Your Guide to Supply Chain Maturity Model
- Supply chain maturity models help businesses gauge the efficiency of various aspects of their company’s framework to meet performance goals.
- Supply chain maturity models are different from capability maturity models; they focus on planning, sourcing, making, delivering and returns.
- The 5 supply chain maturity models are process maturity, procurement maturity, NPD maturity, S&OP maturity and lean maturity.
April 10, 2023 | Supply Chain Risk Management
Supply chain maturity model allows companies to quantitatively determine their position within the framework of maturity and industry best practices.
In this blog, we will explore the purpose of maturity models, the difference between supply chains and capability supply chain models and the five basic maturity models for supply chains.
What is the Purpose of a Maturity Model?
The supply chain maturity models help businesses objectively gauge the efficiency of various aspects of their business to successfully meet performance goals. Supply chain maturity models help identify bottlenecks and areas of improvement across processes from planning to procurement and sales. The goal is to optimize performance so that goals can be reached.
A maturity model typically consists of a set of stages or levels that describe the degree of sophistication and effectiveness of a process or function. Each level represents a higher degree of maturity, with more advanced practices and capabilities. Supply chain models differ from capability maturity models, which focus on reducing risks within the supply chain.
The Difference Between Supply Chain Maturity Models and Supply Chain Capability Models
Capability models are outcome based; maturity models are not. They are process based. Supply chain maturity models focus on the efficiency of current supply chain processes and enable businesses to optimize them while capability models focus on making this efficiency explicitly known to the organization.
The Five Basic Maturity Models for Supply Chains
1. Process Maturity Model
This model focuses on measuring the gap between existing performance and the desired goals of the supply chain processes thereby suggesting multiple ways to optimize the supply chain. It suggests minimizing carriers to improve less-than-truckload (LTL) strategy, including new carriers and analyzing competition to stay ahead of them.
This maturity model has five levels:
Stage 1: Initial – Processes are unorganized and without collaboration
Stage 2: Managed – Basic project management processes are established
Stage 3: Defined – Processes are well-defined and documented
Stage 4: Quantitatively Managed: Processes are measured and controlled using statistical and quantitative techniques
Stage 5: Optimizing – Continuous process improvement takes place to achieve measurable goals
It’s important to consider that the maturity journey for all businesses will be different and not all of them require the highest level of maturity to succeed. The right level of maturity depends on the business’s goals, resources and needs.
2. Procurement Maturity Model
The procurement maturity model measures a company’s ability to optimize its procurement function, understand the current procurement practices and controls for procure-to-pay and implement digital technologies. There are four stages for this model.
Stage 1: Strategic and Operational Procurement
Stage 2: Tactical Sourcing Procurement
Stage 3: Category Strategy Procurement
Stage 4: Innovative Procurement You can learn more about these stages here.
3. NPD Maturity Model
The NPD (New Product Development) maturity model is a framework used to assess and improve an organization’s product development processes and practices. It provides a structured approach to evaluate the effectiveness of product development processes to identify areas for improvement and accelerate new product development. It also helps cut costs to improve the bottom line.
The model then creates an organizational strategy that can be implemented in the short term. The NPD maturity model typically consists of a set of stages or levels, each representing a higher level of maturity or sophistication in product development.
4. S&OP Maturity Model
The S&OP maturity model is a framework for assessing the maturity of an organization’s Sales and Operations Planning (S&OP) process. The model consists of four levels of maturity, each representing a higher level of sophistication and functionality in the S&OP process.
Sales and Operations Planning (S&OP) is a process of aligning sales and operational plans to ensure that the company is delivering the right products at the right time and at the right cost. The S&OP process typically involves five levels of maturity as can be seen in the table below:
| SCM Tasks | I Dysfunctional |
II Infrastructure |
III Cost Reduction |
IV Collaboration |
V Strategic Contribution |
|---|---|---|---|---|---|
| Strategic supply chain planning projects | No strategy exists to guide supply chain design | Supply chain awareness takes hold, however managers still view the company as standalone | Supply chain is viewed as a non-state cost center for internal cost reduction | Joint strategic initiatives are pursued on a limited basis with suppliers and customers | Activity systems are implemented for Strategic advantage |
| Internal collaborative relationships projects | Internal department measures goals and objectives conflict with supply chain excellence | This organization is functionally focused. Initiatives are departmental | Cross functional initiatives begin limited to the company and focused on cost reduction | Supply chain has moved into a single function which manages multi-company relationships | The organization is established multi company infrastructure for important chains |
| Forging supply chain partnership projects | Relationships with suppliers and customers are arm's length at best antagonistic at worst | Collaboration up and down the supply chain is limited to transaction data | Efforts are limited to supplier initiatives focused on cost reduction not revenue increases | Partners collaborate but roles are static | Members of the supply chain expand their value contributions |
| Managing supply chain information projects | Basic information needed for decision making is missing | Technology improvements focus on individual departments and maintenance | Systems efforts support cost reduction within the organization. May or may not be processed justified | Two way information exchange supports transactions and mutual decision making | Technology is a key element integrated into supply chain activity systems |
5. Lean Maturity Model
All supply chains need lean capability. The Lean Maturity Model offers a broad perspective on lean implementation. Consequently, the businesses will have to decide which practices to apply and how to achieve higher adoption rates.
This model emphasizes the current practices used in the supply chain to understand their effectiveness. It generates an analytical report across the supply chain stages and offers suggestions on how to best optimize the processes.
Conclusion
Using supply chain maturity models is essential for optimizing performance and reaching performance goals. As a supply chain manager, it’s important to understand the purpose of maturity models, the difference between supply chains and capability supply chain models, and the five basic maturity models for supply chains. By using these models, you can create an efficient and effective supply chain that will help your company succeed.
Internal Links
https://www.gep.com/research-reports/digital-procurement-maturity
