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ICIEVE 2019 IOP Publishing
IOP Conf. Series: Materials Science and Engineering 830 (2020) 032083 doi:10.1088/1757-899X/830/3/032083

Assessing of supply chain performance by adopting Supply

Chain Operation Reference (SCOR) model

E Prasetyaningsih*, C R Muhamad and S Amolina

Industrial Engineering Program Study, Universitas Islam Bandung, Bandung,
Indonesia

*[email protected]

Abstract. This paper aims at an assessing of a supply chain performance by adopting the Supply
Chain Operation Reference (SCOR) Model. The supply chain activities are divided into five
core processes, i.e. plan, source, make, delivery and return. Each level of the SCOR model is
weighted using Fuzzy Analytical Hierarchy Process (FAHP). The mapping of SCOR Model
consists of 5 core processes at 1st level, 21 performance matrices at 2nd level, and 28 Key
Performance Indicator (KPI) at 3th level. The result shows that the supply chain performance is
68,231. Referring to the performance indicators, the performance achieved by the supply chain
at this time is in the average category. Proposed improvement strategies are designed based on
lean supply chain principles, through the implementation of Gemba Kaizen which consists of 17
proposed strategies.

1. Introduction
Procurement activity is an upstream activity in the supply chain that systematically and strategically
involves manufacturers and suppliers [1]. The purpose of the material procurement activity is to obtain
required materials, start from designing relationships with suppliers to evaluating supplier performance.
The material procurement activities should have efficiency through the integration of all acquisition of
material and material storage in the company [2].
In practical conditions, constraints often occur between manufacturer and suppliers. These
constraints include difficulties to select suppliers who able to meet the required quality and/or quantity
material, and to meet due dates. These problems will affect the production activities such as defective
products due to inappropriate material quality, uncertain production costs, unfulfilled customer demand,
and/or delays to deliver finished products to the customers. To anticipate these problems, manufacturers
often order material more than is needed so that a buildup of material in the warehouse occurs. This
shows the inefficiency of procurement, and it will detrimental to the company both in terms of time and
cost. Therefore, it is necessary to measure the performance of the Procurement Department and make
improvements.
Supply chain performance measurement can be done with the Supply Chain Operation Reference
(SCOR) Model proposed by the Supply Chain Council. Performance measurement with SCOR Model
is done by identifying supply chain performance indicators through the company's supply chain process
so that it can be used to evaluate and improve the performance [3]. The SCOR model provides a systemic
approach to improve strategy, define structure (including human capital), manage processes, and
measure performance [4].

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ICIEVE 2019 IOP Publishing
IOP Conf. Series: Materials Science and Engineering 830 (2020) 032083 doi:10.1088/1757-899X/830/3/032083

Measurement of supply chain performance with the SCOR Model has been carried out by several
researchers, including [5,6] combine SCOR and FAHP; [7] combines SCOR Model and fuzzy-TOPSIS;
[8] align SCOR with business process and information technology in the ERP system; [9] develops a
Financial Components Reference Model (FCOR) based on SCOR Model; [10] integrates AHP and
SCOR (ASIM); [11] Apply SCOR Model in the footwear industry; and [12] measures the performance
of construction logistics.
This study aims at measuring the performance of the Procurement Department by combining the
SCOR Model and FAHP, referring to Arif [5] and Azmiyati [13]. After the performance is measured,
the causes of the problems are identified and then improvements are recommended. This article is
organized as follows: Section 2 describes research methodology, Section 3 shows the result and
discusses the result, and Section 4 states the conclusion.

2. Research methodology
Supply Chain Operation Reference (SCOR) Model and Fuzzy Analytical Hierarchy Process (FAHP) are
chosen to measure the Supply Chain (SC) performance. The SCOR model divides SC activities into 3
levels. Level 1 consists of five core processes, i.e. plan, source, make, delivery, and returns. At level 2
all core processes are configured into the SCOR performance matrix, i.e. reliability, responsiveness,
agile, cost and assets. Furthermore, each SCOR level 2 performance matrix is broken down into key
performance indicators (KPI) at level 3. The KPIs are then weighted using FAHP, where in the FAHP
method, variables (l, m, u) are used to represent each criterion in the form of triangular fuzzy numbers
arranged according to a set of linguistics [14].
Each performance indicator has a different weight so that the parameters should be normalized. The
normalization process uses the Snorm De Boer Equation as follows:
( ) (1)
Larger is Better: Snorm = × 100
( )
( ) (2)
Lower is Better: Snorm = × 100
( )
Si : The value of actual achievement indicator
Smin : The worst achievement value of performance indicator
Smax : The best achievement value of performance indicator

Each weight of a performance indicator is converted into intervals of 0 to 100, where 0 means the worst
and 100 means the best performance indicator. Monitoring system of performance indicators can be
seen at Table 1.
Table 1. Monitoring system of performance indicators [15].
Monitoring System Performance Indicators
<40 Poor
40-50 Marginal
50-70 Average
70-90 Good
˃90 Excellent

3. Result and discussion

To provide an overview of supply chain performance measurements by the SCOR Model and FAHP, a
plastic company is taken as a case study. This company has a problem about delayed delivery of their
products to costumer. Based on observation, it is found that suppliers often do not meet the agreements
stated in the MoU between suppliers and manufacturers. This shows that there are inefficiencies in the

2
ICIEVE 2019 IOP Publishing
IOP Conf. Series: Materials Science and Engineering 830 (2020) 032083 doi:10.1088/1757-899X/830/3/032083

Procurement Department. The assessing result of Procurement Department using SCOR Model and
discussion the results can be described as follows.

3.1. Result
Supply chain flow of the case study company can be seen in Figure 1.

Figure 1. Supply chain flow of the case study company.

3.1.1. Validated performance indicator determination. The first step to measure performance with the
SCOR Model is to identify the Procurement Department's performance indicators, followed by the
validation step of the performance indicators. The plant managers are chosen to validate the indicators
by facing validation techniques. The validated performance indicators are shown in Table 2.
Table 2. Validated procurement performance indicator.
Code Performance Indicator Unit Code Performance Indicator Unit
PR1 Suppliers selection Supplie MR1 Product defects due to material (%)
r quality
PR2 Preparing purchase order (PO) PO
PR3 Documentation of procurement Documen MRe1 Suitability of production output (%)
activities t MRe2 Product lead time (day)
PRe1 Submission purchase order (PO) PO MF1 Machine setup time (Minute
)
PF1 Material quantity planning (Kg) MC1 Flexibility of Production volume (%)
PF2 Fulfilment of supplier selection criteria (%) MA1 Production cost (Rp)
PC1 Maximize order cost (Rp) MA2 Number of “injek” Machine (Unit)
PA1 Finished goods inventory management (%) DR1 Number of crushing Machine (Unit)
SR1 Management of materials in the (%) DRe1 Material quantity received (%)
warehouse
SRe1 Material procurement of suppliers (%) DC1 Delivery time (%)
SF1 Allocation of material inventory (%) DA1 Material payment (Rp)
SC1 Labour cost (Rp) RR1 Material delivery transportation (%)
SA1 Utilization of company resources (%) RRe1 material Quality control (%)
SA2 Change assets into money (%) Material return (%)

3.1.2. The SCOR hierarchy. The validated procurement performance indicators are then mapped as the
SCOR hierarchy starting from level 1 to level 3. The result shows that level 1 of the SCOR hierarchy
consists of five SCOR core processes, i.e. plan, source, make, delivery and return. Level 2 of the SCOR
hierarchy consists of 21 elements that show SCOR's performance matrix, i.e. Reliability,
Responsiveness, Agility, Costs and Assets. Level 3 of the SCOR hierarchy consists of 28 validated KPIs.
The SCOR hierarchy of level 1, level 2 and level 3 can be seen in Figure 2.

3.1.3. Total performance calculation. The total performance of the SCOR model can be calculated
through the weighting stage using the FAHP method, i.e. determine the level of importance of each
performance indicator. The next process is multiplying the weighted value of the SCOR model with the
normalization result of the actual achievement of each performance indicator. The results of the
performance value can be seen in Table 3.

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ICIEVE 2019 IOP Publishing
IOP Conf. Series: Materials Science and Engineering 830 (2020) 032083 doi:10.1088/1757-899X/830/3/032083

Figure 2. SCOR hierarchy of procurement department.

Table 3. Total performance calculation.

Performance
Key Performance Indicator Metric Weights Score
index
Suppliers selection 0,0069 50,00 0,345
Preparing purchase order (PO) 0,0212 50,00 1,058
Documentation of procurement activities 0,0179 25,00 0,449
Submission purchase order (PO) 0,0483 50,00 2,415
Material quantity planning 0,0193 100,00 1,932
Fulfilment of supplier selection criteria 0,0290 80,00 2,318
Maximize order cost 0,0506 68,25 3,453
Finished goods inventory management 0,0368 0,01 0,00037
Management of materials in the warehouse 0,0552 0,00 0,00
Material procurement of suppliers 0,0504 100,00 5,040
Allocation of material inventory 0,0456 30,43 1,388
Labour cost 0,0552 60,00 3,312
Utilization of company resources 0,0133 90,00 1,199
Change assets into money 0,0227 75,73 1,718
Product defects due to material quality 0,0324 91,53 2,966
Suitability of production output 0,0396 91,42 3,620
Product lead time 0,0240 100,00 2,400
Machine setup time 0,0360 60,00 2,160
Flexibility of Production volume 0,0570 100,00 5,700
Production cost 0,0660 38,25 2,525
“injek” Machine 0,0248 100,00 2,475
crushing Machine 0,0203 100,00 2,025
Material quantity received 0,0580 100,00 5,800
Delivery time 0,0540 100,00 5,400
Material payment 0,0560 66,67 3,734
Material delivery transportation 0,0320 50,00 1,600
material Quality control 0,0180 80,00 1,440
Material return 0,0220 80,00 1,760
Total Performance 68,231

4
ICIEVE 2019 IOP Publishing
IOP Conf. Series: Materials Science and Engineering 830 (2020) 032083 doi:10.1088/1757-899X/830/3/032083

3.2. Discussion
Table 3 shows that the measured Procurement Department's performance score of 68.231. Referring to
the monitoring system shown in Table 1, the measured Procurement Department performance is in the
average category because it is in the range of 50-70. Based on the results of these performance
measurements, it is necessary to improve strategies based on five core processes, namely plan, source,
make, delivery and return. The proposed improvement strategy is designed based on the Gemba Kaizen
principle through the adoption of 5S and the application of the PDCA cycle to the Procurement
Department to create continuous improvement. The proposed improvement is formulated as 17
strategies that are related one to another. Therefore, the strategies should be done in parallel starting
from the plan to the return process. Table 4 shows the proposed improvements.
Table 4. Proposed strategies.
Proposed Strategy Code Key Performance Indicator
SP-1 Improvement of coordination and PR1 Suppliers selection
collaboration between manufacturer, PR2 Preparing purchase order (PO)
customers and suppliers. PRe1 Documentation of procurement activities
SP-2 Keep bookkeeping for each procurement PR3 Submission purchase order (PO)
activity PF1 Material quantity planning
PF2 Fulfilment of supplier selection criteria
SP-3 Increase supplier loyalty
PC1 Maximize order cost
SP-4 Increase storage of finished products PA1 Finished goods inventory management
SR1 Management of materials in the warehouse
SS-1 Apply 5S method
SF1 Material procurement of suppliers
SRe1 Allocation of material inventory
SS-2 Understand the market situation SA1 Labour cost
SA2 Utilization of company resources
SS-3 Increase employee loyalty SC1 Change assets into money
SM-1 Increase product quality MR1 Product defects due to material quality
SM-2 Improving delivery accuracy according to MR2 Suitability of production output
customer requests MF1 Product lead time
SM-3 Shorten product lead time MRe1 Machine setup time
SM-4 Decrease setup time MRe2 Flexibility of Production volume
SM-5 Increase profit MC1 Production cost
MA1 “injek” Machine
SM-6 Increase production capacity
MA2 crushing Machine
SD-1 Increase material quality DR1 Material quantity received
SD-2 Improve the timeliness of material delivery DRe1 Delivery time
DC1 Material payment
SD-3 Improve the timeliness of payment
DA1 Material delivery transportation
RR1 material Quality control
SR-1 Apply Kaizen
RRe1 Material return

4. Conclusion
In the case study, it was found that the SCOR Model mapped the Procurement Department activities
into 3 SCOR levels. Level 1 consists of five core processes (plan, source, make, delivery, and return),
Level 2 configures SCOR's main matrix, i.e. customer-facing (Reliability, Responsiveness, and Agility)
and internal-facing (Cost and Assets) into 21 performance matrices. All SCOR level 2 performance

5
ICIEVE 2019 IOP Publishing
IOP Conf. Series: Materials Science and Engineering 830 (2020) 032083 doi:10.1088/1757-899X/830/3/032083

matrices are broken down into 28 Key Performance Indicators (KPI) at level 3. The measurement of the
Procurement Department's performance of 68.231 which is in the average category.
There are 17 proposed strategies designed with reference to the application of the Gemba Kaizen
principle through the application of 5S and the application of the PDCA cycle. The detailed design of
each strategy becomes an opportunity for further research.

Acknowledgment
This research received no specific grant from any funding agency in the public, commercial, or not-for-
profit sectors.

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