The world in which we live is an incredibly dynamic, ever-changing environment and never before has this been more true than today.
As a result, businesses are increasingly looking for ways in which they can secure their supply chain, while remaining efficient, cost-effective and industry specific. One of the ways this can be achieved is through the adoption of a supply chain process management maturity model.
The concept of process maturity derives from the understanding that processes have life cycles or developmental stages that can be clearly defined, managed, measured and controlled throughout time. Higher levels of maturity in any business can be advantageous in a number of ways:
• Better control of the results
• More accurate forecast of goals, costs and performance
• Higher effectiveness in reaching defined goals and the management ability to propose new and higher targets for performance
Although the origins of the maturity model were not initially linked to logistics directly, a growing number of reports have emerged in recent years that represent the use of maturity models based on KPIs to analyse the activities from logistical supply cycles to manufacturing and distribution. Results have shown that at each level of the supply chain maturity model, there are number of benefits to be reaped.
At the first level, focus is placed on improving the company’s functional processes, with internal efforts placed on integrating the different areas of the supply chain. As a result, companies can expect to see a drastic reduction in suppliers and logistics service providers, further rationalisation of the product mix and a greater volume of purchases.
At the second level, attention is given to gains in logistics and to increasing the effectiveness of physical distribution. Demand management consequently becomes a crucial factor, allowing companies to prioritise planning, programming and production.
At the third level, companies develop or redesign their inter-organisational processes and begin to create a specific business network. Important suppliers are invited to participate in planning, operation and sales, allowing supply and demand to be brought closer together. In addition, global relationships are established with logistical service suppliers and clients are encouraged to give feedback on both the current and desired products.
As global demand for products increases, and the deadlines for such orders decreases, companies are under more pressure than ever to have a quick, productive and efficient supply chain. Through the strategic use of technology and information, businesses can use the supply chain maturity model to achieve a position and status in the market that is both beneficial and secure.
Klaus Rüth is senior director at HAVI Analytics & Supply Chain Services.