Supply Chain Maturity

Supply Chain Maturity

The word maturity means a response towards action compared to the standard reaction.

The same concept is used for the “Supply Chain Maturity”, it’s how well a supply chain acts to a demand from the downstream to the upstream.

The maturity of a supply chain depends holistically on (People, Process, Communication, and Information Technology).

There are 4 evolutionary stages for the supply chain:

(A) The Basic supply chain

At this stage, there is no connection between the suppliers and the customers.

Consider the below red boxes as silos where there is a blind gap between the sending and receiving points in the supply chain.

SCM1

People

Even the internal departments within the organization are working in separate silos like (Sales, Marketing, R&D, Finance with no harmony).

And the most challenging silos are within the supply chain departments (Planning, Logistics, Customer Service and Make).

These kinds of silos are built in each node in the supply chain, which blocks the blinding of the flow of demand to the upstream.

Process

There is no clear process that defines the supply chain where each department also inside the supply chain is working alone blindly to close their KPI’s.

Information

There is no integration on the data and the info received from downstream flowing back to the upstream.

Almost are excel sheets with a lag of real-time tracking. It’s a kind of reactive supply chain.

There is no balance between the service level and the inventory level as the supply chain is treated as a cost center by the organization.

(B) The internal integrated supply chain

It’s the second step in the revolutionary phases for the supply chain maturity. Where the supply chain starts to have a collaboration internally between the (Make, deliver, and plan) department.

SCM2

People

A maturity got leveled up internally within the supply chain by clearing conflicts internally and harmonies the communications between each function to ensure a smooth flow of info across.

But still, there is a gap between the supply chain departments and the rest of the organization.

Process

Now the process is settled to enhance the cost of the goods sold in terms of (Material, logistics, and Conversion cost). Efficiency starts to raise up on this stage due to the beginning of internal process creation.

Basics of MRP and MPS are used in this stage to manage capacities and inventory levels but almost with manual inputs.

Information

Those manal data are managed internally between departments to manage the flow of goods and cash.

But still, there is a big barrier between the supply and the real demand from the downstream.

(C) The full integrated supply chain

Another step further the maturity where there is full integration happens within the organization, not only the supply chain.

SCM3

People

Collaboration happens between all functions across the business (Marketing, finance, sales, R&D, and the supply chain).

For product designs and innovations, all department has a voice to assess the network. Business cases for products are assessed precisely as financial statements, all departments work together to optimize between the cost and the customer needs for the designs of the new products.

Process

An internal robust process is structured inside the organization with clear processes and responsibilities. Still, there is a process gap in capturing the real demand in the downstream and convey it to the upstream.

An optimization between inventory level and customer service occurs.

information

ERP system is installed to store all the database inside the organization library. Transactional real-time data is implemented to capture the real flow of information at a certain point of time-integrated with all organizations.

MRP and MPS with a clear Masterdata maintenance are maintained at this stage.

(D) Mature supply chain (Agile/Flexible/Collaborative/Extended)

This is the optimal level of maturity of the supply chain where it’s defined as (collaborative, extended, flexible and Agile).

SCM4

People

A high level of partnership takes a place between the customers and the suppliers (SRM and CRM). The real voice of the consumer is conveyed properly to the downstream.

Product design and innovation are initiated based on the consumer’s need not to a competitor fight back.

Process

A value stream mapping takes a place with a process chart in order to reduce any nonvalue adding activities in the chain to become a value chain.

Working as a pull system, not a push system based on the real demand on the market which allows and triggers a fast response to the upstream and enhances the stock health inventory across all nodes in the supply chain.

Time to market and time to volume is enhanced by using the agile process and minds.

Information

An end to end visibility from the customer to the supplier side takes a place through a collaborative sharing info like (Point of sales “EPOS”, weighted and numerical distribution, market shares as a real-time data, trade stocks triggering, etc.)

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