The Four Levels of Supply Chain Maturity

A Picture of Greg DahlbergAugust 27, 2013 By Greg Dahlberg

Deploying the Right Capabilities to Strengthen Operational Performance and Resilience

Most companies believe they have better than average supply chain resilience. However, when put to the test with a disruption – natural disaster or man-made – it becomes clear that not all supply chains are created equal. Best-in-class organizations leverage real-time intelligence from their ecosystem of networked global trade partners to realize superior supply chain visibility and agility.

A research study by the MIT Forum for Supply Chain Innovation and PricewaterhouseCoopers titled “Supply Chain and Risk Management” identifies and explores the four levels of supply chain maturity:

Level 1: Reactive supply chain management

  • Low degree of integration and little coordination between suppliers and partners
  • Minimal coordination between product design and supplier operations
  • Little visibility into source of supply chain risk
  • Unbalanced inventory leading to poor customer service

Level 2: Internal supply chain integration with planned buffers

  • Align performance objectives and information across internal departments
  • Some visibility into emerging changes and patterns outside of the company
  • Changing demand patterns influence product design
  • Integration of internal risk management processes

Level 3: Collaboration across extended supply chain network

  • Extensive data and information sharing produces high visibility
  • Integration of product design and inventory management across all supply chain partners
  • Visibility outside of the organization is exploited to predict change and variability
  • Monitor supply chain resilience levels and business continuity plan preparation

Level 4: Dynamic supply chain adaptation and flexibility

  • Align KPIs across the entire ecosystem
  • Full flexibility to identify and respond to emerging value chain patterns
  • Real-time monitoring and data analytics
  • Quick responses shortens product, network, and process lead times
  • Segmented risk strategies based on supplier profiles and market-product combination characteristics

Are you a best in-class organization… or still playing catch-up? To what extent has your supply chain risk management program been put to the test? What are you doing to ensure that your supply chain can adapt fast enough to minimize the impact of disruptions?

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