P3
ED
D1–D3
P4
ER
R1–R3
P5
Process
Category
SCOR® Process
Plan Source Make Deliver Return
Process Categories are defined by the relationship between a SCOR® Process and Process Type
Levels of SCOR® Processes

26. Process Element
Level
(Decompose
Process)
Level 3 Description Schematic
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
Comments
P1.1
Identify, Prioritize,
and Aggregate
Supply-Chain
Requirements
P1.2
Identify, Assess,
and Aggregate
Supply-Chain
Resources
P1.3
Balance Supply-Chain
Resources with
Supply-Chain
Requirements
P1.4
Establish and
Communicate
Supply-Chain Plans
26 / 28
Levels of SCOR® Processes

27. Level 3 Detailed Process Element Information
Levels of SCOR® Processes
S1 Source
Stocked Product
S2 Source Make-
to-Order Product
S3 Source Engineer-
to-Order Produst
Source

28. Implementation
Level
(Decompose
Process
Elements)
Level 4 Description Schematic
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.
Comments
28 / 28
Levels of SCOR® Processes

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Level 4 Implementation of Supply-Chain Management Practices
Levels of SCOR® Processes

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Levels of SCOR® Processes

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Each basic supply-chain is a “Chain” of Source, Make, and Deliver
Execution Processes
Each intersection of two execution processes (Source-Make-Deliver)
is a “link” in the supply chain
Execution processes transform or transport materials and/or products
Each process is a customer of the previous process and a supplier to the next
Planning processes thus “balance” the supply chain
Every link require an occurrence of a plan process category
Planning processes manage these customer-supplier links
Levels of Process

32. SCOR® Practices : Supply Chain Risk Management

33. The systematic identification, assessment, and mitigation of potential disruptions (both within and outside the supply
chain) in logistics networks with the objective to reduce their negative impact on the logistics network’s performance.
SCOR® Practices : Supply Chain Risk Management
Define and document the objective and scope
(internal and external) for managing risk. Establish
Context
Identify Risk
Collect and document all potential risk
events that may impact the organization
from meeting its goals.
Assess Risk
Collect and document for each
potential risk the causes, probability,
and consequences (Understand the
Value at Risk).
Determine for each risk whether mitigation
actions are required or the risk is acceptable;
prioritize risks.
Determine the actions required to
eliminate, reduce, or accept and
monitor the risks (Risk Mitigation Plan).
Continuously monitor effectiveness
of mitigation plans; identify emerging
risks and changes in internal and
external context.
Evaluate Risk
Mitigate Risk
Monitor Risk

34. SCOR® People Training – Training develops
a skill or type of behavior
through instruction
Skill – A Skill is the capacity to
deliver predetermined results with
minimal input of time and energy
Experience – Experience is the
knowledge or ability acquired by
observation or active participation.
Aptitudes – A natural, acquired,
learned, or developed ability to
perform a certain kind of work at a
certain level.
Competency – Competency
levels describe the level or
state of qualification to
perform a certain role or tasks.
Novice – Untrained beginner, no
experience, requires and follows
detailed documentation to be able to
perform the work.
Experienced beginner – Performs the
work; limited situational perception.
Competent – Understands the work
and can determine priorities to reach
organizational goals.
Proficient – Oversees all aspects of
the work and can prioritize based on
situational aspects.
Expert – Intuitive understanding.
Experts can apply experience patterns
to new situations.

35. • The SCOR® Model, which is a proven framework for defining
supply chain scope and process operations as well as measuring
supply chain performance, provides an excellent foundation for
environmental accounting in the supply chain.
• The following strategic environmental metrics allow the SCOR® model to be used
as a framework for environmental accounting:
• • Carbon Emissions (Tons CO2 Equivalent)
• • Air Pollutant Emissions (Tons or kg)
• • Liquid Waste Generated (Tons or kg)
• • Solid Waste Generated (Tons or kg)
• • Recycled Waste (Percent)
SCOR® Special Applications :GreenSCOR®
Sustainable business models and environmental accounting are growing business concerns. However, there
are multiple approaches to measuring the total environmental footprint of an organization or supply chain
with no agreed upon standards.

36. A Sweden based
retail chain which
deals in furniture
and house decor
items
345 branches
in 42 countries.
Fortune’s “100 Best
Companies to
work for” list
(three consecutive
years)
Training magazine’s
annual “Top 100”
ranking of companies
that excel in human
capital development
Four consecutive
years)
Ranked 20th in “The
World’s Most
attractive Employers
2011’ in the
Universum Awards,
an employer
Branding event
Working Mother
magazine’s annual
list of the “100 Best
Companies for
Working Mothers”
Four Consecutive
years
SCOR® Case Study

37. • 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
37
Why does IKEA use SCOR® model?

38. IKEA Performance Goals (FIVE YEAR PLAN)
QUALITY -Meet the specifications
-Supplementary
Services
SPEED -Unique Store
Layout
-Automation
(conveyor belts)
DEPENDABILITY -Hub and Spoke
Model to ensure
availability
FLEXIBILITY Global Sourcing to
adjust for volume
changes
Mix and Match to avail
large variation in
offerings
COST -Automation (Less re-
work)
-Self Service
-Flat packs (less space)
Capacity Supply Network Process and Technology
Operations Decisions Shape
Competencies and Constraints
PerformanceObjectives
Market
Competitiveness

39. IKEA Performance Goals

40. IKEA Journey to SCOR®
• Cost Saving in Furniture Design
• Sustainable Relationships with suppliers
• Combining Retail and Warehousing Processes

41. IKEA Business Process Flow

42. 42
IKEA Inventory Planning and Forecasting
• Cost-Per-Touch Inventory Tactic
• In-Store Logistics
• Maximum/Minimum Settings as Proprietary System
• Usage Of High-Flow & Low-Flow warehouse facilities
• Do-It-Yourself Assembly lowers Packaging Costs
• Ikea currently has:
• 1046 suppliers in 52 countries,
• 9500 different products,
• 40 distribution centers in 16 countries.

43. Manufacturing at IKEA
• 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.

44. Logistics at IKEA
• IKEA has about 40 distribution centers worldwide in 16 different countries
• Cross-Docking method used
• Astro WMS adopted by IKEA in 2010 increases and improves efficiency in their
distribution centre.
IKEA products are transported by road, rail and sea between suppliers, distribution centers
and IKEA stores, and from the stores to customers.
IKEA transport service providers must comply with the requirements in the supplier code of
conduct IWAY, including industry-specific requirements

45. • IKEA takes returned products seriously.
• Customers have at least 30 days to bring back purchased products for a full
refund regardless of the reason for the return
• Recovery team present at each store
• After necessary 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.
Return Policy at IKEA

46. • 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.
46
Return Policy at IKEA

47. • 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
47
Best Practices at IKEA (RISK MANAGEMENT)

48. “Our co-workers are our most valuable resource – when they grow, IKEA
grows.”
• Values - IKEA embraces human rights and respect for the individual,
and the way we work is based on a strong and living company culture.
• Listening to our co-workers IKEA uses “VOICE” – a company-wide
survey – to monitor how coworkers view various aspects of their
employment at IKEA.
• Safe and healthy working conditions
• Keeping co-workers involved
• Dialogue with unions
• Supporting work-life balance
48
Managing People as a resource at IKEA

49. GREEN SCOR® at IKEA
o Ikea Sustainability Product Score Card Criteria:
-More is Less
-Renewable material
-Recycled Material
-Environmentally better material
-Separable and recyclable material
-Product quality
-Transport efficiency (number of products per container)
-Energy efficiency production
-Renewable energy production
-Raw material utilization at suppliers
-Product use (less use of energy and water and less waste in customers’ homes)

51. How does it all come together at IKEA?

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SCOR® is a process reference model that provides a language for communicating
among the supply-chain partners.
SCOR® is used to describe, measure and evaluate Supply-Chain configurations.
• A standard language helps management to focus on management
issues.
• As and industry standard, SCOR® helps management focus across
inter-company supply chains.
• Describe : Standard SCOR® process definitions allow virtually any supply-
chain to be configured.
• Measure : Standard SCOR® metrics enable measurement and benchmarking
of supply-chain performance.
• Evaluate : Supply-chain configurations may be evaluated to support
continuous improvement and strategic planning.
Conclusion