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Supply Chain Assessment
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II. Aware

A crisis usually shifts management to the supply chain management paradigm. When management commits to supply chain management, the enterprise tends to take on the characteristics of Stage II. This stage introduces the concepts of cross-functional integration and coopera­tion with suppliers and customers. The aware stage focuses on site efficiency.

Characteristics

Business Environment: Stage II begins the evolution of an enterprise towards supply chain management. Pockets of excellence begin to emerge. Although the culture remains focused on internal efficiencies, breaking down the walls of the internal supply chain is a prerequisite to addressing the external supply chain. Criteria that define a business environment at Stage II include

•    alignment:

-      business unit, site, divisional alignment

-      delegation

-      apex functional reporting level

-      effectiveness measured internally

•    business processes:

-      expansion of market

-      cross-functional processes

-      introduction of benchmarking

•    effectiveness measure:

-      reports and profit centers

-      program established, but may be tracking "traditional" measures

-      measures target the alignment

-      focus is on how well the cross-functional team does

-      performance measures instituted for customers and suppliers.

Customer and Supplier Relations: Although Stage II activities are not always consciously related to supply chain management, they indi­cate an awareness that the traditional model is inadequate. Supplier and customer relations may still have an adversarial tone, but some cooperation begins to creep into the process. Often it takes the form of a customer encouraging the enterprise to participate in a supply chain initiative. Success in improving relations may be sporadic due to the culture of the enterprise and the industry. Criteria for this stage include

Customer:

•      other functions besides sales interface with customers

•      requirements are understood in greater detail, e.g., on-time
delivery of 98 percent

•      participate in some customer-mandated supply chain programs.

Supplier:

•      teaming becomes a practice

•      purchasing smarter is the mantra

•      end users participate with Purchasing on requirements

•      "team-by-day, scheme-by-night" approach still is prevalent.

In this stage, the lines of communications start to open, albeit slowly, with suppliers and customers. Key criteria at this stage are

•      recognition that EDI requires a business focus

•      expansion of customer EDI transaction sets

•      initiation of supplier EDI.

Information Systems: As the business progresses toward a more effective internal supply chain, integrated information systems began to evolve. Initially, these integrated systems tend to address operational requirements. Major criteria that place an enterprise at this stage are

•      implementation of MRP, MRP II and/or DRP packages

•      requirements defined by a cross-functional team


•      initiation of executive information systems and decision support systems

•      systems support for performance measurement systems.

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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