supply chain maturity model
DESCRIPTION
it tells about the four levels of maturity modelTRANSCRIPT
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Supply Chain Maturity Model
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The Supply Chain Evolution
4
Value chain
Collaboration
5
Full Network
Connectivity
The Innovators are poking through or jumping over the wall
to III and IV (tomorrows market)
I
Enterprise
Integration
Functional
Process
Intra-
Enterprise
Inter-
Enterprise
External
Total
Business
System
3
Partner
Collaboration
2
Corporate
Excellence
Most are working toward Level II
improvement (todays market)
Logical progression of supply chain efforts; none can be skipped.
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Level 1 Functional Process
Focus particularly on sourcing and logistics Bring enterprise integration into focus as organizational goal Overcome resistance for info sharing and best practice integration Significant savings through vendor base rationalization- 1-2% profit Focus on inbound freight, internal material processing and
manufacture, outbound freight, warehousing and delivery mechanisms to support logistics system
1st level focus is on internal processing and outbound freight and later on internal freight.
0.5-1% benefit achieved reduce cost per mile on transportation, reduce warehouse and trasnfer ownership to 3rd party
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Level 2- Intra-Enterprise Attain some degree of optimization across
internal processes.
Supply chain infrastructure begins to appear with sourcing and logistics moving to higher level.
Planning is important and order management becomes relevant
Order management system to eliminate errors critical for planning system
S&OP introduced for formal process- analyze customer orders, production process, customer delivery.
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Forecast accuracy improves from 40% to 50% in level 2. With key customers involvement and maturing in S&OP, can improve to 60% at level 3.
Inventory management reduction achieved however may come with upstream movement of inventories
Supply chain organization will be established with a designated leader and collaboration with IT emerging and will finally result in alliance between SCO and IT
Corporate Intranet in place, reduced internal resistance to adoption
TMS and WMS systems start appearing with technology enablers
Level 2- Intra-Enterprise
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Level 3 Inter-Enterprise Level 1 and 2- Firms internal excellence comfort
zone, reluctant to breakout- focus on cost reduction
Top mgmt. focus to move to level3- collaborative working.
Selective partner system to achieved ASCM- end to end processing view with partner collaboration
Forecasting and planning get further improved with production and delivery capability. APS introduced.
Resistance to handover processing/ sharing vital info. to external organization.
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High level of improvements; Savings shared with selected partners.
Significance of distributors to improve supply chain with improved inventory position.
Focus begins to shift now to key customers and analysis of linked process steps continues
Level 3 Inter-Enterprise
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Level 4- Partner Collaboration
ASCM efforts are established- Supply chain consistuents share knowledge on extranet and collaboration to increase revenues and better utilize combined assets
Reduction in costs and service improvements.
Metrics focused on customer satisfaction.
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Level 5- Full Network Connectivity
Intelligent value network can reach as high as 5-8%.
Linked organization share virtually all data electronically and working collaborative on intelligent systems- still an ideal scenario
Few firms in that sight Technology Intel, Cisco, HP, IBM; Consumer goods- Colgate-Palmolive, P&G, Nike, GE, Toyota.
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The Potential Savings and Revenue Enhancements
Projected benefits from Collaborative Initiative implementations
Inventory
reduction
Reduced
logistics
costs
Efficiencies
in direct
spend
Efficiencies
in indirect
spend
Savings
in sales
expenses Savings
in R&D
Total
cost
savings Margin
increase
Sales
increase
Total
benefits
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Percent of
revenue
*Source: CSC projections based on benchmarked performance of comparable solution offerings
The Collaborative Network solution set looks to achieve projected cost savings on the order of
5% of revenues; with total benefits to be obtained at an estimated 7% of revenues
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Co
nfi
gu
re
Plan
The process model
for any enterprise
comprises typical
building blocks
1.Manage the
supply chain
2. Manage
products
Plan
Source
MAKE Deliver
Return
Manage
product
portfolio
Design
product
Maintain
processes Change
product
Design
process and
tooling
Process Maturity Managing Supply Chain
Based on SCOR Model: Supply Chain Council
Co
nfi
gu
re p
rod
uc
t
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Process Maturity: Managing Supply Chain
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Technology Maturity: Managing Supply Chain
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Process Maturity: Design Engineering
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Process Maturity: Production Engineering