The key goal of any supply chain transformation is to have a full picture of the lead time and resources required to meet customers’ delivery expectations. Amid today’s dynamic, global economy, a confluence of trends is upping the ante on precise supply chain planning and execution.
In agriculture, for example, consumers are demanding increased visibility into the source of their food, from “field to fork.” In retail, customers increasingly expect to move among online and physical channels with ease, (aka an omnichannel store experience), including buy-online-pickup-in store and same-day delivery, with no compromise on quality, regardless of device or location.
To improve supply chain performance, it’s not enough to focus on one activity, process or business unit. But that’s arguably what “enterprise resource planning” has encouraged: Fragmented (not company-wide) excellence, siloed systems, a customer experience that is often outdated and disjointed.
Orchestrated supply chains can change all that. In part one of this report, we examined the four stages of supply chain maturity. Here, we outline an approach to achieving full orchestration.
Moving to the highest of supply chain maturity will likely involve big changes to four key disciplines: business, information, application and technology architectures. Organizations should start by considering these four key disciplines and how they might interconnect to impact their strategy:
Business architecture. This includes process and organizational factors, such as roles and functions, as well as the vision for business capabilities, such as strategic procurement services or integrated business planning.
Information architecture. How is your information organized, stored and shared between departments (if at all)? Is there a common model for corporate data and language rules that underpins your business information and processes?
Application architecture. This encompasses the application reference architecture model, application strategic intent and individual application packages that support business transactions.
Technology architecture. The lean, mobile and scalable hardware and network platforms that deliver application services.
Next, organizations can assess their success in these disciplines using the Supply Chain Council’s SCOR model, a leading framework that defines five attributes of supply chain performance. As organizations transition through the supply chain maturity curve, they should benchmark their position in all five areas:
Reliability: Perfect order fulfillment.
Responsiveness: Order fulfillment cycle time.
Agility: Flexibility, adaptability and value-at-risk.
Cost: Total cost to serve.
Assets: Cash to cash cycle time, return on assets, and return on working capital.
Excellence in one area is not enough. In other words, the organization’s supply chain maturity is only as strong as its performance in the weakest discipline (see Figure 1).
The following questions can also help businesses identify their existing level of supply chain maturity in the five areas included in the SCOR framework, in addition to the all-important factor of leadership and strategy.
Is supply chain management a strategic boardroom position in your organization? Having senior buy-in will ensure a strategic focus on cost, time, and quality in terms of both process and product. Value-chain leadership practices must demonstrate three qualities: alignment with the business’s strategy for a target operating model; integration of business processes and information to underpin decision-making; and adaptability to partner with the business and deliver differentiated value.
Is quality built into your supply chain? Ultimately, the goal is for customers to get what they want, when and where they asked for it to be delivered. But that is irrelevant if the product is broken when it arrives.
Do you have a built-in change-management process that consistently monitors supply chain dynamics? An orchestrated supply chain means an agile supply chain. Therefore, all partners and processes need to be adaptive to improve quality and drive operational efficiency.
Does your supply chain minimize the number of touches and the touch time in supply chain transactions? A touchless chain means you can achieve zero failure principles and deliver 100% on-time.
Is the movement of information and money as critical in your supply chain as the movement of materials? Effective supply chain orchestration means having a seamless flow of information and money so that goods can be delivered in line with customer expectations and profit expectations.
Do you have the relevant resources needed, including human capital? Many do not; 63% of CEOs say that staff shortages are a key problem. If that’s the case, how well prepared is your business to find, attract and keep tomorrow’s workforce? An internal talent assessment can reveal whether the organization has what it needs, while informing competency improvement requirements.
The answers to these questions will dictate how the business progresses from a decentralized, unified or networked supply chain to a fully mature and orchestrated one. Doing so is not easy, but it will boost the business into the top ranks of supply chain maturity, freeing it to focus on strategic initiatives and establish an unbeatable competitive edge.