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III. Proliferating

Supply chain management concepts proliferate in Stage III. The enter­prise works closer with its suppliers and customers. Business and in­formation systems are integrated across the enterprise. Communica­tions move to the status of electronic commerce.

Characteristics

Business Environment: A major culture shift occurs at Stage III. The enterprise is not only working as a single unit, but it also views cus­tomers and suppliers in a different light. Key identifiers of a business at this stage are

•   alignment:

-      enterprisewide alignment

-      line staff and product groups

-      core competencies

-      internal supply chain integration

•   business processes:

-      processes designed from supply chain management viewpoint

-      watchdog

-      benchmarking and best practices

-      6 sigma processes

-      customers and suppliers are asked to comply

-      payment upon receipt

-      introduction of knowledge management concepts

•   effectiveness measure:

-      measures across the enterprise

-      plans and investment centers

-      introduction of balanced scorecard.

Customer and Supplier Relations: Coordination is the defining relationship of Stage III. Management adopts the concepts of supply chain management. The enterprise not only embraces supply chain ini­tiatives of customers but also starts their own. Some remnants of the adversarial relations still exist at the individual level. Culture is diffi­cult to change. Criteria that characterize this stage are

Customer:

      Formal contact is encouraged at operational levels

      Customer requirements are internalized.

      Customer requirements become the basis for tracking performance.

      Value chain concepts are introduced.

Supplier:

      Purchasing bias is eliminated as a policy.

      Sourcing becomes the predominant concept.

      Value engineering and nontraditional contracting become the norm.

      Metrics are created and tracked.

      Supplier certification becomes standard.

      Professional relationships develop at technical levels.

Supply Chain Communications: Introduction of electronic com­merce; annual supplier conferences.

Information Systems: CIO reporting to CEO; ERP; initiation of data mining, data marts and data warehousing; introduction of knowledge management systems; systems strategy aligned with business strategy.

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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