Supply Chain Readiness Levels

Enhancing the Industrial Readiness and Resilience of Global Value Chains

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 digitalization 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 industrialization risks and reduce deployment readiness. In this context, the ability of corporations to rapidly and successfully industrialize 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 industrialize 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 characterized 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 industrialize innovation or deal with major disturbances. Following the deployment in the railway supply chain, a structured supply chain development program was defined, aiming to get companies to improve their individual readiness from Level 2 (understanding) to Level 3 (advanced) in the first instance. The program 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 industrialization of new and innovative products from all sectors of the economy, including products of the ‘green industrial revolution’ from the 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 industrialize products of future technology roadmaps and then plan appropriate capability interventions to bridge the identified gaps or fund research and innovation programs 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.

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