Supply chain maturity

As the supply chain matures, supply chain leaders partner with the commercial teams to design outside-in processes that can better sense and shape demand. They use these insights to drive a more profitable response. In our interviews for this book, 5 percent of companies were at this stage of maturity, which is often termed demand driven. 

The historic definition, as defined by the first and second generation of supply chain pioneers, is limited and applicable to only stages 1 and 2 of the supply chain maturity model in Chapter 1 (Figure 1.3). The basis of the design of these traditional processes is the premise that an underlying pattern in historical customer shipment data can be identified using statistics. Any additional unexplained patterns could be simply addressed as randomness, or an unexplainable variation. These same processes assumed that the patterns (demand signals)— in this case, only trend/cycle and/or seasonality— will continue into the future. 

In the early stages of supply chain maturity, companies design programs based on historic information. The average time to measure effectiveness is six weeks. Despite these obstacles, trade promotion management remains the number one demand-shaping lever of consumer products and food and beverage companies. 

The results are substantial. Companies reaching stage 2 of supply chain maturity in sales and operations planning are able to drive an average improvement of 2 percent increase in growth and a 3 to 7 percent improvement in asset utilization. Other benefits include reductions in inventory and improvements in new product launch success. S OP allows companies to make the right trade-offs in metrics based on the supply chain strategy. 

The first phase is called the Construction Phase and aims to identify the DDSC components and develop the Demand Driven Supply Chain Maturity Model, and comprehends three major steps, as described below ... 

It will not be presented the detailed VICS assessment in the body of this book. However, it will be considered as a key input when developing the E)emand Driven Supply Chain Maturity Model in Chap. 5. 

Demand Driven Supply Chain Maturity Model... 

In this book, it is proposed to apply the AHP method to identify the weights for each component of the Demand Driven Supply Chain, and also for each category within each component, in order to ensure a consistent comparison, and a reliable overall score performance in the demand driven supply chain maturity model. 

As the supply chain matures, it should be able to improve these measures beyond what a firm could achieve on its own. As discussed earlier in this chapter. 

The selection of enterprises for the fundamental study was informed by their different levels of supply chain maturity. This, in turn, helped in dividing the fundamental study into two stages the preliminary study and the final study. First, the enterprises were screened to determine the maturity of their supply chains and only then was the final study conducted. The studies covered supply chains operating - either in whole or in part - in Poland. The selection of enterprises was based on various available lists and registers of enterprises used in Poland, such as HBl or Panorama Firm. To ensure the proper diversity of the sample, the size and sector of the enterprises were taken into consideration at this stage of selection. 

The literature on the topic presents a number of supply chain maturity models. Such models most often facilitate the analysis of the status quo in supply chain processes they also constitute a source of guidelines for the improvement of these processes, thus helping in reaching higher levels of supply chain excellence. Models fulfilling the objectives specified above include ... 

Table 2.4 Supply chain maturity stages according to Ch.C. Poirier... 

The nature of coUahoration with partners is a parameter that determines supply chain maturity level. Most of the researched organisations (74%) had already consolidated their suppliers and were initiating closer collaboration with selected partners. This collaboration pertained in particular to suppliers. The still low application of SCM among the analysed companies is confirmed by the limited scale of close collaboration based on strategic alliances (4% of respondents). Vertical alliances with suppliers or purchasers were the most popular (80% of all initiatives), while horizontal alliances with direct competitors were rare (only... 

In the context of assessing supply chain maturity in Poland, it is interesting that as many as 58 per cent of respondents felt like supply chain leaders. In the context of earlier data painting an image of supply chain maturity, this declaration may not be reflected in reality, and may result from the need to dominate, or a feeling of being isolated from other entities in the supply chain. This is confirmed by the fact that over 27 per cent of companies do not know who their supply chain leader is (Figure 2.9). 

To sum up, the following conclusions from the research on supply chain maturity level in Poland should be emphasised ... 

Based on the criteria for assessing the supply chain maturity level proposed in Poirier s model, it may be concluded that most respondents are at the first stage of development. This does not change the fact that an increasing number of companies undertake initiatives extending beyond internal excellence and integrate processes in the entire supply chain. 

Table 2.13 Assessment of supply chain maturity in Poland according to Poirier s model (selected areas)...

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