The Supply Chain Operations Reference model (“SCOR”) can be useful for measurement and benchmarking purposes. It is a normalization based on a well-defined taxonomy where major functional areas are disaggregated and attributes related to those functions are further broken down into strategic and operating metrics. It is a top down approach where at its lowest level an enterprise can try to map how they run the business to how the taxonomy is structured in order to try and derive some value out of the benchmarks.
However this method suffers from what most methods of this type suffer from which is they typically are able to tell the enterprise what they already know without giving them a set of tools to actually solve the problem.
An example of a SCOR measure is as follows:
RL.1.1 Perfect Order Fulfillment
The percentage of orders delivered on-time, in full. Components of perfect include all items and quantities on-time, using the customer’s definition of on-time, complete documentation and in the right condition
[Total Perfect Orders] / [Total Number of Orders]
RL.2.1 % Orders Delivered in Full; RL.2.4 % Perfect Condition; RL.3.19 % Orders Received Defect Free; RL.3.24 % Orders Received Damage Free.
An order is perfect only if all L2/L3 metrics are perfect; An order must be: on-time AND in-full AND right condition AND right documentation
In contrast, my company advocates an architecture that is a bottom up, process driven measurement environment with precise access to any issues that cause a measurement to indicate there is a problem….on a real time basis. If an enterprise likes and is using any of the SCOR taxonomy, the data can easily be calculated using the associated equations and displayed on an executive dashboard while maintaining the drill down capability to actually identify and resolve any root cause issues.
To read more about this subject, I suggest you read the new whitepaper, Supply Chain’s New World Order”, where I also discuss the cloud, S&OP, and why a holistic approach is needed for supply chain management.
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