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Stage 1: Functional Focus
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Functional departments within an organization focus on improving their own process steps and use of resources. Managers typically focus on
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APPENDIX B The Supply Chain Maturity Model
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their individual department s costs and functional performance. Processes that cut across multiple functions or divisions are not well understood, resulting in limited effectiveness of complex supply chain processes.
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Stage 2: Internal Integration
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Division- or companywide processes are now defined, allowing individual functions to understand their roles in complex supply chain processes. Cross-functional performance measures are clearly defined, and individual functions are held accountable for their contributions to overall operational performance. Resource requirements typically are balanced across the organization. A well-defined demand-supply balancing process that combines forecasting and planning with sourcing and manufacturing is evident at this stage.
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Stage 3: External Integration
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Stage 2 practices are now extended to the points of interface with customers and suppliers. The company has identified strategic customers and suppliers, as well as the key information it needs from them in order to support its business processes. Joint service agreements (JSAs) and scorecard practices are used, and corrective actions are taken when performance falls below expectations.
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Stage 4: Cross-Enterprise Collaboration
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Customers and suppliers work to define a mutually beneficial strategy and set real-time performance targets. IT now automates the integration of the business processes across these enterprises in support of an explicit supply chain strategy. See Figure B-1 for a list of the practices for plan, source, make, and deliver under the four stages.
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SELECTED RESULTS OF SUPPLY CHAIN MATURITY ANALYSIS
PMG s analysis found that the study population defined in Appendix 1 was distributed largely between transitional stage 2 and stage 3. More than a third (36.6 percent) had dominant practices associated with mature stage 2, internal integration, showing an average stage of 2.3. Another third (34.1 percent) was in the process of transitioning to stage 3 and beyond.
F I G U R E B 1
Subprocess components of Supply Chain Maturity Model.
Stage 2: Internal Integration Stage 3: External Integration Global demand/supply planning is consistently aggregated across the rm, focused on functional accountability, and continuously improved by comparisons to historical performance. Cross-functional commodity management teams and supplier partnerships are in place. Common ERP systems are used effectively. Stage 4: Cross-Enterprise Collaboration Dynamic global demand forecasting and capacity utilization calculations feed demand/supply decision-making mechanisms. Joint demand/supply decision-making bodies leverage and share data globally. Integrated supply network uses eenabled systems to automate/optimize all commodity and supplier transactions.
Stage 1: Functional Focus
PLAN
Demand/supply planning is done internally, with no integrated processes and tools across plants.
SOURCE
Supplier partnerships are poorly de ned; processes are informal; there is no integrated set of tools to allow common access to procurement data.
MAKE
DELIVER
276 Material and production control data are tracked electronically to optimize internal scheduling and inventory management. Formal outbound logistics processes, automated order management systems, speci c channel rules (terms and conditions), delivery quality standards, and automatic invoicing exist. Variability exists in order entry and scheduling across product divisions.
Copyright 2004 The Performance Measurement Group, LLC
Strategic partnerships with customers and suppliers is facilitated by direct, collaborative, electronic data exchange, and governed by formal supply chain performance agreements. Strategic commodity/supplier partners participate in collaborative product development, process/TCO improvement programs, and consortia buying, and have access to select online data. Customer-driven, APS (linked to suppliers); kanban demand pull manufacturing; real-time inventory control; automated product quality control; and total life-cycle product data management are dominant.
Manual material and production control activities are driven by rudimentary implementation of MRP/MPS tools.
Fully-enabled, electronically-captured APS; product con guration speci cation; demand pull; inventory back ushing; product history; and quality-control systems allow instantaneous product changes and drive continuous improvement.
No formal, standardized processes or tools are in place for order management, channel rules, product delivery, or invoicing.
Product and delivery process data maintenance systems function simultaneously throughout the supply chain, and are accurate and visible to all supply chain partners via e-commerce systems. Differentiated service levels and performance agreements are formalized.
Comprehensive e-commerce linkages throughout supply chain optimize warehousing (outsourced but integrated), tracking, transportation and delivery, and automated invoicing. Differentiated channel rules and order/service levels, including real-time commitments.
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