WEBVTT Kind: captions Language: en 00:00:03.600 --> 00:00:10.400 Why learn about supply chain management maturity?  This maturity level shows to what degree a supply   00:00:10.400 --> 00:00:16.240 chain is a cohesive team. Assessing a supply  chain’s maturity level will help you add   00:00:16.240 --> 00:00:21.440 value because you will see the gaps in the  current system. It will also help you notice   00:00:21.440 --> 00:00:28.000 when your company is backsliding relative to its  former progress or to competing supply chains.  00:00:29.200 --> 00:00:37.120 Here we show a five-stage model, although other  models exist. In Stage 1, Multiple Dysfunction,   00:00:37.120 --> 00:00:43.840 the supply chain reacts inefficiently to issues.  In Stage 2, the Semifunctional Enterprise,   00:00:44.400 --> 00:00:48.640 the supply chain is still reactive  but is becoming more efficient.   00:00:49.440 --> 00:00:56.240 In Stage 3, the Integrated Enterprise, the  company becomes proactive while staying efficient.   00:00:57.200 --> 00:01:03.360 In Stage 4, the Extended Enterprise, a  nucleus firm becomes a strategic driver   00:01:03.360 --> 00:01:08.560 of its supply chain. In Stage  5, the nucleus firm and others   00:01:08.560 --> 00:01:15.520 help the supply chain become more consistent  and systematic. Let’s differentiate each stage. 00:01:16.960 --> 00:01:21.520 In the Multiple Dysfunction stage,  functions like purchasing, sales,   00:01:21.520 --> 00:01:26.320 and so on fall in silos that hinder  optimization or collaboration.   00:01:27.120 --> 00:01:31.680 There is little connectivity between  these silos and none with suppliers,   00:01:31.680 --> 00:01:38.880 who are mainly transactional. Organizations must  react to change because the various stakeholders   00:01:38.880 --> 00:01:44.560 cannot plan effectively. Therefore, the  supply chain is seen as a cost center. 00:01:46.240 --> 00:01:52.320 In the Semifunctional Enterprise, cost-cutting  is the focus so the total cost of ownership   00:01:52.320 --> 00:01:58.240 may be used in procurement decisions. Route  and carrier selection may also help control   00:01:58.240 --> 00:02:04.720 transportation cost. Cost improvements are  possible because the organization begins   00:02:04.720 --> 00:02:11.440 to invest in connectivity technology and  equipment automation. However, silos still   00:02:11.440 --> 00:02:17.840 make decisions independently so insights in  one area may not get leveraged elsewhere. 00:02:19.760 --> 00:02:23.680 In the Integrated Enterprise,  silo walls come down.   00:02:24.720 --> 00:02:29.360 Technical integration comes from an  Enterprise Resources Planning system,   00:02:29.360 --> 00:02:36.320 while cross-functional business processes  like logistics help integrate silos.   00:02:36.320 --> 00:02:43.040 For example, warehousing and transportation  integrate their decision making. A proactive   00:02:43.040 --> 00:02:49.840 focus is seen in less product complexity or use  of design for logistics or manufacturability.   00:02:50.640 --> 00:02:56.880 Rather than guesswork for inventory and  safety stock, these are managed strategically.   00:02:57.680 --> 00:03:03.440 While customers and suppliers are not networked,  customer segmentation is sophisticated   00:03:03.440 --> 00:03:10.800 and some suppliers may provide materials  Just-in-Time. Note that the stages so far   00:03:10.800 --> 00:03:17.840 are primarily historical, but small or protected  organizations may still be in these stages. 00:03:19.200 --> 00:03:25.840 In the Extended Enterprise, the nucleus firm  treats the supply chain as a strategic driver and   00:03:25.840 --> 00:03:32.560 we finally create a modern supply chain because  some business processes extend to suppliers   00:03:32.560 --> 00:03:40.560 and/or customers. The networks of various supply  chain partners form a larger network. The network   00:03:40.560 --> 00:03:46.080 integrates demand generation with  fulfillment, aligns with strategy,   00:03:46.080 --> 00:03:52.080 shares real-time information, and enables  collaborative forecasting and replenishment. 00:03:53.520 --> 00:03:59.520 In the Orchestrated Supply Chain, we now  differentiate between adequate and world-class   00:03:59.520 --> 00:04:05.600 supply chains. This stage requires what is  called a supply chain digital transformation.   00:04:06.400 --> 00:04:12.960 This refers to realizing the benefits of diverse  technology and process improvements in the supply   00:04:12.960 --> 00:04:20.640 chain. Therefore, this stage is all about finding  and addressing gaps so that end-to-end visibility   00:04:20.640 --> 00:04:28.320 and process automation can provide real value.  A key gap to address is network security.   00:04:29.040 --> 00:04:35.360 Another gap is procurement risk. Resilient  sourcing is used to address this gap   00:04:35.360 --> 00:04:42.080 such as by diversifying to include at  least one in-country supplier. In addition   00:04:42.080 --> 00:04:48.080 to products being inclusively designed,  they also right-size their product variety.   00:04:48.960 --> 00:04:55.520 This stage is also about people maturity.  Persons at this stage embrace change management,   00:04:55.520 --> 00:05:01.760 work well on cross-organizational teams, and  use actual data to drive their decisions.  00:05:03.520 --> 00:05:10.560 So, what level is my supply chain at? To  answer this question you may need to look   00:05:10.560 --> 00:05:17.840 not only at one’s own supply chain but also at  competing supply chains. Success is relative!   00:05:19.040 --> 00:05:24.880 Another nuance is that a supply chain may be more  mature in some business areas than in others.   00:05:26.000 --> 00:05:37.840 We hope you enjoyed this overview  of supply chain maturity levels.