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Supply Chain Assessment
Part 2 of 6

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 I. Traditional

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 func­
•   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

•   alignment:

-      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

-      price

-      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

-      invoices

-      checks

-      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


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