Pillars of Supply Chain Strategy

In the 1990’s a consulting firm and market research firm, along with some academics got together to create a process and performance measurement model to support the growing field of supply chain management. They called it the supply chain operations reference model, or SCOR. It simplifies supply chain management, makes it easy to explain and therefore make it happen within your organization and across your supply chain(s).

We have found its greatest use as the pillars of developing a supply chain strategy.  

The Pillars

The SCOR model simplifies supply chain management into six functions. We call these the Level 1 processes. 

• Plan
• Source
• Make
• Store*
• Deliver
• Return

* I added “Store”, which is not in the SCOR model. I did this because of my view of the importance of warehouse and inventory management to ecommerce, which is growing sector of the economy. 

Plan

Processes that balance aggregate demand and supply to develop a course of action that best meets sourcing, production and delivery requirements

Level 2 Planning processes:

• Balance resources with requirements
• Determine customer requirements
• Define Resources (people, money, equipment, facilities, systems, etcetera)
• Manage regulatory risk

Source

Processes that procure goods or services to meet planned or actual demand

Level 2 Sourcing processes:

• Supplier selection
• Purchase – receive – verify – authorize payment
• Assess supplier performance
• Manage the supply network (suppliers’ suppliers)
• Manage supplier risk (single source, country-risk, currency hedging)
• Manage import / export requirements

Make

Processes that transform products to a finished good to meet planned or actual demand

Level 2 Production processes:

• Engineering / design
• Production
• Waste disposal
• Testing
• Packaging

Store

Processes that manage inventory for use in manufacturing or to support downstream demand

Level 2 Storage processes:

• Manage warehouse
• Receive
• Pick/pack/ship
• Set inventory levels

Deliver

Processes that provide finished goods and services to customers

Level 2 Delivery processes:

• Route shipments
• Select carriers
• Installation
• Invoice customer

Return

Processes associated with returning, or receiving returned products, for any reason; typically including post-delivery customer support

Level 2 Return processes:

• Defective product to suppliers
• Defective product from customers
• Products sent to suppliers for maintenance, repair or overhaul
• Products sent from customer for maintenance, repair or overhaul

For more information on the SCOR model and details about the measurement system used as part of the model, see our white paper.  https://www.supplyvelocity.com/wp-content/uploads/2020/02/Supply-Chain-Operations-Reference-SCOR-Model.pdf