Designing Supply Chain Analysis Tool Using SCOR Model

(Case Study in Palm Oil Refinery)

F. Lestari1, @, K. Ismail2, A. B. Abdul Hamid3, @, W. Sutopo4
1
PhD Student on Faculty of Management, Universiti Teknologi Malaysia, Malaysia
@
Scholarship Grantee of Amanah Pelalawan Foundation
2
Faculty of Management, Universiti Teknologi Malaysia, Malaysia
3
Faculty of Management, Universiti Teknologi Malaysia, Malaysia
@
Visiting Professor at Mitrans
4
Department of Industrial Engineering, Sebelas Maret University, Indonesia
(E-mail address: fitra_lestari@yahoo.com; kamariah@icc.utm.my; m-abakar@utm.my; sutopo@uns.ac.id)

Abstract - Business strategies of palm oil supply chain
include linkages between plantation as suppliers, milling,
refining and customer. Case study on palm oil refinery shows
the distribution of product from supplier to customer has a
pattern that can be standardized into operational procedures
within business processes. This paper aims to present the
implementation methodology of SCOR Model based case
study on palm oil refineries using the software Process
wizard. The methodology can facilitate the blending of
business objective, strategy, process and technology in the
supply chain. The result shows SCOR templates is very
useful tool for the design of a supply chain configuration and
also provide the ability to improve the system through best
practice projects. It is necessary to note that the software
Process wizard can be used as a tool for analyzing
configuration operations of the supply chain.
Keywords - Palm oil, Process wizard, refinery, SCOR,
supply chain
I. INTRODUCTION
Business strategies of palm oil supply chain include
linkages between the plantation as suppliers, milling,
refining and customer which it illustrates the relationship
between business entities into a chain [1]. Palm oil
industries have a complex business chain. The business
processes of palm oil are initiated from plantation, and
then processed by the processing industries as refinery,
distributed to industry of product developers who produce
diverse products until the end users as customers.
In the refinery processes, there is a batch-process of
processing crude palm oil into intermediate goods or
finished goods. Many industries utilize the processing of
palm oil refineries. Then, the result of this processing will
be distributed to the customer at local market industries
which producing finished goods of palm oil products and
the international market using the port center as shipping
services. Distribution of crude palm oil to be processed in
the refinery industry requires handling the storage in the
form materials of liquid or oil. The product of refinery
processes not only in the form of liquid, but also can be a
solid such as specialty fats thus requiring storage strategy
in logistic arrangements and the distribution of finished
goods. Products in the form of solid and liquid have
different handling in terms of the distribution to the
customer [2]. Therefore, it needs an analysis tool that can
support integration within the supply chain. Designing of
supply chain practices in the palm oil industry will
emphasize on integration. According to van donk et al.,
[3] uncertainties and complex operational characteristics
increase of the need for integration.
There is a methodology that can facilitate the blending
of business objective, strategy, process and technology in
the supply chain. The tool is SCOR model which it seeks
to develop the business processes of an interconnected
flow material between business networking [4]. In
addition, this model can also describe the mapping
between the business process areas based on their
stakeholders. The advantage of this model, users can
design business chain and to develop strategies and
improve on technology within a business process.
The software Process wizard is a software that can
build a business strategy using the SCOR methodology to
design a model within a supply chain. This paper aims to
present the implementation of the SCOR Model based
case study on palm oil refineries using the software
Process wizard. This application is expected to give
impact in the form one of the analytical tools to re-
engineering supply chains with the implement of SCOR.
II. SUPPLY CHAIN
Strategic Supply Chain Management (SCM) is one of
the strategies used to win the market. This strategy aims to
minimize production costs with minimal resources to
achieve more profit and customer satisfaction at the right
time in the right place and the right amount [5]. In
addition, SCM is an integration of the organization and
activities through cooperative organization relationship,
effective business process, and high levels of information
sharing to create high performing value systems that
provide member organizations a sustainable competitive
advantage [6]. However, research found that these
strategies were used for different constructs for different
country. In fact, the manager has different perceptions and
cultures on how to arrange a strategy for its organization
[7]. Previous studies have shown that different industry
may also have a different effect on SCM practices [8] [9].

978-1-4799-0986-5/13/$31.00 2013 IEEE

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To solve these problems, the decision maker should find
fitting on these approaches and models based on
respective business processes.
Relationship among entities within SCM is exchanging
of material flows, and financial information. This
exchange occurs from upstream to downstream by
providing some benefit to the product. Application of
SCM covers with production and large geographic-scale
distribution of a diversified set of goods. They are like
horticultural, meat, fishery, dairy, bakery, beverages and
other products are proposing logistic and safety challenges
which require an implementation of the technology [10].
III. SCOR MODEL
Supply chain operational reference (SCOR) is the
product which is developed by Supply Chain Council.
SCOR model is a tool for mapping, benchmarking and
configuration operations of supply chain [11]. This model
is divided into three parts: performance metric, process
building block and best practice. In this paper, SCOR
model will be implemented by using software which
adoption SCOR model version 8.0. The software provides
modules to build a process model into supply chain which
it is called Process wizard. Furthermore, glossaries in this
terminology can be used for all business process.
A. Performance metrics
Performance metrics serve to measure the performance
of a business process using the standard metrics available.
This measurement is a tool for benchmarking between our
company and competitors. In addition, this metric is also
known as key performance indicators. The performance is
divided into two types of elements: performance attributes
and performance indicators.
B. Process Modeling
Process model serves to configuration operations of
the supply chain structure and improvement activities in
the supply chain. The model defines the process into three
levels. Level 1 is process definitions and describes the
scope and level configuration of the supply chain. This
level contains five different processes such as Plan,
Source, Make, Deliver and Return.
Level 2 is process type level which positioning of
business process in the supply chain determines the supply
chain strategy. This level contains 26 level 2 in different
processes. In Plan level, the model is distinguished among
Plan supply chain (P1), Plan source (P2), Plan make (P3),
Plan deliver (P4) and Plan return. In the Source level, the
model is distinguished among Source stocked product
(S1), Source make to order product (S2), and Source
engineering to order product (S3). In Make level, the
model is distinguished among Make to stock (M1), Make
to order (M2), and engineering to order (M3). In Deliver
level, the model is distinguished among Deliver stocked
product (D1), Deliver make to order product (D2),
Deliver engineering to order product (D3), and Deliver
retail product (D4). Then, in Return level, the model is
distinguished among Source return defective product
(SR1), Source return MRO product (SR2), Source return
excess product (SR3), Deliver return defective product
(DR1), Deliver return MRO product (DR2), Deliver
return excess product (DR3).
Level 3 is process category which contains 185 level 3
processes. This level is a breakdown of the sub process of
level 2. It shows same procedures to other companies
whether they want to configuration operation in the supply
chain. For the instance, in process Source stocked product
can be generated in Schedule product deliver (S1.1),
receive the product (S1.2), verify product (S1.3), transfer
product (S1.4), and authorize supplier payment (S1.5).
C. Best Practice
Best practice is a way to improve and configure a set
of supply chain processes. Improvement can be done
through automation, technology, special skill which
applied in the process and unique method for distributing.
The software Process wizard provides a module to do best
practice based on process at the level 2. The module of
improvement consists of type best practice, definition,
status level of maturity and level of importance.
D. SCOR Template in Process wizard
Template in Process wizard consists of several
modules. In this case study, it will use three modules:
Balanced scorecard, Geographic diagram and Thread
diagram. Balance Scorecard is used to generate
performance metrics which user can pick up materials
from the master database. Configuration operations of the
supply chain can be built with the drag icon from the
toolbox as representative in the business process.
Furthermore, a map that describes geographic area is
available in this module. All of this can be created using
the Geographic diagram module. Thread diagram serves
to build a block diagram of SCOR model. This module
show interconnected flow material between operations of
the supply chain.
IV. CASE STUDY
This paper tries to provide an analysis tools to design
palm oil refinery within a supply chain structure.
Designing of palm oil refinery supply chain is done with
an adoption SCOR model which using software Process
wizard. The structure of supply chain involves processing
of milling, refinery and penetration of the market.
A. Palm Oil Refinery
A case study was conducted from refinery process in
Johor Bahru, Malaysia. This process produces oil and
 Proceedings of the 2013 IEEE IEEM
specialty fats to be shipped to the customer. Raw materials
for the production process are obtained from the milling
industry. Furthermore, the finished products will be sent
to the local industry, using tank trucks and also shipped
through the port center uses the shipping services. This
distribution uses Third-party Logistics (3PL) service
delivery where online booking is done through established
contracts. Fig. 1 is a business process that occurs on the
palm oil refinery. For the detailed information, the red line
means service by 3PL and the black line means cover of
their own business. Furthermore, process model between
entities supply chain multiple link concurrently in palm oil
refinery can be seen in fig. 2.
Fig. 1. Business processes palm oil refinery
B. Adoption SCOR model
Benchmarking is done by selecting performance
metrics from the master database of software Process
wizard then the data entered source of the data in annual
reports. In this case, the performance attributes divided
into external and internal. External facing includes supply
chain attributes of reliability, responsiveness, and
flexibility. While the Internal faces include supply chain
attributes of cost and asset management. It can be seen in
fig. 3. Each attribute has different performance metrics
depend on its performance attributes used. In the instance,
attribute reliability has a metric as Perfect order
fulfillment. Value this metric can be achieved with [Total
perfect orders] / [Total number of orders] x 100%.
This software provides a tool to develop the supply
chain based on the work area as well as its association
with other industries. Refinery process which is located in
the state of Johor Bahru will be shown through the
southern part of the Malaysian map which is bonded
directly to Singapore. Fig. 4 shows that this project was
done on a Geographic diagram module which the icon of
industries can be dragged from the toolbox on this
software. In addition, movements of material flow from
suppliers to manufacturing and to the customer shown
through the direction of arrow. Each entity will display the
process type on level 2 based on the SCOR Model
methodology.
The thread diagram module will generate process
models from the Geographic diagram module. The results
showed that process models are distinguished based on the
business process of entities in the supply chain structure.
Fig. 5 shows the definition of process in every industry.
The process model of refinery process shows its business
strategy in running process industries. For the instance,
the refinery stored stock materials from suppliers in
storage, produced products in the production system based
on a push strategy and stored the final product at the
warehouse. Plan level shows all the overall planning
process is done in the form of a Plan supply chain.
Furthermore, in the preparation of the return strategy, the
source that reject will return to the supplier. Then, if the
customer is not satisfied with a product of this industry,
they will repatriate the product to replacing with a product
that has been agreed.
Best practice module performed on each process type
at level 2 which wants to be improved. Fig. 6 shows best
practice of process type of Stock Delivery of product (D1)
on Internet orders. The user can declare status is going on
at this time and determine the level of importance to be
improved. Each Best practice module can be
recommended for proposed projects that will be improved.
V. CONCLUSION
The palm oil refinery has business networking that
associated with suppliers and customers. Distribution of
product from the supplier to the customer has a pattern
that can be standardized into operational procedures
within business processes. This paper has successfully to
show designing supply chain at a case study using
software Process wizard which adopted methodology in
the SCOR model. The result of this paper shows SCOR
templates is very useful tool for the design of a supply
chain configuration and also provide the ability to
improve system through Best practice module. Therefore,
the Process wizard is software that can be used as a tool
for analyzing configuration operations of the supply chain.
Improvements through Best practice module
recommend projects which would be carried out. Further
studies proposed to rank the priority project that wants to
improve. Furthermore, improvement strategy of business
process directed towards dynamic supply chain analysis
tool on discrete event simulation. It aims to improve the
supply chain system which featuring multiple scenarios of
business process to achieve optimal results.
 Proceedings of the 2013 IEEE IEEM

ACKNOWLEDGMENT [6] P. Trkman, K. McCormack, M. P. V. de Oliveira, and M. B.

Ladeira, The impact of business analytics on supply chain
The authors thank to the Amanah Pelalawan Foundation performance, Decision Support Systems, vol. 49, no. 3, pp. 318
for Ph.D Degree Scholarship Program that fund this 327, Jun. 2010.
research. [7] W. S. Chow, C. N. Madu, C.H. Kuei, M. H. Lu, C. Lin, and H.
Tseng, "Supply chain management in the US and Taiwan: an
empirical study." Journal Omega, vol. 36. no.5, pp.665-679 2008.
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Fig. 2. Supply chain in palm oil refinery

Fig. 3. Balanced scorecard module

Proceedings of the 2013 IEEE IEEM

Fig. 4. Geographic diagram module

Fig. 5. Thread diagram module

Fig. 6. Best practice module