Supply chain readiness levels – whitepaper

Posted on 5 Nov 2021 by The Manufacturer
Partner Content

The manufacturing industry is undergoing a transformational change globally, brought upon it by an unprecedented combination of geopolitical events, technology advances, societal trends and health emergencies. The challenges are multiple, as are the commercial opportunities for those who will develop the correct strategic responses.

An overriding industrial requirement is to rapidly develop and successfully deploy innovative technologies, from digitalisation and automation to new green and sustainable technologies, whilst at the same time enhancing the effectiveness and resilience of global and regional value chains. The key antithesis here is that rapid innovation adoption by industry can increase industrialisation risks and reduce deployment readiness.

Read the full whitepaper here.

In this context, the ability of corporations to rapidly and successfully industrialise innovations is frequently limited by the readiness or maturity of their global value chains. And whilst measurement systems exist for the measurement of the maturity of a particular technology, or a manufacturing process, they do not exist for measuring the maturity of supply chains; this creates a significant global challenge and a strategic opportunity to unlock major operational and competitiveness benefits in global value chains.

Following on from the original, academic definition of system-level risk mitigation and maturity approaches, an industrially oriented ‘Supply Chain Readiness Levels’ (SCRL) methodology and associated digital toolkit were developed from a practical, industrial implementation perspective. The methodology is assessing the maturity of nine key measurable technology and business capabilities called ‘threads’ using four maturity attainment Levels from ‘awareness’ and ‘understanding’ to ‘advanced’ and ‘expert’.

In essence, SCRL assesses the supply chain’s readiness to industrialise Innovation and operate at world class standards. In order to enhance the ability of businesses to deal with major and frequent disruptions in their business environment, it is mission critical to understand how key business capabilities contribute towards building business resilience.

The SCRL methodology has been especially adjusted and extended to provide a measure of resilience, by identifying specific combinations of capabilities that contribute towards it and measuring their combined effect, thus resulting in the ‘SCRL-Resilience’ methodology and toolkit. To the knowledge of the authors, this is the first readiness and resilience focused methodology and toolkit to be made available for deployment within industry sectors and supply chains, addressing a major global industrial requirement.

The SCRL-Resilience methodology has been applied to two UK supply chains, one supplying the railway sector and one supplying the digital and automation sector, with very good results. In each cohort, the overall readiness and resilience of each company were measured and benchmarked against the cohort’s overall attainment. Interesting trends were identified regarding how specific sets of capabilities were clustered together at the same level in high performing companies. Perhaps more importantly, capability maturity gaps were identified within each company and within the overall supply chain via subsequent cohort data analysis. The findings allowed the clustering of low readiness and resilience capabilities that characterised the low maturity attainment companies.

The industrial deployment of SCRL Resilience provided unique perspectives and a ‘landscape view’ into the capability and readiness of two UK supply chains to industrialise innovation or deal with major disturbances. Following the deployment in the railway supply chain, a structured supply chain development programme was defined, aiming to get companies to improve their individual readiness from Level 2 (understanding) to Level 3 (advanced) in the first instance. The programme also aims to codify the interventions and actions needed in order to define a ‘how to do it’, standard performance improvement process. For the digital and automation supply chain the analysis of results underpinned a regional supply chain strategy that is focused on developing the supply chain’s capabilities, retaining best performing businesses, and attracting new competitive companies in the region.

A key readiness finding from the overall attainment, across the two supply chains, was that two out of three companies had their overall readiness measured at the two lowest maturity levels. This represents a strategic risk and provides an opportunity for targeted supply chain capability development to allow businesses to thrive in an increasingly competitive and volatile global market.

In terms of specific business capabilities, good attainments of readiness were measured for ‘Contract Management, Risk Management and Security’, ‘Synchronisation of Supply’, and ‘Innovation and Technical Mastery’ as for each one of these capabilities more than 40% of companies were assessed as having advanced or expert readiness. At the other end of the spectrum, almost three out of four supply chain companies had their ‘Digital Competence’ measured at the two lowest readiness levels. This indicates a significant challenge with the digital transformation of the supply chains assessed and represents a business and technology risk that needs to be addressed.

The overall assessment of resilience resulted in an interesting set of results with the headline finding being that 72% of companies had achieved expert or advanced levels reflecting mature business practice in strategy and innovation. This is a highly significant outcome that indicates the priority UK businesses give to enhancing their ability to deal with major market disturbances. In terms of specific capabilities, ‘Strategy’ is a well performing capability with 28% of companies being assessed at the top resilience quartile, whilst ‘Agility’ and ‘Sustainability’ were identified as key foci of companies for enhancing their resilience, with both having 34% of companies assessed in the two lower resilience quartiles.

The use of SCRL is strategic and front-end, to assess readiness during new value chain configuration. This makes the methodology especially well placed to support the efficient industrialisation of new and innovative products from all sectors of the economy, including products of the ‘green industrial revolution’ from electrification of transport, to hydrogen applications. SCRL can also be applied during the reconfiguration of legacy value chains and this is especially pertinent during the period of global industrial recovery post COVID-19 when companies are seeking to rebalance and enhance the resilience of their value chains, re-purpose capabilities to access different markets or re-shore critical products. Apart from using SCRL commercially, the methodology can be deployed by Trade Associations and Government Agencies to gauge a value chain’s maturity to industrialise products of future technology roadmaps and then plan appropriate capability interventions to bridge the identified gaps or fund research and innovation programmes to enhance national capabilities.

Currently, the SCRL methodology is being deployed to more sectors of the UK’s economy, the industrial clients have benefited from its deployment and commissioned strategic supply chain capability enhancement projects and work will continue to expand its deployment and further enhance its impact.

Here are some statistics from the whitepaper:

  • 65% of the companies assessed had their overall Readiness measured at the two lowest maturity levels. These businesses have an increasing understanding of the main capabilities required by high performing supply chains, but they have not, as yet, progressed the development and significant deployment of such methods. This represents a strategic risk and an opportunity for targeted supply chain capability development to allow businesses to thrive in an increasingly competitive and volatile global market.
  • 43% of companies have advanced level maturity attainment for ‘Contract Management, Risk Management and Security’, reflecting good business strengths in life-cycle contract management, risk management, use of standards and data security.
  • 41% of companies have advanced readiness for ‘Synchronisation of Supply’ showcasing strong ability to react to changes in demand and ability to cope with uncertainty in forecasting, resulting in on time delivery.
  • 41% of companies have advanced readiness for ‘Innovation and Technical Mastery’, incorporating innovation in products and processes with an active focus on building technology collaborations.
  • 72% of the supply chain companies assessed had their ‘Digital Competence’ measured at the two lowest readiness levels. This indicates a significant challenge with the digital transformation of the supply chains and represents a business and technology risk that needs to be addressed.
  • 72% of the supply chain companies assessed had their overall resilience measured as expert or advanced, reflecting the strategic focus UK businesses have given to enhancing their ability to deal with volatile market conditions and the adoption of best practice standards. Whilst this is positive, the concern is that the remaining 28% of the companies assessed are ill prepared to deal with major disruptions to production and this increases their business risk and threatens the sustainability of the supply chains.
  • 28% of companies reached expert level for ‘Strategy’ when assessing resilience; this is the top attainment level for any capability that contributes to resilience and reflects good leadership, technology forecasting and market awareness within the supply chains.
  • 34% of companies were placed in the two lower resilience quartiles for ‘Agility’ and ‘Sustainability’; these areas emerge as key foci of supply chain companies in the process of enhancing their resilience.

The authors

Prof Paul Maropoulos PhD, CEng, FIMechE, FCIRP is the Director of Technology and Strategy Consulting Ltd and an Honorary Fellow of the MTC in recognition of his contribution to UK’s manufacturing. He is Professor of Advanced Manufacturing at Queen’s University Belfast, Director of the Advanced Manufacturing Innovation Centre and Editor-In- Chief of the Journal of Engineering Manufacture.

Dr. Thorsten Kampmann PhD, LLM-IP, MSc-HE, MSc-BT, is leading the MTC product and service offering for supply chain improvement. Thorsten has worked in consulting for the last decade in sectors including healthcare, manufacturing, automotive, aerospace, energy, technology and automotive.

Cy Keogh BSc (Hons) MBA (MBS), a supply chain development specialist with 30 years’ experience focusing on developing supply chains as a competitive asset through the design of value-driven development programmes. He took a lead in developing the MTC’s Supply Chain Readiness Assessment tool. He has published work on Entrepreneurship in the Journal of Innovation and Technology.

Michael Cunliffe PGDip CQP MCQI, working within the MTC’s Transformation Team, developing UK supply chain capability introducing innovation to products and processes. Has over 30 years of experience in manufacturing operation management in high value manufacturing sectors, with further experience in managing and mentoring for UK Aerospace grant programmes.

Read the full whitepaper here.