Take a second to think about your supply chain. Would you describe it as “mature”? What is a “mature” supply chain, anyway?
Supply chain maturity is a crucial concept for achieving supply chain success. Read on to learn what it is, why it matters, how to assess it, and how to improve your supply chain maturity by modernizing your integrations.
What Is Supply Chain Maturity?
It’s helpful to think of your supply chain as an actual metal chain made of links. The chain is only as strong as the weakest link. If there’s even one weak link in a chain, it breaks, rendering it useless.
Think about the weakest link in your supply chain. Is there a component that, if it were to fall apart, would throw your supply chain in disarray?
Supply chain maturity, then, refers to how resilient your supply chain is. Can every link withstand pressure? How quickly could you patch a link if it is weak?
Researchers at PwC and MIT have identified four stages of supply chain maturity:
- Reactive supply chain management
- Internal supply chain integration with planned buffers
- Collaboration across an extended supply chain network
- Dynamic supply chain adaptation and flexibility
Reactive supply chain management is the lowest level of supply chain maturity. There’s a low degree of integration, with little coordination between suppliers and partners, minimal synchronization between product design and supplier operations, low visibility into supplier risk, and inventory imbalances, which lead to customer dissatisfaction.
An internalsupply chain with planned buffers is the next highest level. Companies at this stage of supply chain maturity align performance objectives and information internally, and they have some visibility into emerging changes and patterns unfolding outside of the organization. As such, changing demand patterns influence design, and organizations integrate internal risk management processes.
Collaboration across extended supply chain networks is the second highest level of supply chain maturity. At this stage, there is extensive data and information sharing. Product design and inventory management are integrated across all supply chain partners. Organizations have visibility into what is going on externally, they use that knowledge to predict upcoming changes, and they can also monitor supply chain resiliency.
Dynamic supply chain adaptation and flexibility is the highest level of supply chain maturity. At this level, key performance indicators are aligned across the entire ecosystem, and organizations have complete flexibility to identify and respond to emerging value chain patterns. Real-time monitoring and data analytics take place. Organizations can respond quickly so product, network, and process lead times are shorter; they have also put segmented risk strategies based on supplier profiles and market-product combination characteristics in place.
Why Does Supply Chain Maturity Matter?
So, why does supply chain maturity matter so much? More to the point, why should it matter to your business?
Today’s global business environment is dynamic to the point of near-volatility. That means your supply chain is at risk. Go back to the earlier comment about the weakest link – a single deficiency can bring down your supply chain because everything is interconnected.
When you have higher levels of supply chain maturity, you will be more prepared for risks that come your way. For example, a delay in a supplier’s shipment won’t cripple your production; you’ll be able to prepare for it and make alternate arrangements to ensure that you get the materials you need to continue working.
At the highest level of supply chain maturity, your systems are integrated (both internally and with your supply chain partners) so the global business environment is not only less unpredictable, but you can better respond to whatever challenges it throws at you.
Assessing Your Supply Chain Maturity
How do you assess your supply chain maturity? Start by looking at your processes. Are they automated, or are they mostly manual?
Next, consider how integrated your organization’s systems are. Can you easily share information inside and outside of the organization, or does it live in silos?
Another question to ask is how much visibility you have into your organization’s data as well as your supply chain in general. A sad example comes from the UK photography equipment chain Jessops. Disjointed forecasting processes led to the company accumulating over £16 billion in obsolete stock.
Some of the questions you will have are not technical; your culture, and that of your suppliers, has a great deal to do with supply chain maturity. Do you have a culture that supports information sharing, or are people so entrenched in manual processes and data silos that the idea of collaboration is foreign? Some of the work you will need to do to improve your supply chain maturity will be with humans.
Improving Your Supply Chain Maturity with Integration Modernization
If you are at the lowest level of supply chain maturity, do not worry. You do not have to stay there forever; there is a way to move forward.
Integration modernization is a significant part of the answer. Without integration modernization, data silos will run rampant across your organization, and you will never have the visibility you need to make better decisions or know what is going on with your suppliers.
The idea of modernizing integration architecture is daunting for some companies. In some cases, they are using legacy technology in combination with manual processes, so this represents a huge leap for them. Other firms have so many interconnected systems that the thought of trying to integrate them gives them pause.
Integration modernization does not have to keep you awake at night. The right partner makes the process less stressful and more successful. Choose the right integration modernization consultant to improve your supply chain maturity. Are you ready for data integration? Get the assessment. Absolutely free.