Sparta Systems attended Gartner’s Supply Chain Executive Conference in Phoenix, AZ on May 21-23, 2013. A variety of manufacturing companies across all industries and all sizes participated in the event, with the majority representing supply chain and supplier management. Attendees were interested to learn how to deal with the challenges faced by enterprises going from early stages to more integrated stages of supply chain maturity. This conference is the world's most important annual gathering of senior supply chain executives, providing the critical strategies, tactics and tools needed to grow companies and move them forward quickly and efficiently. During the conference, the main conversations covered the challenges faced in today’s complex marketplace, technological evolution and global supply base is complex and broad. Some of these challenges included:
- carrying costs of inventory
- managing change
- demand shaping
- supply shaping
- SC control tower to provide visibility, decision-making and action using real-time data
- single source of truth which is demanded due to M&A, various systems and partner networks
What was really interesting was that all these challenges are tightly coupled with the stage of maturity that the companies fall into. The maturity model for supply chain closely resembles the maturity model for manufacturing as well as quality management. Gartner has done extensive research to come up with the supply chain maturity model, which has five stages. These five stages start as tactical then lead to strategic. They consist of:
Stage 1: Reactive, lowest cost, business unit focused leading to a bunch of point solutions, therefore, siloed environment
Stage 2: Projects based, looking for operational efficiencies and lower total lifecycle cost with some integration but still islands of systems
Stage 3: More integrated functional execution (still not end-to-end), looking at lowest total cost of ownership with corporate focus and greater center of excellence based systems
Stage 4: Optimized systems, profitability, greater emphasis of outside-in mentality (customer focused), collaborative/shared supply management and demand driven end-to-end processes
Stage 5: Total optimization, shared value creation, shared services, full corporate vision, shaped for value synchronization allowing for supply and demand shaping and full visibility
This looks a lot like the maturity model for a quality management system, and quality is part of every stage but as the stage progresses, quality is well integrated in a collaborative and process-based manner. 75% of companies are stage 3 or below, with few in stage 4 and very few in stage 5. Companies like P&G and Amazon are considered to be leaders in vision-based supply management using disciplined SM processes to achieve this stage. As in Enterprise Quality Management Systems (EQMS), supply management has many aspects other than just technology. They are people, process, cadence, change management, governance and leadership. Superior supply chain is tightly linked to innovation and the CEO survey revealed that the large majority of CEOs have shown revenue growth by innovation as their number one priority.
The key takeaways from this conference are companies with their partners need to identify the stages of maturity, generate the initiatives to move from one stage to the next and prioritize what needs to be done to effectively move to the next stage in a disciplined manner. This takes the right leadership, competent managers and proper technology. As I said before, QMS progression follows a similar pattern albeit at a much less complex world.
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