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654 Int. J. Logistics Systems and Management, Vol. 5, No. 6, 2009
Copyright © 2009 Inderscience Enterprises Ltd.
Developing a maturity model for Supply Chain
Management
M. Lahti, A.H.M. Shamsuzzoha and P. Helo*
Logistics Research Group,
Department of Production, University of Vaasa,
P.O. Box 700, FI-65101 Vaasa, Finland
E-mail: mari.lahti@uwasa.fi E-mail: zohaipe@yahoo.com
E-mail: petri.helo@uwasa.fi
*Corresponding author
Abstract: The performance of a supply network decides the company’s success
and it is therefore, critical to develop a mature supply chain approach for the
visibility of supply and demand collaboration. The aim of this research is to
develop a Supply Chain Management (SCM) maturity model, which behaves as
a maturity assessment tool that could meet the needs of companies’ maturity
level. The empirical part of the study introduces few impressive previously
made supply chain maturity models, which also form a base for developing this
model. Conceptual, analytical and decision methodological approaches were
used as a research method.
Keywords: SCM; supply chain management; maturity model; logistics
evaluation; competitiveness; management control; stakeholders; planning
strategy.
Reference to this paper should be made as follows: Lahti, M.,
Shamsuzzoha, A.H.M. and Helo, P. (2009) ‘Developing a maturity model
for Supply Chain Management’, Int. J. Logistics Systems and Management,
Vol. 5, No. 6, pp.654–678.
Biographical notes: M. Lahti completed her Master of Science in Economics
from the University of Vaasa, Finland, in the year 2005. She is currently
working as a planner in the unit of business studies in Kokkola University
Consortium Chydenius, Finland. Besides the supply chain management
maturity models, her recent interests are in the field of business management
and leadership.
A.H.M. Shamsuzzoha is working as a project researcher and PhD student
in the Department of Production, University of Vaasa, Finland. He has
received a Master of Science in Mechanical Engineering from the University
of Strathclyde, Glasgow, UK. Currently, he is working on the project ‘CATER’
and his activities are devoted to the integration of Design Structure Matrix
(DSM) in product development. His major interest lies in the area of
product development and logistics. He has published papers in different
journals such as International Journal of Engineering and Technology, Journal
of Manufacturing Technology, Bangladesh Journal of Environment Science,
and Pakistan Academy Science Journal.
P. Helo is currently Professor in the Department of Production, University of
Vaasa, Finland. His major research interest addresses the management of
logistics processes in supply demand networks, which take place in electronics,
machine building and food industries. This research has developed new
Developing a maturity model for Supply Chain Management 655
approaches on analytical modelling and use of computers solving industrial
management problems. His research interest includes logistics systems and
supply chain management, information technology tools and productivity
measurement and technology progress. His works have been published in
various journals, including International Journal of Advanced Manufacturing
Technology, International Journal of Production Research, International
Journal of Agile Management System, International Journal of Management
and Enterprise Development, etc.
1 Introduction
The business controls are decidedly based on supply chain networks, which also
influenced to the competitiveness both in domestic markets and in global operational
environments. The focus has increasingly moved to competing network vs. network
(Chroneer, 2005). As a whole, it can be said that the trend of logistics is to form the
control of entirety between companies’ operations where the material flow is optimal
from the chain’s participant’s point of view and decisions are made thinking about the
total benefit. Such being the case, developing logistics has an important role of
strengthening competitiveness and partnerships and it also helps to achieve remarkable
cost savings.
In literature, there are plenty of published papers, which explain and define the
concept of Supply Chain Management (SCM) issues in general. According to Pastinen
et al. (2003), SCM emphasises the view of extended value chain, in which different
companies’ value chains are connected to form a functional entity. Bridgefield Group
(2005) presents supply chains as a linked set of resources and processes that begins with
the sourcing of raw materials and extends through the delivery of end items to the final
customer. According to the definition of SCM by the Global Supply Chain Forum,
SCM is
“the integration of key business processes from end user through original
suppliers that provide products, services and information that adds value for
customer and other stakeholders.” (Chan and Qi, 2003; Gunasekaran et al.,
2001)
SCM can only be talked if there is a proactive relationship between a buyer and a supplier
and the integration is across the whole supply chain, not just first-tier suppliers.
The strategic objective of the supply chain is to maintain a compatibility relationship
among upstream and downstream actors of the total supply network (Vanteddu et al.,
2006). In reality, a supply chain is much more complex. For a company in the middle of
the supply chain, the supply chain looks more like an uprooted tree, where the roots
represent the supplier network and the branches represent the customer network.
Successful SCM requires a change from managing individual functions to managing
a set of integrated processes and further to start to compete chain vs. chain (or network
vs. network) (Patterson, 2005).
Today’s supply chains are facing increasing risks of demand and supply imbalance,
liability, supply chain security and optimising the total cost (Lambert, 2004; Cohen and
Roussel, 2005). Supply chain maturity implies stronger evolved processes and positive
progress towards the goals of a company. The decision on maturity based on the
656 M. Lahti et al.
knowledge of information exchange and expertise within the company (Archer, 2006).
This phenomenon captures the organisation’s current maturity level across the five-level
processes (plan, source, make, delivery and return) and its overall supply chain.
It provides the assessment of organisations and guides an immediate measure, revealing
areas that require attention to advance maturity, greater reliability, response, flexibility
and financial performance.
The concept of maturity in supply chain network derives from the understanding that
networks have life cycles that can be clearly defined, managed, measured and controlled
throughout the time. When the maturity level is high, it means better control of output
results, improved forecasting of goals, costs and performance and greater effectiveness in
reaching defined goals (Poirier and Quinn, 2004). It can be discovered generally that the
key enablers of a mature supply chain are lean and flexible operations, end-to-end
visibility of supply and demand collaboration, event-based management and integrated
technology. By creating mature supply chain operations, companies are better positioned
to tackle changes in the supply chain environment. The supply chain maturity model is
playing an important role when it is wanted to take the right actions for moving forward
to the goal. This kind of model can be used to assess the current condition of the SCM
processes and to help the companies to focus on the areas of improvement that makes
sense for their current maturity stage (McCormack et al., 2003).
Maturity models of supply chain networks measure the maturity level of companies’
suppliers that are the valuable framework for organisational leadership (Tiku et al.,
2007). These models are used to evaluate the present situation of the companies based
on the key competitive features, setting the goals pertaining to which factors are
implemented next and identifying the factors, which are more critical for the necessary
improvement actions and resource allocations.
This study introduces a few impressive models from which the companies are able to
assess their current position in SCM maturity. Based on this, an applied model is
developed for a SCM maturity model tailored just for the needs of the case company.
The rest of the paper is organised as follows: in Section 2, we discuss an overview of
maturity model while Section 3 highlights the different developed supply chain maturity
models so far. Section 4 provides an executive summary of different developed maturity
models and Section 5 introduces a new supply chain maturity model. Finally, Section 6
presents some discussion on supply chain maturity while Section 7 concludes the paper.
2 Maturity model: an overview
The literal meaning of the word maturity is ripeness, conveying the idea of development
from some initial state to some more advanced state. The basic idea behind this is the
notion of evolution, suggesting that the subject may pass through a number of
intermediate states on the way to maturity. Basically, it can be said that definitions
of maturity combine an evolutionary or experiential element with adoption of good
practice. Furthermore, maturity implies that the processes are well understood, supported
by documentation and training, is consistently applied in projects throughout the
organisation and is continually being monitored and improved by its users (Fraser et al.,
2002).
Developing a maturity model for Supply Chain Management 657
The concepts of process or capability maturity are increasingly being applied to many
aspects of concerning supply chains, both as a means of assessment and as part
of a framework for improvement. Basically, maturity models have been proposed for
a range of activities including SCM, Enterprise Resource Planning systems, supplier
relationships, R&D effectiveness, product development, innovation, product design,
product development collaboration and product reliability for example Champlin (2002).
The principal idea of the maturity models is that they describe, in few phrases, typical
behaviours exhibited by a company or an organisation at a number of levels of maturity.
With the maturity models, the company can also pinpoint their current maturity stage and
view the next steps heading towards advanced practices.
Maturity approaches have roots in the field of quality management. One of the
earliest approaches is Crosby’s Quality Management Maturity Grid, which describes the
typical behaviour exhibited by a company at five levels of maturity, for each of six
aspects of quality management (Fraser et al., 2002). Perhaps the best-known derivative
from this line of work is the Capability Maturity Model (CMM) for software that has
been a model used by many organisations to identify the best practices useful in helping
to increase the maturity of processes. The CMM takes a different approach however,
identifying instead a cumulative set of the so-called Key Process Areas (KPAs), which all
need to be performed as the maturity level increases. This is described as a ‘staged’
representation, and leads to the attribution of a single level for maturity in the range 1–5
(Carnegie Mellon Software Engineering Institute, 2005). Later on, in 2000, the CMM
was upgraded to Capability Maturity Model Integration (CMMI). The CMMI is a process
improvement approach that provides organisations with the essential elements of
effective processes. It can be used to guide process improvement across a project,
a division or an entire organisation (Kulpa and Johnson, 2003).
Although there have been proposed a number of different types of SCM maturity
models, they all share the common property of defining a number of dimensions or
process areas at several discrete stages or levels of maturity with a description of
characteristic performance at various levels of granularity. This is also concerning all the
developed maturity models of different subjects. Typology of the SCM maturity model
can be generally speaking divided into two basic groups. These two groups can be
characterised as maturity grids and hybrids or Likert-like questionnaires. The Likert-like
questionnaire can be considered to be a simple form of maturity model when it is
constructed in a particular way. In this case, the question is simply a statement of a good
practice and the respondent is asked to score the relative performance of the organisation
on a scale from 1 to n. This is equivalent to a maturity grid in which only the
characteristics of the top-level practices are described. The SCM maturity models that
combine a questionnaire approach with definitions of maturity are referred to be as
hybrids. Typically, there might be an overall description of the levels of maturity but no
additional description for each activity (Fraser et al., 2002).
3 Previously developed Supply Chain Management maturity models
There are several maturity models existing in literature to measure the maturity level of
different fields such as software industry and project management. Along with software
and manufacturing application, Vaidyanathan and Howell (2007) developed Construction
Supply Chain Maturity Model (CSCMM). The objective of CSCMM was to provide
658 M. Lahti et al.
a roadmap for members to realise operational excellence, so that collectively the
construction project can realise the benefits of improved performance. However, there
also exists maturity models to measure the maturity standard of supply chain systems.
PRTM Management Consultants (2005) developed four-level manufacturing supply
chain maturity model, which describes how a company starting with functional
automation can move to an enterprise-level automation and finally to effective
cross-company collaboration across the entire manufacturing supply chain. The model
provides a strategic direction for each manufacturing company.
It is of great importance to measure the maturity level of companies SCM system.
In today’s competitive business environment, it is recognised that continuous monitoring
and improvement is essential for the business to thrive. Flexible, efficient and matured
supply chains guide the business to maintain competitiveness and maximise customer and
shareholder value (Lalwani and Mason, 2006). The maturity level is generally assessed in
several ways such as web-based questionnaires, tests using financial data, and through
joint discussions in workshops. The studies by Srai and Gregory (2005) and Foggin et al.
(2007) both present lists of different maturity models within SCM issues, which span
from simple two hours self-assessment tests to large cause and effect analysis, which
require several weeks to fulfil.
Three research questions are presented in this paper. First research question is:
“What kind of maturity models has already developed to assess the maturity and
capability of supply chain participants?” The second research question is: “How the
supply chain maturity models differ from each other?” The following SCM maturity
models are presented here quite precisely owing to the nature of last research question:
“What kind of maturity model can be developed based on the existing models which
would meet the needs of the case company?” This requires an extensive viewpoint for
developing a new supply chain maturity model. Based on our research on this subject,
these SCM maturity models presented in this section are the well known and the most
complete models. The models are described in a chronological order below:
3.1 Model 1A
Charles Poirier has over the years developed two quite similar maturity models to picture
the evolution of supply chain. These models are based on his decades of experience in the
field and his work as a partner with one of the world’s largest information technology and
management consulting companies, Computer Sciences Corporation (Poirier, 1999;
Poirier and Bauer, 2001). For his first model, Poirier (1999) has recommended the
following four levels as a maturity model:
• sourcing and logistics: characterised by functional excellence and programmes like
supplier reduction, inventory reduction and cost reduction
• internal excellence: use of activity-based costing and process management
• network construction: development of differentiated processes across the enterprise
and cooperative planning with collaborators
• industry leader: wide use of technology tools, demand-supply linkages and a global
perspective.
Developing a maturity model for Supply Chain Management 659
Table 1 details the four levels of maturity through which a company evolves as it strives
to reach the advanced stages of SCM. A trip to the most advanced level must
proceed through each of the preceding levels, as stages cannot be skipped (Poirier and
Bauer, 2001). According to this model, the first two levels labelled ‘internal’ occur
within the organisation, and the last two levels labelled ‘external’ occur when the
company joins forces with external organisations. Arranged along the vertical side of the
table are the key elements in SCM that are used to describe the evolution process
(Poirier, 1999).
Table 1 Levels of supply chain optimisation
I II III IV
Driver VP – Sourcing CIO Business Unit Leaders Management Team
Benefits Leveraged savings: FTE
reduction
Prioritised
improvements across
network
Best partner
performance
Network advantage:
profitable revenue
Focus Inventory: project
logistics; freight: order
fulfilment
Process redesign;
systems improvement
Forecasting; planning;
cust. Services;
interenterprise
Consumer: network
Tools Teaming: functional
excellence
Benchmarks, best
practices, activity
based costing
Metrics, database
mining, electronic
commerce
Intranet, internet,
virtual inf. systems
Action area Midlevel organisation Expanded levels Total organisations Full enterprise
Guidance Cost data: success
funding
Process mapping Advanced cost
models: differentiating
processes
Demand/supply
linkage
Reach Major cost categories Business unit Enterprise Global interface
Model None Supply chain
intraenterprise
Interenterprise Global market
Alliances Supplier consolidation Best partner Partial alliances Joint ventures
Training Team Leadership Partnering Holistic processing
Internal External
Source: Poirier (1999)
3.2 Model 1B
A couple of years after the first model were published; Poirier and Bauer (2001) proposed
again a model of supply chain evolution. Differing from the previous model, this new
model contains five levels but is otherwise similar to his four-level model. This model
consists of the following five levels:
• enterprise integration: focused on functional processes
• corporate excellence: at the intra-enterprise level
• partner collaboration: begins the process of working with selected supplier and
customers
660 M. Lahti et al.
• value chain collaboration: through e-commerce, internet and other cyber
technologies
• full network connectivity: through integrating systems to the benefit of all partners.
These five levels describe how a company moves its supply chain effort to a position in
which e-commerce characteristics are introduced, assimilated and used to advantage as a
full network communication system.
Table 2 E-business development framework
Maturity stage
Business
application areas Levels I/II Level III Level IV Level V
Information
technology
Point solutions Linked intranets Intranet-based
extranet
Full network
communication
system
Design, development
product/service
introduction
Internal only Selected external
assistance
Collaborative
design-enterprise
integration and PIM
Business functional
view – joint design
and development
Purchase,
procurement,
sourcing
Leverage business
unit volume
Leverage full
network through
aggregation
Key supplier
assistance,
web-based sourcing
Network sourcing
through best
constituent
Marketing, sales,
customer service
Internally developed
programs,
promotions
Customer-focused,
data-based
initiatives
Collaborative
development for
focused consumer
base
Consumer response
system across the
value chain
Engineering,
planning, scheduling,
manufacturing
MRP
MRPII
DRP
ERP-internal
connectivity
Collaborative
network planning-
best asset utilisation
Full network
business system
optimisation
Logistics and
inventory
management
Manufacturing
push-inventory
intensive
Pull system through
internal/external
providers
Best constituent
provider-dual
channel
Total network,
dual-channel
optimisation
Customer care and
order management
Customer service
reaction
Focused service-call
centers
Segmented response
system, customer
relationship
management
Matched
care-customer care
automation
Human resources Internal sc training Provide network
resources, training
Interenterprise
resource utilisation
Full network
alignment and
capability provision
Source: Poirier and Bauer (2001)
3.3 Model 2
DRK Research and Consulting LLC develops this supply chain maturity model,
which has a foundation based on business process orientation concepts. These concepts
are also based on Philip Crosby’s development of a maturity grid for the five stages that
companies follow in adopting quality practices as well as the CMM developed by
Carnegie Mellon University in Pittsburgh for the software development process
(McCormack et al., 2003).
Developing a maturity model for Supply Chain Management 661
The supply chain maturity model introduced here allows companies to quantitatively
identify their position within a framework of maturity and industry benchmarked best
practices. This model focuses on the five KPAs: plan, source, make, deliver and return.
Figure 1 represents the view of process maturity that relates to the Supply Chain
Operations Reference model.
Figure 1 The Supply Chain Management maturity model view
Source: McCormack et al. (2003)
3.4 Model 3
The Performance Measurement Group and PRTM Management Consultants (2005)
jointly developed the supply chain maturity model from a combination of benchmarking
experience and fields of knowledge. This model is used to assess the stage of capability
for each of four processes (plan, source, make and deliver) defined by the Supply Chain
Operations Reference model and also for what is classified as ‘overall’ SCM practices
that govern the strategy and link the processes together.
This maturity model helps companies to break down their current supply chain
practices for maturity and makes the companies to focus on their critical processes that
will increase overall maturity (PRTM Management Consultants, 2005). The stage of
maturity is derived from a qualitative assessment, which uses more than 270 questions
and characterise supply chain practices in four areas (plan, source, make, and deliver),
which address the overall supply chain practices. These areas are further broken down
with specific questions and multiple-choice answers to cover the scope that is presented
in Table 3.
Figure 2 illustrates SCM maturity model, jointly developed by Performance
Measurement Group and PRTM, which points out the maturity stages from 1 to 4 and
separates mature practices from immature practices.
662 M. Lahti et al.
Table 3 Operational elements in the Supply Chain Management maturity model
Planning strategy
Demand planning
Supply planning
Plan
Demand/Supply balancing and decision making
Sourcing strategy
Sourcing processes
Supplier development/management
Source
Sourcing organisation and infra structure
Manufacturing strategy
Production scheduling
Materials issue, movement, and tracking
Make
Manufacturing process control
Deliver enablement
Order entry and scheduling
Warehousing, transportation, and delivery
Deliver
Invoicing and cash collection
Overall supply chain strategy
Overall supply chain performance and management
Overall supply chain processes
Overall
Overall supply chain organisation
Source: PRTM Management Consultants (2005)
Figure 2 Stages of supply chain process maturity (see online version for colours)
Source: PRTM Management Consultants (2005)
Developing a maturity model for Supply Chain Management 663
3.5 Model 4
Handfield and Straight (2004) developed a Supply Chain Capability Maturity Model
(SCCMM) that aims to assist executives to determine the relative level of maturity of
their enterprise supply chain business processes and to define what the organisation needs
to do to positively affect the bottom line. This model is based on accumulated knowledge,
documented research, in-depth interview and observation of best practices across global
organisations and covers the broad range of business processes including design, source,
make, deliver, sell/market and service.
Table 4 Key areas of the Supply Chain Capability Maturity Model
Design Source Make/Mfg Market/Sell Deliver Service
Strategic Customer/
Supplier design
collaboration
Supply base
rationalisation
and allocations
Rationalise
manufacturing/
distribution
network
Promotion
strategy
rationalisation
Negotiate
contracts or
outsourcing
partnerships
Rationalise
spares network
Product
line/mix
rationalisation
Supplier
Relationship
Management
(SRM)
Capacity
rationalisation
Rationalise
sales channels
Select
logistics
partners
Select inv
stocking points
New product
requirements
analysis
In/Outsourcing
rationalisation
Long-term
expansion
Market analysis Rationalise
transportation
network
Service
facilities
rationalisation
DFx MRO strategy Marketing
spend
Reverse
supply chain
Establish
service level
expectations
Phase In/Phase
Out
Indirect
materials
strategy
Order
management
Partner products
Supplier
selection and
contract
negotiation
Branding
Source: Handfield and Straight (2004)
An organisation can use this assessment tool to derive quantitative scores from qualitative
information on business processes. This assessment provides a benchmark of
organisation’s supply chain maturity as well as identifies areas for improvement. This
model has also a very detailed approach to measuring and defining the relative maturity
of these processes ranging from ad hoc to defined, linked, integrated and extended.
Using a combination of self-assessment with structured interviews, a company can begin
to understand the key areas of opportunity, as well as the key areas of potential risk.
An example of the major modules associated with core strategic processes is shown in
Table 4.
3.6 Model 5
Ayers (2004), a principal of CGR Management Consultants, has established a supply
chain maturity model with five stages of maturity. With this maturity model, users
can self-assess their current situation and stage of maturity. The model also offers
664 M. Lahti et al.
to view plans for moving to the next stage. The structure of an entire maturity model is
described precisely in Table 5. In this table, the left-side column represents five SCM
tasks, also known as knowledge areas. Along the top are presented maturity stages 1–5.
Table 5 is also explained at each stage for each task and described what it takes to
achieve that stage (Ayers, 2004).
Table 5 Stages of SCM maturity
SCM Tasks
I
Dysfunctional
II
Infrastructure
III
Cost Reduction
IV
Collaboration
V
Strategic
Contribution
Strategic
supply chain
planning
projects
No strategy exists
to guide supply
chain design
Supply chain
awareness takes
hold, however
managers still
view the company
as standalone
Supply chain is
viewed as a
nonstrategic
cost center for
internal cost
reduction
Joint strategic
initiatives are
pursued on a
limited basis
with suppliers
and customers
Activity systems
are implemented
for strategic
advantage
Internal
collaborative
relationships
projects
Internal department
measures, goals and
objectives conflict
with supply chain
excellence
The organisation
is functionally
focused.
Initiatives are
departmental
Cross-
functional
initiatives
b
egin, limited to
the company
and focused on
cost reduction
Supply chain has
moved into a
single function,
which manages
multi-company
relationships
The organisation
has established
multi-company
infrastructure for
important chains
Forging supply
chain
partnerships
projects
Relationships with
suppliers and
customers are arm’s
length at best,
antagonistic at
worst
Collaboration up
and down the
supply chain is
limited to
transaction data
Efforts are
limited to
supplier
initiatives
focused on cost
reduction, not
revenue
increases
Partners
collaborate but
roles are static.
Partners pursue
sphere strategies
Members of the
supply chain
expand their value
contributions
Managing
supply chain
information
projects
Basic information
needed for
decision-making is
missing
Technology
improvements
focus on
individual
departments and
maintenance
Systems efforts
support cost
reduction within
the
organisation.
May or may not
be process
justified
Two-way
information
exchange
supports
transactions
and mutual
decision-making
Technology is a
key element
integrated into
supply chain
activity systems
Making money
from supply
chain projects
Cost reduction and
process
improvement is a
hit-and-miss affair.
Efforts-often hurt
more than they help
Reductions are
internal and
measured through
department
budgets. Service
is not an issue
Cost-reduction
efforts cross
departments but
are limited to
internal efforts
Supply chain
cost reduction is
limited to
logistics and
other operating
costs
Cost reduction
across the supply
chain is the target.
Benefits are
shared among
partners
Source: Ayers (2004)
3.7 Model 6
A fierce competition and changing circumstances in marketplace has been a driver to
recent interest in logistics and SCM. This has also been governing the development of
Developing a maturity model for Supply Chain Management 665
SCM Logistics Scorecard model jointly developed with Takao Enkawa, Professor of
Tokyo Institute of Technology and Japan Institute of Logistics Systems (Enkawa, 2005).
The SCM Logistics Scorecard, a simplified benchmarking method, evaluates company’s
activities and effectiveness from a SCM point of view with assessment questions.
This assessment tool consists of 22 parts, which are divided into four SCM core areas
such as strategy and organisation, planning and execution, performance, and information
technology. Besides the core areas, the Scorecard has also extended to contain some
economical key ratios. Figure 3 describes the structure of a Scorecard model.
With the Scorecard subjective awareness of strengths and weaknesses can be
determined through a self-assessment. The user evaluates its maturity on each area and
items on Scorecard’s five-level scales, resulting information of company’s positions
within an industry and overall industries. The Scorecard also provides suggestions of
company’s SCM operations and financial bottom-line improvements.
Figure 3 SCM Logistics Scorecard’s structure including core areas and sub-areas
Source: Enkawa (2005)
4 Executive summary of the developed maturity models
The preceding sections offered an introduction to the SCM maturity models that have
been developed approximately during the years 1999 and 2007. The name of these
666 M. Lahti et al.
six models varies on from supply chain evolution, e-business development framework
and supply chain maturity model to SCM Logistics Scorecard but all of these models can
also be commonly called the SCM. These six models also have a common goal. They all
divide supply chain practices in a different capability or maturity levels and aim to
pinpoint the company’s current position in maturity model on the way to the advanced
capabilities. All these six models are based on years of supply chain benchmarking
experience and field knowledge. These models have also been used for years, so they are
tested, tried and proved. Almost every developer of these models is the consulting
company, which has made half of the models commercial.
Owing to the commercial nature of the models, the inclusive information about those
is not available naturally. According to the maturity models, which have been presented
here, there are two different methods to measure the company’s maturity and position in
a maturity model. A company can either self-assess the current maturity stage based on
step-by-step detailed defined model or a company can use a specific set of questions,
which include questions from each of the supply chain key areas, to find out the
current stage of maturity. Half of the models take advantage of the method used in the
Supply-Chain Operations Reference model, which divides supply chain in KPAs.
This kind of method is using exactly those above-mentioned models that contain the
set of question-type determination of maturity stage. We have pulled all together in
Table 6, which summarises these six SCM maturity models.
From the above descriptions, maturity models can be classified into two different
approaches such as grids and hybrids/Likert-type questionnaires. We have pulled together
the information of different approaches of the SCM maturity models in Table 7.
This table also divides the models in stages and describes each stage.
Table 6 Summary of the Supply Chain Management maturity models
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6
The
development
company
Computer
Sciences
Corporation
DRK Research
and
Consulting
PRTM
Management
Consulting &
PMG
Supply Chain
Resource
Consortium
CGR
Management
Consultants
Tokyo
Institute of
Technology
Japan
The person
that have
developed the
model
Charles
C. Poinier
Kevin
McCormack
PRTM Robert
Handfield and
Kevin
McCormack
James Ayers Takao
Enkawa
The method
how to
determine the
maturity stage
Company
self-assess the
current
maturity stage
based on
detailed
model
Company fill
in a
questionnaire
to find out the
maturity stage
Company fill in a
questionnaire to
find out the
maturity stage.
Questionnaire is
not publicity
available
Company fill
in a
questionnaire
to find out the
maturity stage
Company
self-assess the
current maturity
stage based on
detailed model
Company
self-assess
the current
maturity
stage based
on detailed
model
Stages of a
model
4 & 5 stages
Enterprise
integration →
Full network
connectivity
5 stages
Ad Hoc →
Extended
4 stages
Functional focus
→ Cross
Enterprise
collaboration
5 stages
Ad Hoc →
Extended
5 stages
Dysfunctional
→ Strategic
Contribution
5 stages
The stages
are not
named
Developing a maturity model for Supply Chain Management 667
Table 6 Summary of the Supply Chain Management maturity models (continued)
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6
Simple model
and detailed
defined stages
provides fast
and easy
determination
of a maturity
stage
The model
acts also as a
visual score
card of the
current
situation and
areas of
opportunity
The model
provides a good
starting point for
evaluating
existing supply
chain capabilities
and selecting the
critical best
practices
The model
acts also as a
visual score
card that can
help explain
some of the
interfunctional
linkages and
their
weakness that
may exist
The simple
model offers a
fast assessment
of the current
state for design
of SCM project
processes
Gives some
suggestions
to improve
company’s
SCM
operations
and
financial
bottom line
Special
characteristic
Company
evaluates their
progress
against the
model in
specific key
business
application
areas
The model
focuses on the
four key
process areas:
plan, source,
make and
deliver
The model is
used to assess the
stage of
operational
capability for
each of four
operational
elements: plan,
source, make and
deliver
The model
covers the
business
processes
areas such as
design,
source, make,
deliver,
market and
service
Company
evaluates their
progress against
the model in five
SCM knowledge
areas
Company
evaluates
their
progress
against the
model in
four supply
chain core
areas and
22 items of
them
Table 7 Approaches of the models
SCM Maturity
Model &
Reference Maturity stages Approach
Computer
Sciences
Corporation
(1st.)
I
Sourcing and
logistics
II
Internal
excellence
III
Network
construction
IV
Industry leader
Maturity grid
10 issues, detailed
description at each
stage
Computer
Sciences
Corporation
(2nd.)
I
Enterprise
integration
II
Corporate
excellence
III
Partner
collaboration
IV
Value chain
collaboration
V
Full network
connectivity
Maturity grid
8 issues, detailed
description at each
stage
DRK
Research and
Consulting
I
Ad Hoc
II
Defined
III
Linked
IV
Integrated
V
Extended
Maturity grid/
Likert Hybrid
6 issues, brief
description at each
stage plus 5 point
scale
PRTM
Management
Consulting &
PMG
I
Functional
focus
II
Internal
integration
III
External
integration
IV
Cross-Enterprise
collaboration
Maturity grid/
Hybrid checklist
5 areas. 20 issues,
brief description at
each stage
668 M. Lahti et al.
Table 7 Approaches of the models (continued)
SCM Maturity
Model &
Reference Maturity stages Approach
Supply Chain
Resource
Consortium
I
Ad Hoc
II
Defined
III
Linked
IV
Integrated
V
Extended
Hybrid checklist
6 areas 105 issues,
brief description at
each stage
CGR
Management
Consulting
I
Dysfunctional
II
Infrastructure
III
Cost
reduction
IV
Collaboration
V
Strategic
contribution
Maturity grid
5 supply chain
tasks, detailed
description at each
stage
Tokyo
Institute of
Technology
Japan
I II III IV V Maturity grid/
hybrid
4 areas, 22 issues,
detailed
description at each
stage
All of these models are basically somewhat similar, only the observed subject areas of
supply chain are varying. It is important to recognise that companies should progress in
sequence through the stages of those models by building on the practices they have
solidly established at each stage. In order for a company to be considered mature for a
given maturity stage, it must be effectively using a majority of its practices from that
stage.
5 Development of new Supply Chain Management maturity model
It is justified to use PRTM Management Consultants and The Performance Measurement
Group’s supply chain maturity model as a base when developing a new model because
the previous model is developed using knowledge gained from more than a decade of
supply chain benchmarking experience and field knowledge of current and future
practices in different industry segments. At the same time, when this research aims to
develop a completely new model tailored just for the needs of case company, it also uses
one of the previously made models as a base also adopting characteristics from other
models. Such being the case, all the sub-questions features are combined in this
forthcoming model.
Building of such a model starts by developing and defining the maturity stages for the
applied model. After that, the target assessment areas or KPAs are decided and
determined. Now, when the base for the model has been created, it is time to formulate
the actual assessment tool, a questionnaire for assessing the maturity of different supply
chain process areas and practices of supply chain participants. The initial aim has been to
build the model to be as simple as possible including the instructions of how to use the
tool in practice.
Developing a maturity model for Supply Chain Management 669
5.1 Developing and defining the maturity stages
During the creation of this proposed model, four stages called functional focus, internal
integration, external integration and cross-enterprise collaboration were considered to
be applicable. Figure 4 illustrates the ABB Corporate Research Center’s (ABB, 2007)
four stages SCM maturity model where stage 4 describes the most mature state whereas
the most immature state stands in stage 1. In other words, this model is based on an idea
where a highly mature supply chain is one that has achieved advanced capability across
each stage of the model. The following sections give general definitions to each of the
four stages of newly developed maturity model and at the same time, it is illustrated on
how the practices in each stage are influencing to the structure of the whole value chain.
Figure 4 The maturity stages of ABB corporate research centre’s Supply Chain Management
maturity model
Stage 1: Functional focus
Discrete supply chain processes and data flows are well documented and understood.
Organisational roles, responsibilities and supplier partnerships are not well defined.
Basic information, which is not available across the organisation, is electronically
collected from many different databases with limited access. Functional departments
within an organisation are focusing on improving their own process steps and use of
resources, performance is also measured at functional level. Managers are typically
focusing on their individual department’s costs and functional performance. Figure 5
depicts functional focus where the order of information flows systematically through
sales, production, purchasing and end in a supplier. In other words, demand/
supply information flows internally but there are no integrated processes across plants
(ABB, 2007).
Stage 2: Internal integration
Division or company-wide processes are now defined; this allows individual functions to
understand their roles in complex supply chain processes. Process-specific information is
collected and shared within the factory using integrated systems and internal databases.
At this point, supplier partnerships are already well defined and classified. Resources are
managed at both functional and cross-functional levels; also resource requirements are
typically balanced across the organisation. Figure 6 represents internal integration where
order information flows simultaneously from sales to production, purchasing and finally
670 M. Lahti et al.
end to supplier. In internal integration, demand and supply planning processes are
aggregated across the company.
Figure 5 Functional focus (see online version for colours)
Source: ABB (2007)
Figure 6 Internal integration (see online version for colours)
Source: ABB (2007)
Stage 3: External integration
Stage 2 practices are now extended to the points of interface with customers and
suppliers. Strategic customers and suppliers are identified, as well as key information the
company needs from them to support its business processes. Also, effective collaboration
processes with key customers are implemented and information is collected and shared
electronically with the value chain parties. Figure 7 pictures external integration where
the company has adopted automated links to customer demand and this information is
shared directly to the suppliers, in addition that the order information flows
simultaneously from sales to production and purchasing.
Stage 4: Cross-enterprise collaboration
Information technology plays an important role at this stage. Customers and suppliers
work to define a mutually beneficial strategy and principles and they set real-time
performance targets. Information technology now automates the integration of the
business processes across these enterprises supporting of an explicit supply chain
strategy. There is a real-time information visibility across the entire value chain
where the supply chain improvement tools are also used effectively (Matopoulos et al.,
2007). Figure 8 shows the most mature state, cross-enterprise collaboration,
Developing a maturity model for Supply Chain Management 671
where internet-enabled processes or integrated systems allow all participants in the
supply chain to view the same demand information simultaneously.
Figure 7 External integration (see online version for colours)
Source: ABB (2007)
Figure 8 Cross-enterprise collaboration (see online version for colours)
Source: ABB (2007)
5.2 Defining the questions for questionnaire
From the integration of factories and smooth cooperation point of view, three important
things can be seen in ABB: How the information is shared in a supply chain, how this
information is used in decision-making situations and how the physical materials move in
a supply chain (ABB, 2007). These three notable matters formed the base for developing
the right questions to the maturity assessment tool to pinpoint the company’s maturity
stage of different supply chain practices. The assessment questions were founded on both
of our own judgement and knowledge, so that the developed maturity assessment tool
could meet as much as possible, the needs of the studied research company ABB
Corporate Research Centre. The questionnaires were revised and updated with the help of
ABB Corporate Research Centre’s consultants in Vaasa, Finland.
672 M. Lahti et al.
The maturity assessment tool is built up so that each sub-area contains
questions/statements from each of the four maturity stages and for each stage there are
directed two questions/statements. The maturity assessment tool is composed of
128 questions. There are two possible ways to choose the answers to the questions. The
user can choose either the point of dominant practices that are practices that are well
established and used across the organisation or future practices that are practices that are
already defined in the organisation but not fully implemented yet. Future practices may
also be practices that the company has planned to carry out in a near future.
The practices stated in each of four stages are organised so that they proceed in
consequential order so that practices in stage 1 are the most immature while the practices
in stage 4 are the most mature. In other words, questions at each stage are aimed to be
defined so that the progress should happen in sequence through each stage by building on
to the practices that have established at each stage. Attempts to advance without a base of
firmly established practices are not recommendable. The main idea is to achieve effective
functional focus and internal integration before attempting to adopt any substantial
externally integrated processes. In the above consequences, a company is considered to
be mature for a stage in which majority of practices is effectively used.
One of the key principles is that set of questions in a maturity assessment tool is used
in a way that the target company can assess their dominant and future practices in each
sub-areas as well as in each stage of the tool. An example of this is illustrated in Table 8
with using the planning practice’s sub-area called planning strategy. Throughout the
whole assessment tool, the stages are organised in reverse order starting from asking the
questions in stage 4 proceeding down to stage 1. The aim is to avoid or pass the notice of
possible embarrassment of immature organisations to be placed in low maturity stages
along this assessment tool. On the other hand, when all the practices are gone through
starting from the most mature practices, the organisation gets conveying information of
those mature practices that the organisation should be trying to reach.
Table 8 An example of planning strategy from maturity assessment tool (see online version
for colours)
Developing a maturity model for Supply Chain Management 673
5.3 Presentation of the outcomes
It is extremely important that the outcomes or results are presented by illustrations and
they are easy to interpret. So, visualisation had a significant role when we were planning
the possible ways to present the outcomes of the maturity assessment tool. Based on the
company’s responses in each 16 sub-areas, the results can then be presented in a way as
illustrated in Table 9. This way of representation allows fast and easy interpretation and
comparison of outcomes, showing the current maturity stage in each sub-areas. Table 9
plots the company’s dominant and future practices in each sub-areas based on the answer
choices so that spots in the middle of the grid point out half stages, whereas the spots in
the right side of the grid point out the whole stages. Results in this table are imaginary.
Table 9 Dominant and future practices at each stage (see online version for colours)
Table 9 is dominant and future practices on average scores can be presented from each of
the SCOR areas by using a chart as described in Figure 9. This table helps organisations
to outline the whole situation in each area’s dominant and future practices. It enables the
comparison between different areas too.
Figure 9 Average stage for dominant and future practices by SCOR element (see online version
for colours)
674 M. Lahti et al.
After a while doing the maturity mappings of different organisations or companies,
the average and best in class results can then be easily formed. The results then can also
be presented as in Table 10, which shows the target company’s maturity in each
sub-areas and the average scores that the leaders have.
Table 10 The Company’s own maturity scores, average and best in class results (see online
version for colours)
The maturity assessment tool’s results or outcomes can be further presented in a way,
which is illustrated in Figure 10. There, the areas plan, source, make and deliver
are presented and they are further broken down to all 16-sub areas. More detailed
information concerning functions or practices, which for example requires immediate
attention, can be added into this table by using Table 8’s answer choices as an example.
Figure 10 Results presented in a form that helps to highlight the critical areas (see online version
for colours)
Developing a maturity model for Supply Chain Management 675
6 Discussion
Global businesses are continuously moving towards outsourcing to make balance
with the present customisation era. The outsourcing, which is related to supplier’s
involvement, becomes an increasingly powerful trend in modern multinational companies
(Manzini et al., 2007). It is necessary to control and manage effectively with these
suppliers maturity standard to compete with diversified product range and increasing
customer awareness. The required level of integration among upstream supply chain and
downstream customer’s requirements must be achieved to meet the strategic objectives of
the manufacturing companies (Vanteddu et al., 2006).
The maturity model framework proposed above is a new way of thinking and
organising the disparate supply chain efforts around business processes, tools and
standards by recognising the need for a conscious strategy around organisation.
The proposed maturity model will be dynamic by definition and evolving. As the
organisation matures, we need to develop the benchmarking further to assess a
company’s maturity level based on the various assessment criteria listed above.
Companies’ different performance criteria need to be updated in a regular interval that
matches the expectations from a certain maturity level. They can look to consistent
processes, performance and expectations because of achieving certain maturity standard.
The benefits of achieving this will be of tremendous value to improving the processes in
the industries supply chain network as a whole.
The evidence pointing to improved business performance through supply chain
maturity is significant but has often been a subjective assessment. According to recent
researches on this area, linking SCM maturity to performance can provide some of the
answers, at least at the high level. In accordance with the research by McCormack et al.
(2003) aim to relate financial bottom-line performance to SCM maturity and link this
performance to maturity stages, which show that there is a dramatic difference between
bottom maturity stages and top stages. SCM costs as a percent of total revenue, for
example are 3% lower at the upper stages than lower stages. The cost of goods sold is
almost 12% lower and profit is 2% higher in upper stages. According to the research,
it is also seen that top maturity stages had an average increase in sales of 20% year to
year while the lower stages had only 6%. This strongly suggests that the SCM maturity
model can be used as an indicator of financial performance.
In the above consequences, research is going on to develop new and improved
maturity models for supply chain evaluation that can contribute to the continuous
improvement of companies supply chain maturity level. In addition, evaluating and
certifying a supply chain maturity will be a new dimension in the application and
benchmarking of cross-company maturity models. Future research could be involved to
validate the proposed maturity model to enhance its benchmarking criteria. Research also
needs to develop this model to correlate with several criteria to business performance
such as cost, quality and efficiency of production line.
7 Conclusions
A supply chain maturity model can be considered as a methodology that is related to
definition, measurement, management and the controlling of business process. Higher
level of maturity indicates the superior performance of an organisation (Poirier, 2006).
676 M. Lahti et al.
This paper has presented results from qualitative research that investigated the level of
supply chain maturity of ABB supply chains, and studied the relationship mapping
between supply chain process maturity and its performance. In respect of business
leadership, supply chain maturity models have wide application for performance
measurement and continuous process improvement within an organisation. The maturity
models are valuable tools for the leadership of companies supply chain systems through
determining the stages of maturity and setting the goals of maturity improvement. A new
applied maturity model for the manufacturing SCM has been proposed in this paper.
The model provides a framework to assess both where the company is today along the
maturity stage and how it can goes to more advanced maturity levels.
The resulted maturity assessment tool contains 128 questions to be able to point out
the maturity of practices. Such being the case, the tool might prove to be quite toilsome
with all of those questions but, on the other hand, it also allows a very specific
determination of the maturity state in different supply chain areas and practices.
The resulted maturity assessment tool will certainly develop and become more accurate
further for the part of the questions, during the usage of the tool. The tool also allows a
different kind of usage; it can also be used like a self-evaluation tool, which carried
through without an external auditor where the target company assesses its own practices
for example, by using simple stage definitions or the grid. Used like this, it does not give
the most accurate results of the company’s current maturity stage but allows still a fast
and easy evaluation.
Although the developed tool is quite helpful for companies but still there are some
limitations for its application. In this maturity model, we investigate the studied
company’s supply chain maturity by asking questionnaires, which could be biased from
the real values that make the outcome in question. This model also did not consider the
cost estimations during planning and implementation stages of companies supply chain
maturity. This tool can only be used for evaluating some of the areas in supply chain for
example, just planning practices or sourcing practices. However, using the tool as a
whole, offers naturally the most extensive picture from the maturity of practices.
This maturity assessment model aims to place the company in a specific maturity
stage, based on the answers in questionnaire. In order for having more detailed
information on the used practices and their maturities in companies and for being able to
help companies to focus their improvement efforts on the critical processes that will
increase their supply chain maturity, the maturity assessment questionnaire could be
expanded to include more and more specific questions or statements in each stage.
One interesting research area would also be to study what kind of benefits more mature
companies are enjoying compared with less mature companies. For example, can there be
found any correlation between supply chain maturity and superior performance when
using this model?
Until today, there is not any supply chain maturity model able to manage properly the
typical complexities encountered in the management of supply chain networks although
several efforts are taken for improving and expanding the individual performance
evaluation into companies’ suppliers, distributors and customers. Future research could
be considered to identify the barriers of the application of any maturity model for
companies’ supply chain performance measurement and possible improvements.
The costs involvement in planning and implementing maturity models are also need to be
investigated critically.
Developing a maturity model for Supply Chain Management 677
Acknowledgements
The authors acknowledge The ABB Corporate Research Centre, Vaasa, Finland, and
ASDN project (EGLO – Ministry of Transport and Communications Finland) for all out
support of this research work. We are also grateful to the anonymous reviewers for
helpful comments that make the suitability of the paper to the readers.
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