Proceeding, International Seminar on Industrial Engineering and Management

Menara Peninsula. Jakarta. Au~st 29-30, 2007 ISSN: 1978-774X

PERFORMANCE
EVALUATION OF SUPPLY CHAIN USING SCOR MODEL: THE CASE
OF PT. YUASA, INDONESIA
Sudaryantol and Rudiana Bahri2
IDepartment ofIndustrial Engineering, Gunadarma University, Jakarta Indonesia
E-mail: sudarvanto@stafffllmadarma.ac.id
2Graduate ofIndustrial Engineering, Gunadarma University, Jakarta Indonesia

ABSTRACT
Supply Chain Management (SCM) is the process of planning, implementing, and controlling the operations
of the supply chain aims at satisfying customer requirements efficiently. SCM has become increasingly
important in a global economy and has received a tremendous attention from both industries and
researchers in recent years. In the face of growing complexity of the global supply chains, more business
entities are realizing that SCM has become a key strategic aspect of their business. It is believed that efficient
and effective supply chain management can assists an organization in getting the right goods and services to
the place needed at the right time, in the proper quantity and at acceptable cost. However, until recently, due
to the complexity of supply chain system, it is very difficult to measure its performance. This paper focuses
on the performance measurement of supply chain by addressing on these following questions: Which
supply chain performance measures are used in practice? How was the metric evaluation implemented?
What were the problems that occurred in the performance measurement of a supply chain? To deal with
these questions, Supply Chain Operation Reference (SCOR) Model is used to measure the supply chain
performance. It provides a framework for evaluating the performance of supply chain management in the
corporation that comprises offive main processes namely plan, source, make, deliver and return. The SCOR
model contains measures for operational control and until recently is recognized as the most
comprehensive approach for the evaluation of supply chain operation. The empirical results of the
measurement of supply chain performance with the case of PT. Yuasa Indonesia indicates that the company
has achieved the best in their class for reliability (delivery performance, fill rate) and warranty return cost.
Two attributes i.e. production flexibility and value added employees are still at medium performance and the
rest attributes have the advantages performance.
Keywords: supply chain management, SCOR Model, performance evaluation

INTRODUCTION
The term Supply Chain Management (SCM) was
coined by Keith Oliver in 1982, referring to the
processof planning, implementing, and controlling
the operationsof the supply chain with the purpose
to satisfy customer requirements as efficiently as
possible.Supply Chain Management encompasses
the planning and management of all activities
involvedin sourcing, procurement, conversion, and
logistics management activities that includes
coordination and coIlaboration with channel
partners.In other word, SCM integrates supply and
demandmanagement within and across companies
(Wikipedia,2007).
Through an efficient and effective supply
chain management, an business organization could
get the right goods and services to the place needed
at the right time, in the proper quantity and at
acceptable cost (Morciniec and Yearworth, 2006).
In the face of growing complexity of the global
supply chains, more business entities are realizing
that SCM has become a key strategic aspect of their
business. Recently, SCM has become one of the
most important strategic aspects of any business
entity and increasingly important in a global
economy, as evidenced by an increasinglyattention
from both industries and researchers.
There are some factors that have dramatically
increased the complexity of supply chains, i.e.
fragmenting customer needs, increased cost
pressures based on global competition and a new
level of complexity. As global competition and
advancing technology makes borders irrelevantand

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Sudaryanto C49
Proceeding, International Seminar on Industrial Engineering and Management
Menara Peninsula. Jakarta. AUj!USt29-30, 2007
link business entities more closely, supply chains
are growing increasingly complex. A new level of
complexity of supply chain has been resulted by the
involvement of more parties and more
geographically dispersed location that certainly
leads to the difficulty in managing the supply chain.
In such environment, the complexity will increase
exponentiallythat must be considered and resolved
to lead to competitive advantage. However, until
recently, due to the complexity of supply chain
system, it is very difficult to measure how well their
supply chain performance.
Supply chain performance evaluation
becomes one of the biggest challenges for today's
competitive companies. SCOR model provides an
integral and comprehensive performance measures
and covering both external and internal facing
environment comprising both operational and
financial. These metric should provide sufficient
detail and richness to steer supply chain
performance rather than individual business
performance.
This paper focuses on the performance
measurement of supply chain by addressing on
these following questions: Which supply chain
performance measures are used in practice? How
was the metric evaluation implemented? What were
the problems that occurred in the performance
measurement of a supply chain? Accordingly, this
paper is organized as follows: section one outlines
a brief summary of the background of the study,
mainly focusing on the problem of the performance
evaluation of a supply chain. Section two provides
a review of the theoretical background of the
research. Methodology for measuring supply chain
performance will be presented in the section three.
The empirical results and discussion of the
measurement of supply chain performance with the
case of PT. Yuasa Indonesia will be presented in
section four. The conclusions of the study is
described in the section five.
mEORETICAL BACKGROUND
Supply Chain Operations Reference (SCOR)
Model
The Supply Chain Operations Reference-model
(SCOR) has been developed and endorsed by the
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ISSN: 1978-774X
Supply-Chain Council (SCC) as the cross-industry
standard for supply-chain management. The see
was organized in 1996 by Pittiglio Rabin Todd &
McGrath (PRTM) and AMR Research, and initially
included 69 voluntary member companies (Supply
Chain Council, 2007a). The membership is now
open to all companies and organizations interested
in applying and advancing state-of-the-art supply-
chain management systems and practices. Since its
introduction in 1996, the SCOR model has grown
significantly both in terms of acceptance and
usage. Currently, over 800 organizations are
involved in maintaining and improving the model
through continual partnership with the Supply
Chain Council. The SCOR model is intendedto be
an industrial standard that enables next-generation
supply chain management. The latest version of the
SCOR model was SCOR 8 that has been released
on 2007 (Supply Chain Council, 2007a).
The SCOR model integrates business process
reengineering, benchmarking, and process
measurement into a cross-functional framework.
The business process reengineering capture the "as-
is" state of a process and derive the desired "to-be"
future state. Benchmarking refer to quantification
the operational perfonnance of similar companies
and establish internal targets based on "best-in-
class" results. Finally, Process measurement is
characterized by the management practices and
solutions that result in "best-in-class" performance
(SCC, 2007a). Accordingly, as a reference model,
SCOR contains the 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 and standard alignment to features and
functionality
The SCOR model is the first model that can
be used to configure the supply chain based on
business strategy by providing standard
descriptions for the activities within the supply
chain. It also identifies the performance
measurements and supporting tools suitable for
each activity and integrates the well-known
concepts of business process reengineering,
benchmarking, and process measurement into a
cross-functional framework. It captures the 'as-is'
state of a process and then derives the performance
Performance Evaluation of ... ...
Sudaryanto
 Proceeding,International Seminar on Industrial Engineering and Management
Menara Peninsula. JakLzrta. AUJ!USt 29-30. 2007 ISSN: 1978-774X

of similarcompanies and establishes internal targets The definitions of the above processes are
basedon 'best-in-class' performance. follows: The Plan process consists of processes
The structural framework of the SCOR model that balance aggregated demand and supply to
is composed of the following elements: Standard develop a course of action which best meets
descriptions of the individual elements that make sourcing, production and delivery requirements.
upthe supply chain processes, standard definitions Plan processes deal with demand/supply planning,
of key performance measures, descriptions of best which include the activities to assess supply
practices associated with each of the process resources, aggregate and prioritize demand
elements, Identification of software functionality requirements, plan inventory, distribution
that enables best practices. requirements, production, material, and rough-cut
capacity for all products and all channels. The
Scor Processes and Levels Source process contains processes that procure
goods and services to meet planned or actual
The SCOR process can go into many levels of demand. Sourcing/material acquisition includes the
processdetailto help a company analyze its supply jobs of obtaining, receiving, inspecting, holding,
chain.It spansall customer interactions, from order and issuing material. Management of sourcing
entry through paid invoice. The process helps infrastructure includes vendor certification and
companiesunderstand how the 5 steps repeat over feedback, sourcing quality, in-bound freight,
and over again between suppliers, the company, component engineering, vendor contracts, and
and customers. The SCOR model is originally vendor payments. The Make process includes
foundedon five distinct management processes, functions that transform goods to a finishedstate to
namely,Plan, Source, Make, Deliver and Return meet planned or actual demand. Make is the core
whichare called level 1 processes. The processes process of the manufacturing system in which
are further decomposed into process categories actual production execution takes place. The
(level2) depending on the type of environment in Deliver process comprises processes that provide
whichthe SCOR model is applied. The p~ocess finished goods and services to meet planned or
categoriesfurther contain process elements, which actual demand, typically including order
isthethirdand the last level in the SCOR model. At management, transportation management, and
level3, the elements model contains performance distribution management. Processes associated
attributes, metrics, best practices and software with returning or receiving returned products for
featuresrequired for that element. Figure 1 shows any reason are grouped into Return process. These
theinfrastructureof the SCOR model, while Figure processes extend into post-delivery customer
2 shows the process levels. support.
Hierarchically, the SCOR model contains
three Levels of process detail as illustrated on
Picture 2. Level 1 is the top level that deals with
process types and defines the supply chain using
five key processes: Plan, Source, Make, Deliverand
Return. The SCOR model Level 1 metrics
characterize performance from customer-facingand
internal-facing perspectives. At this level, basis of
competition is defined and broad guidelines are
provided to meet the competition.

Figure 2. Processes covered by seOR (See, Level 2 is the configuration level and deals with
2007a) process categories. It defines different categories
within the Level 1 processes. At this level,
processes are configured in line with supply chain

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Proceeding, International Seminar on Industrial Engineering and Management
Menara Peninsula, Jakarta. AUJ!USt29-30, 2007 ISSN: 1978-774X

strategy in which internal redundancies can be There are three types of processes in the
identifiedand eliminated. SCOR model: planning, execution and enable.
Planning processes plan the whole chain alongwith
...11I
n - planning specific type of execution process.
Execution processes cover all process categoriesof
Source, Make, Deliver and Return except the
'Ii
11
enable process categories. Enable process of a
particular process type defines the constitution of
E
iI that particular process element. Using the four
fi levels of the SCOR model, a business can quickly
:I
I and unambiguously describe its supply chain. A
!
. supply chain that is defined using this approachcan
I.ftri J del , . canpenJ\ abtttr"'
~~.lbo-
i . ~.......
""'-8DdfOCllioCJd:

also be modified and reconfigured rapidly as

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business and market requirements change. The
SCOR model has a powerful role in implementing
supply chains. The SCOR model Levels 1 and 2
(.otnpJI'ia"llntbll\ot"lhdtl~
~.a..-I3. metrics keep management focused, while Level 3
metrics support on-goingdiagnosis.

Metrics

Figure 2. The level ofSeOR Model (See, 2007b) Metric is a standard of measurement of
performance that gives the basis on which to
The goal at Level 2 is to simplify the supply
chain and enhance its overall flexibility. At Level 2, evaluate the performance of processes in the supply
chain that must be reliable and valid. Reliability
the SCOR model provides a tool kit of different
deals with the consistency of your research
process categories. At Level 2, market constraints,
instrument. Validity deals with whether the
product constraints and company constraints are
variables are appropriately defined and
considered to configure the inter- and intracompany
representative of the concepts or constructs under
process categories.
investigation.
Level 3 is the process element level and is the
Although the SCOR model provided various
lowest level in the scope of the SCOR model.
performance metrics for supply chain evaluation, it
Implementation levels that are below Level 3, in did not indicate whether the metrics were suitable
which we decompose process elements into tasks for all type of industry, and therefore, SCOR model
and further activities in classical hierarchical
customization is sometimes required. The selection
manner, are not in scope of the SCOR model. Level
of suitable performance metrics associated to each
3 allows businessesto define in detail the processes
process element including the suitable performance
identified, as well as performance metrics and best
metrics to evaluate supply chain performance.
practices for each activity. Performance levels and
Calculation of a metric may be dependent not only
practices are defined for these process elements.
on the process data items but on the calculation of
Benchmarks and the required attributes for the more detailed, lower level metrics as well. The
enabling software are also noted at this level. At
SCOR model does not prescribe a method for
Level 3, inputs, outputs, and basic logic flow of
rolling up the metrics.
process elements are captured. The latest version of SCOR model endorses
At Level 4, implementation of supply chain 13 performances of the level 1 metrics. Each
processes takes place. This level describes the metric of SCOR Model is associated with exactly
detailed tasks within each of the Level 3 activities
one out of five performance attributes namely
needed to implement and manage the supply chain
on a day to day basis.

Performance Evaluation of ......

C52 Sudaryanto
 Proceeding,International Seminar on Industrial Engineering and Management
MenaraPeninsula. Jalwrta. AUJ!Ust29-30. 2007 ISSN: 1978-774X

Supply chain reliability, supply chain Operating income and profit, improvement
responsiveness,supply chain flexibility, supply in return on investment (ROI) and in return on
chaincosts, and efficiency in managing assets, as assets (ROA) as well. The use of a process
shownin Table 2. In practice, it is very difficult to reference model allows companies to communicate
achievethe best performance in all 13 metrics, using common terminology and standard
therefore,most companies typically choose among descriptions of the process elements that help
fourto six of the 13 performance metrics to focus understand the overall supply chain management
on. process and the best practices that yield the optimal
The SCOR model has proven to benefit overall performance.
companiesthat use it to identify supply chain
problems.Bolstorff & Rosenbaum, (2003) reveals RESEARCH METHOD
the benefits of implementing SCOR model in
businessorganization. The benefits comprise of The method used to measure the supply chain
operating cost reduction, customer service performance in this research is Supply Chain
improvement, rise in Operation Reference (SCOR) Model. It provides a
tramework for evaluating the performance of
Table 2. Levell metric supply chain management in the corporation that
Perfonnance Attributes
comprises of five main processes namely plan,
Customer Internal source, make, deliver and return. Moreover, the
facinl!. facinl!. SCOR Model contains measures for operational
Levell metric control and until recently is recognizedas the most
comprehensive approach for the evaluation of
c supply chain operation. The measure used in this
'iij :E 1;;
0
tJ
III
III
research comprises 13 performances of the level 1
C .;( U
8. 0)
i<:
-< metrics. Each metric of SCOR Model is associated
III
with exactly one out of five performanceattributes
namely supply chain reliability, responsiveness,
flexibility, costs and assets.
Delivery performance The definition and calculation for each metric
Fill rates according to Supply Chain Council (2007), can
briefly described as follows: delivery performance
Perfect order fulfillment
measures the percentage of orders deliveredon time
Order fulfillment lead time with respect to the total number of orders delivered.
Fill rate is defined as percentage of ship-from-stock
Supply chain response time
orders shipped within 24 hours of order receipt.
Production flexibility Order fulfillment lead time indicates the average
Total SCM cost
actual lead time consistently achieved trom
customer authorization of purchase order to final
Cost of goods sold installation/order completion at customer end. It is
calculated as percentage of sum of lead time
Value added productivity
required for each order fulfillment trom purchase
Warranty return cost order authorization to final installation divide by
total number of orders. Perfect order fulfillment is
Cash to cash cycle time
measured by the percentage of orders meeting
Inventory days of supply deliver performance and with complete and
Asset turn accurate documentation with no shipping damage.
Supply chain response time refers to the time it
Source: SCOR takes the integrated supply chain to respond to
abnormal (significant) change in demand.

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Proceeding, International Seminar on Industrial Engineering and Management
Menara Peninsula. JakrIrta. AUJ!USt29-30. 2007 ISSN: 1978-774X

Production flexibility can be seen in two parts, measurement metric, the order fulfillment lead time
upside flexibility and downside flexibility. Upside of 40 days will equivalent with the performance of
flexibility is number of days required to achieve an o % and 10 days lead time equal to achievement of
unplanned sustainable 20% increase in production. 75 % of performance. Through similar
Downside flexibility is percentage order reduction transformation, the target, actual achievement and
sustainable at 30 days prior 'to delivery with no the performance of each attribute, known as SCM
inventory or cost penalties. The production metric score card, can be summarized as the Table
flexibility is dependent upon internal manufacturing 1.
capacity, direct labor and material availability and The results of the analysis of supply chain
affects inventory on balance sheet. Total logistics performance of PT. Yuasa clearly indicate that the
management cost is associated with the sum of achievementof some performance attributes could
supply chain related costs for order management, not be fully met according with the target. In terms
material acquisition, inventory carrying, finance of supply chain reliability, two metrics namely
and planning, and MIS costs. Cost of goods sold delivery performance and fill rate, both of them has
associated with buying raw materials and producing achieve the level of best in class with the value of
finished goods, includes both direct cost and 99 %. This level indicates that the supply chain
indirect cost Value added productivity is calculated reliability of the company has achieved the ultimate
as the differencebetween total product revenue and performance. It worth to be noted that the high
total material purchases divided by total achievement is more affected by good performance
employment. Warranty cost or returns processing of its supplier (external facing) selected by PT.
cost includes materials, labor, and problem Yuasa rather than due to internal factors.
diagnosis for product defects. Cash-to-Cash cycle
time is a measure of the time required in days to Table 1. SCM metric score card 0 PT. Yuasa
No Perfonnance Attribute Achive- Perfor-
convert cash paid to suppliers into cash received ment mance
from customers, including the inventory required. %
Inventory days of supply indicates the total gross I Deliverv Derformance ("Ai) 100 99.1 99.1
2 Fill rates (%) 20 19 99
value of inventory at standard cost before reserves 1-30 10 75
for excess and obsolescence. Asset turns refers to 3 Orderfulfillment lead lime
(days)
the total turns of capital employed and calculated 35 30 65
as total gross product revenue divided by total net 1-10 5 50
assets.
20 35 65
RESULTS AND DISCUSSION 0.5 0.7 70
0.4 0.2 90
0.7 0.9 55
The supply chain performance is defined as the
30 35 65
percentage of the actual achievement to the highest
target (best in class) for each measurement metric. 30 24 75
It should be noted however, that the consistency in 1.7 1.5 70
measuring good performance should be maintained,
whether the attributes associated with benefit or
cost For attributes associates with benefits, i.e In terms the responsiveness as measured by
delivery performance, the higher the value, the the metric of order fulfillment lead time, the actual
better, and on the contrary, the lower the better for achievement is 10 days and thus place PT. Yuasa
all attributes associate with the cost, for example at the level of advantage with the performance level
for total SCM cost. of 75 %. The metric associated to the supply chain
Through a linear transformation, the best flexibility comprise of response time and
performance will have the value of 100 % and the production flexibility have different performance
worst performance has the value of 0%. For level. The response time (35 days) is still at the
example, based on the threshold value for

Performance Evaluation of ... ...

C54 Sudaryanto
 Proceeding, International Seminar on Industrial Engineering and Management
Menara Peninsula. JakLlrta. AU$!USt 29-30. 2007
advantagelevel, but the production flexibility of 5
days clearly place PT. Yuasa its at medium
performancelevel. Accordingly, the company
should narrow this gap to achieve better
performances.
Table 4.2. Actual versus competitive performance
of supply chain
Performance
as-is
Best in class
Best in class
Advantage
Advantage Best in class
Best
Best
Best
Best
Best
10. Best
11. Best
12. Best
Concerning the cost performance attributes,
thevalueof the metric is mixed. In term of cost of
goodand total SCM cost, the companyis still at
the performance level of advantage. In term of
warrantycost, the company has achieve the best in
class performance level, and unfortunately, its
performancein terms of value added employee
productivityis fall in the medium competitive level.
Finally,all the metrics associated to the asset, i.e
inventorydays of supply, cash to cash cycle time
and asset turn have the performance of advantage
level.
Basedon their actual achievement,there
arefivedifferentcategories for supply chain
performance,namely major opportunity (0 - 20 %),
disadvantage (>20 % - 40%), medium (>40 %-
60%),advantage(>60 % - 80%) and best in class
(>80% -100%).
Ideally a company should achieve the best
performancein all 13 metrics, but in practice it is
verydifficult to realize them. In the case of PT.
Yuasa, three metrics Le. delivery performance, fill
rate,cost, warranty return cost) have achieved their
bestperformance. The empirical results reveal that
the warranty return cost is the only internal facing
attributes achieving best in class performance.
Performance Evaluation of Supply Chain ......
Sudaryanto
ISSN: 1978-774X
Accordingly, efforts should be made to improve the
performance of their supply chain attributes, both
from internal perspectives related to cost and asset
and from the external parties such as
responsiveness and flexibility.
CONCLUSION
The empirical results of the measurement of supply
chain performance with the case of PT. Yuasa
Indonesia indicates that the company has achieved
the best in their class for some performance
attributes associated to reliability (delivery
performance, fill rate) and cost (warranty return
in class cost). Two attributes Le. production flexibility and
in class value added employees still have medium
in class
in class
performance and the rest attributes associated with
in class supply chain have the advantage performance.
in class
in class
in class
REFERENCES
Morciniec, Michal and Michael Yearworth, Using
the SCOR Model to Assess the Potential
Impact on Business Metrics of an IT Solution,
Hewlett-P~ckard Labs, Bristol, UK, 2006
Supply Chain Council, Supply Chain Operation
Model: SCOR Overview version 8.0,
URL:www.supply-
chain.orf!! galleries/default-
file/SCOR800verviewBooklet2.pdf, July,
2007a.
Supply Chain Council, SCOR Quick Reference,
URL: http://www.supply-
chain.orgl galleries/default -file/
SCOR8.0ReferenceGuide.pdf, July, 2007b.
Bahri, R. Analisis terhadap pengukuran kinerja
rantai pasokan (Supply Chain) dengan
metode SCOR pada PT. Yuasa Battery
Indonesia, Skripsi, Department of Industrial
Engineering, Gunadarma University, 2007.
Boston Consulting Group, Creating the Optimal
Supply Chain: special report, URL:
www.bcg.com. July 2007.
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