STAGES OF PROFICIENCY
Stage I is the lowest level of proficiency for supply chain
management. Most enterprises initiating supply chain management tend to have one or more characteristics at this stage. The traditional stage is characterized by
• adversarial relationships with suppliers and customers
• "stove pipe" efficiency of business functions
• little or no formal communications with customers and suppliers
• discrete information systems.
Business Environment: A business environment at Stage I con-centrates on functional efficiency. Performance is measured by function even when such performance may be counterproductive to the organization as a whole. Until an enterprise is ready to change the functional culture, it cannot progress in supply chain management. Some features of the business in this stage are
- top to bottom hierarchy within functions
- little or no coordination between functions
• business processes:
- make and sell
- processes designed to optimize the function
- function-specific procedures
- business processes not fully developed
• effectiveness measure:
- standards and cost centers
- performance measures evaluate internal performance
- focus is on how well the functional unit performs.
Customer and Supplier Relations: At Stage I of the Supply Chain
Proficiency Model, customer and supplier relations are clearly adversarial. Sales and Marketing and Purchasing do not understand supply chain management concepts, nor do they implement any supply chain management best practices. The primary criteria that define these relationships follow:
• Sales is the only authorized customer interface.
• No contact by other departments.
• Requirements understood only at high level:
- better quality
- improved performance
- on-time delivery.
• heavy Purchasing bias:
- volume discounts
- consolidate purchase and delivery
- Purchasing is the only interface with suppliers.
• dictatorial relationship
• user requirements ignored if they conflict with Purchasing measures.
Supply Chain Communications: At this stage of proficiency, formal supply chain communications, internal and external, are probably nonexistent. Paper is the primary mode of communications. Some characteristics for this stage are
• multipart forms:
- purchase orders
- picking slips
- buck slips
• call centers
• customer-mandated EDI.
Information Systems: Information systems follow the business culture and are functionally oriented. Single functions define the requirements and do not consider interfaces with other systems. Stage I information systems are
• discrete systems by functions
• highly redundant data
• no data integrity
• lack of management information.
To Be Continued
For balance of this article, click on the below link:
Lean Manufacturing Articles and go to Series 10