1. The document outlines a framework for supply chain excellence with three focus areas: strategy, customer, and core capabilities. 2. It presents a 10-level model for assessing procurement and supply chain maturity, ranging from basic price negotiation to integrated enterprise-wide supply networks. 3. Key performance indicators and capabilities are described at each level to measure areas like compliance, cost reductions, inventory management, and collaboration with suppliers.

1. 1
Supply chain E2E wheel of excellence
All 3 focus areas needs to be addressed to drive real results, simplicity and benefit from digital excellence
Strategy
vision
Customer
Target
Customer
demand
NPI
Budget
Forecast
Strategic
Sourcing
Tactical
Sourcing
Contract
Manage
Distribution
centers
Forecast &
planning
In bound
logistic
Quality
assurance
Warehouse
Purchase 2
Pay
Production
assembly
Out bound
Logistic The framework
Deliver effective and
efficient
The Core
(Set Direction)
The Substance
Deliver content &
value
3 focus areas
Dan Hansen
SCM excellence model
+45 24942369

2. Procurement and Supply Chain Maturity Model
16 December 2016 Dan.han@mail.dk
Price reduction phase
Value management
supplier cooperation
Total Value of Ownership
supplier collaboration Integrated supply networks
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8 Level 9 Level 10
Price
negotiation,
separate buys
Leveraged
volumes – price
negotiation
Business-wide
leveraged
volumes – price
negotiation
Cost reduction
negotiations on
today’s
expenditure
Cost targeting
introduced with
key suppliers
First major cost
benefits flow
from joint cost
mgt./
productivity
projects
First major
time-benefits
flow from joint
planning on
multi project
basis
Time & Cost
benefits are
optimised
Benefits are institutionalised and
a sustainable competitive
advantage is established
Procurement and supply chain and enterprise maturity
KPIs for price
performance
Procurement
savings locked in
to budget
KPIs include
supplier cost
reductions and
more complex SRM
metrics
KPIs driven by
customer
satisfaction mode
KPIs move to
<___> total cost
& productivity
metrics
KPIs include collaborative targets &
benchmarked competitive advantage
metrics
KPIs centre on efficiency & speed along
& between supply chain members
Basic purchasing
procedures in
place
Procurement mgt.
capable
Procurement and
Supply Chain
vision, mission &
business strategy
agreed with
functions &
business mgt.
Procurement SAAS
solution available,
including Master
Data governance
and aligned
volume / planing
info route
Skills analysis in
progress
Initial training in
progress
Ways of working
roles, skills,
structures,
processes &
internal/ external.
Interfaces agreed.
Business benefits
defined
KPIs include
inventory metrics
Noncompliant
spend identified.
Initial actions
taken to extend
contracts company
wide. Spend item
common coding in
progress
75 % compliance
on contracted
spend
Supplier spend
database available
Initial top talent
recruitment
commenced.
Engineering &
Finance rotation to
Procurement
commences. Cross
functional training
commences
Change
management
projects funded for
Procurement/
business process
improvement
KPIs include SRM
metrics
Initial benefits
achieved from
supplier cost
reductions are
somewhat shared
with suppliers
Common inventory
mgt. introduced to
optimise
inventories in
division/region.
VMI introduced.
Mgt. control exists
over 75% of
external spend.
Item coding >50%
complete.
Outsourced
logistics mgt.
introduced.
Key positions filled
to 50%. Focused &
targeted training
portfolio
introduced
Clear evidence of
new processes
working in category
mgt. & capital
procurement.
Suppliers experience
changes in approach
Low value /
indirect spend
outsourced
Total expenditure
is cracked and
reported
All key positions
filled with top
talent people.
Focused training
provided to all
people involved
with suppliers &
supply chain
Category teams
work effectively in
all areas of spend
including cross
division leverage &
strategies. Capital
procurement
engaged in cross
project resource &
demand
leveraging.
Supplier relations
developed on mgt.
level. Supplier
strategies linked
to business plans
and strategies
All spend is
leveraged with
supply chain
partners
All transactions
with suppliers are
system linked &
automated.
Supplier/contracto
r performance
>98% full
customer
satisfaction
Key suppliers &
contractors
involved at
appropriate early
stage of projects
to assist in
planning and
project
development.
Relationship mgt.
deployed as key
enabler to supplier
positioning & to
support full
release of supplier
potential. Second
tier suppliers &
subcontractors
included in
comms. and
planning links.
Supplier councils
established
between exec &
key supplier CEOs
to calibrate &
agree common
business & supply
chain strategies.
Temporary role
exchange
commence
between key
engineering &
operating staff &
the external
supply chain to
facilitate
collaboration
Top talent recycles
out of
procurement to
future careers
Customers of
choice status
achieved with key
supplier
community
Procurement &
supply chain skills
are embedded into
engineering &
operations
functions. Job/role
boundaries are
deemphasized.
Procurement
transactions are
equally prompted
by supplier or
customer
Procurement mgt.
assumes coach
role
Logistics is fully
outsourced to
3PL/4PL providers
if not a business
core competence
Operations and
engineering focus
on core
competencies
Competitive
supply networks
emerge as virtual
entities. Multi
enterprise function
working
commences
similar to Kelretsu
Talent supply
chain and career
paths created
across supply
network
Analysts and
investors
acknowledge
strategies and
collective business
network
Market rewards
share prices
Integrated
enterprise wide
supply networks
work bilaterally &
multilaterally to
provide goods
equipment &
services solutions
to time, cost &
profitability
parameters for all
operations &
entities
Enterprise
assumes sector
lead with
sustainable
competitive
advantage in
Procurement &
supply chain
performance
Mgt. /business process
People
Systems/logistics
General status
KPI approach
Key
ERP/MRP
operational &
effective
E-transaction
systems available