Supply Chain Maturity Model

The Supply Chain Evolution

The Innovators are poking
through or jumping over the wall
to III and IV (tomorrows market)

5
Full Network
Connectivity

4
Value chain
Collaboration
Most are working toward Level II
improvement (todays market)

3
Partner
Collaboration

2
Corporate
Excellence
I
Enterprise
Integration

Functional
Process

IntraEnterprise

InterEnterprise

External

Logical progression of supply chain efforts; none can be skipped.

Total
Business
System

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

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.

Level 2- Intra-Enterprise
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 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.

Level 3 Inter-Enterprise
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 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.

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- ColgatePalmolive, P&G, Nike, GE, Toyota.

The Potential Savings and Revenue Enhancements

Projected benefits from Collaborative Initiative implementations

10.0%

8.0%

Percent of
revenue

6.0%

4.0%

2.0%

0.0%

Inventory
reduction

Reduced
logistics
costs

Efficiencies Efficiencies
in direct
in indirect
spend
spend

Savings
in sales
expenses

Savings
in R&D

Total
cost
savings

Margin
increase

Sales
increase

Total
benefits

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

*Source: CSC projections based on benchmarked performance of comparable solution offerings

Process Maturity Managing Supply Chain

The process model
for any enterprise
comprises typical
building blocks

Manage
product
portfolio

Configure product

2. Manage
products

1.Manage the
supply chain

Design
product

Design
process and
tooling

Plan

Plan

MAKE
Source

Deliver

Configure

Return

Based on SCOR Model: Supply Chain Council

Change
product

Maintain
processes

Process Maturity: Managing Supply Chain

Technology Maturity: Managing Supply Chain

Process Maturity: Design Engineering

Process Maturity: Production Engineering