MY HOMEWORK OF The Supply Chain

HANANE ELBAROUD
TO OUR LOVELY PROFESSOUR S. IDDIK
The Supply Chain Council's SCOR Model:
The SCOR (Supply Chain Operations Reference) model serves as a performance-driven

framework for overseeing supply chain activities. It facilitates the assessment and comparison
of these activities, aiding organizations in pinpointing areas for enhancement and
implementing optimal strategies.
Mastery of the SCOR model transcends theory, providing practical utility for supply chain
professionals navigating complex global trade and logistical networks. By comprehending and
applying this model, professionals can enact tangible enhancements in supply chain
operations, equipping them with the tools and knowledge essential for success in their roles.
This piece aims to explore the historical development of the SCOR model, elucidating its
fundamental components and diverse applications across various sectors, underscoring its
productivity-enhancing impact.
Genesis and Evolution of the SCOR Model
Introduced in 1996 by Pittiglio Rabin Todd & McGrath and AMR Research, the SCOR model
marked a revolutionary milestone in supply chain management. It standardized operations and
introduced a universal language for industry professionals, fostering better integration and
operational excellence.
The model's governance has undergone transitions, initially overseen by the Supply Chain
Council and later, following the 2014 merger of APICS with the Supply Chain Council, by
APICS SCC.
The SCOR model's evolution underscores its adaptability, evidenced by the incorporation of
the ENABLE process category in 2013 to acknowledge the significance of supporting
activities in supply chain management.
The latest iteration, unveiled in 2017, introduced updates to maturity models, best practices,
and terminology to address emerging challenges and technologies such as omnichannel
strategies, metadata, and blockchain.
The ongoing evolution of the SCOR model underscores its foundational role in supply chain
optimization. Its capacity to adapt to evolving trends and technologies has sustained its
relevance for businesses seeking to enhance their supply chain operations, cementing its status
as a pivotal tool in today's dynamic global market.Structure of the SCOR Model
The SCOR model comprises four hierarchical levels: strategic (level 1), tactical (level 2),
operational (level 3), and detailed (level 4). Each level delineates specific processes further
divided into activities, representing the discrete tasks or actions required for process
completion.At the strategic level (level 1), the focus lies on formulating high-level supply
chain strategies, defining overarching goals, objectives, and key performance indicators
aligned with market and customer requirements.
The tactical level (level 2) translates strategic plans into actionable initiatives, optimizing the
supply chain network, balancing supply and demand, and managing inventory levels to ensure
responsiveness to demand fluctuations.
Operational management (level 3) entails day-to-day oversight of supply chain activities,
including goods and information flow management, inventory monitoring, and order
fulfillment, with an emphasis on operational efficiency and meeting customer needs.
At the detailed level (level 4), each process undergoes decomposition into specific activities,
necessitating the development of detailed procedures and work instructions to drive
continuous improvement, streamline processes, and eliminate inefficiencies.
The Logistics Scoreboard:
The Logistics Scoreboard functions as a vital tool for evaluating and quantifying the
efficiency of logistics and supply chain operations. It offers a comprehensive overview of
essential performance indicators (KPIs) and metrics pertinent to logistics activities, enabling
organizations to gauge their logistics performance and compare it against industry
benchmarks or internal targets.
The specific KPIs and metrics incorporated into the Logistics Scoreboard may vary based on
organizational priorities and industry nuances. Nonetheless, several common indicators are
typically tracked:
 On-time delivery: This metric measures the percentage of orders or shipments
delivered punctually to customers as promised.
 Order fulfillment cycle time: It tracks the duration from order placement to order
delivery, reflecting the efficiency of fulfillment processes.
 Inventory turnover: This KPI calculates how rapidly inventory is being sold and
replenished, indicating inventory management effectiveness.
 Perfect order rate: It gauges the percentage of orders that are delivered flawlessly
without errors or complications, reflecting operational excellence.
 Transportation cost per unit: This metric assesses the transportation cost incurred per
unit of goods or products shipped, aiding in transportation cost optimization.
 Warehouse capacity utilization: It evaluates the efficiency of warehouse space

utilization, optimizing storage resources and reducing operational costs.
 Customer satisfaction: This KPI measures customer feedback and satisfaction levels
regarding logistics services, indicating service quality and customer-centricity.
 Order accuracy: It tracks the percentage of orders fulfilled accurately without errors or
discrepancies, ensuring customer satisfaction and operational efficiency.
 Freight cost as a percentage of sales: This metric assesses the cost of freight
transportation relative to total sales, aiding in cost management and profitability analysis.
 Return rate: It measures the percentage of products returned by customers, providing
insights into product quality, customer preferences, and reverse logistics efficiency.
Regular monitoring and analysis of these KPIs and metrics via the Logistics Scoreboard
empower organizations to pinpoint areas for enhancement, streamline logistics processes, and
elevate overall supply chain performance. It facilitates data-driven decision-making,
facilitates the establishment of performance targets, and fosters continuous improvement
across logistics operations.
Activity-Based Costing (ABC):

activity-based costing (ABC) is a costing method that assigns overhead and indirect costs to
related products and services. This accounting method of costing recognizes the relationship
between costs, overhead activities, and manufactured products, assigning indirect costs to
products less arbitrarily than traditional costing methods. However, some indirect costs, such
as management and office staff salaries, are difficult to assign to a product.
KEY TAKEAWAYS
Activity-based costing (ABC) is a method of assigning overhead and indirect costs—such as
salaries and utilities—to products and services.
The ABC system of cost accounting is based on activities, which are considered any event,
unit of work, or task with a specific goal.
An activity is a cost driver, such as purchase orders or machine setups.
The cost driver rate, which is the cost pool total divided by cost driver, is used to calculate the
amount of overhead and indirect costs related to a particular activity.
ABC is used to get a better grasp on costs, allowing companies to form a more appropriate
pricing strategy.
The ABC calculation is as follows:
Identify all the activities required to create the product.
Divide the activities into cost pools, which includes all the individual costs related to an
activity—such as manufacturing. Calculate the total overhead of each cost pool.
Assign each cost pool activity cost drivers, such as hours or units.
Calculate the cost driver rate by dividing the total overhead in each cost pool by the total cost
drivers.
Divide the total overhead of each cost pool by the total cost drivers to get the cost driver rate.
Multiply the cost driver rate by the number of cost drivers.
Economic Value Analysis (EVA):

Economic Value Added (EVA), also referred to as Economic Profit, is a financial metric
derived from the Residual Income approach. Unlike traditional accounting measures like net
profit, EVA focuses on capturing the true economic profitability of a project or investment by
accounting for the opportunity cost of capital.
The concept of EVA revolves around the notion that investors expect a certain rate of return,
often referred to as the "hurdle rate" or "cost of capital," to compensate for the risk associated
with their investment. EVA measures the difference between the return generated by a project
or investment and the required rate of return. In essence, it quantifies how much value a
project adds to a company over and above what investors expect to receive.
Here's a breakdown of key aspects of EVA:
Residual Income Technique EVA is calculated based on the residual income approach, which
deducts the cost of capital from the operating profit of a project or investment. The residual
income represents the surplus income generated after accounting for the cost of capital.
Indicator of Profitability: EVA serves as a robust indicator of the profitability of projects or

investments undertaken by a company. By comparing the EVA generated by different projects
or investments, businesses can assess their relative profitability and allocate resources
accordingly.
Wealth Creation for Investors: The fundamental premise of EVA is that genuine profitability
occurs when a project or investment generates additional wealth for investors beyond what
they could earn elsewhere with similar risk. EVA measures the extent to which a project
contributes to wealth creation for shareholders.
Returns Above Cost of Capital: EVA emphasizes the importance of projects generating
returns above their cost of capital. Projects that fail to achieve this threshold may not be
considered economically viable, as they do not generate sufficient value to compensate for the
capital employed.
THE REFERENCES
Rajesh, R., Pugazhendhi, S., Ganesh, K., Ducq, Y., & Koh, S. L. (2012). Generic balanced scorecard
framework for third party logistics service provider. International Journal of Production
Economics, 140(1), 269-282.
RAJESH, R., PUGAZHENDHI, S., GANESH, K., et al. Generic balanced scorecard framework for third
party logistics service provider. International Journal of Production Economics, 2012, vol. 140, no 1, p.
269-282.
Rajesh, R., et al. "Generic balanced scorecard framework for third party logistics service
provider." International Journal of Production Economics 140.1 (2012): 269-282
https://throughput.world/blog/supply-chain-operations-reference-scor-model/
https://www.investopedia.com/terms/a/abc.asp#:~:text=Key%20Takeaways,task%20with%20a
%20specific%20goal
https://corporatefinanceinstitute.com/resources/valuation/economic-value-added-eva/
#:~:text=Economic%20value%20added%2C%20generally%20abbreviated,profit%20minus%20a
%20finance%20charge

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HANANE ELBAROUD

TO OUR LOVELY PROFESSOUR S. IDDIK

The Supply Chain Council's SCOR Model:

The SCOR (Supply Chain Operations Reference) model serves as a performance-driven

 Warehouse capacity utilization: It evaluates the efficiency of warehouse space

Activity-Based Costing (ABC):

Economic Value Analysis (EVA):

Here's a breakdown of key aspects of EVA:

Indicator of Profitability: EVA serves as a robust indicator of the profitability of projects or

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