Supply Chain Strategy

What is supply chain?

A supply chain consists of all entities that are involved, directly or indirectly, in fulfilling a customer request. Supply chain activities transform resources, raw materials and components into finished products and services that are delivered to the customers. The entities that form a supply chain are the customers, manufacturers, suppliers, warehouse, transporters, and retailers. Supply chain activities begin with a customer order and ends when the customer pays for the purchase. We can picture it as the product or supply moving from suppliers to manufacturers to distributors to retailers to customers along a chain.

Supply chain strategy

Organizations need to develop a supply chain strategy in addition to the business strategy in order for the actual operations to meet a specific supply chain objective. Business strategy involves leveraging the core competencies of the organization to achieve a defined high-level objective. It involves the analytical and decision making process on what products or services to create and identifying the timing and markets. On the other hand, supply chain strategy involves the actual operations of the organization to meet a specific supply chain objective. Supply chain strategy is very helpful in operationalizing the business strategy to achieve greater efficiency. It also sets the groundwork for how should we work with our supply chain partners to enhance the existing relationships in the competitive market. Overall, a well-executed supply chain strategy adds more value to the organization.

The first step in developing a supply chain strategy is to understand the business strategy well as it clearly shows how the organization competes in the market. Supply chain strategy should be the enabler of the business strategy. Then we need to do a realistic assessment of the current assets and evaluate how well they support the strategy. An implementation plan needs to be created specifying the tasks, roles and responsibilities, timeline, and performance metrics. During the development of the supply chain strategy it will be great to collaborate with our partners as it will be an ideal opportunity to learn more about those companies and identify mutual goals.

Executing the supply chain strategy

Successfully executing the implementation plan requires a great deal of project management skills as it deals with a vast variety of groups and stakeholder that are internal or external to the organization. It is very important to manage the performance and timelines throughout the implementation. The deviations from the plan must be identified at an early stage and corrective actions should be made to bring everything back on track.

Evaluation of supply chain strategy

Organizations must reevaluate their supply chain strategy periodically to position itself in the changing market conditions. The main drivers for this evaluation are the growth in global or local competition, change in business strategy or business model, determination to retain the leadership position, counter challenges in a downward economy and the supplier consolidation. The following general criteria can be used to evaluate an organizations’ supply chain strategy (Perez-Franco, 2011).

  1. Support: tasks should support the goals of the supply chain strategy.
  2. Consistency: components of the supply chain strategy should be compatible.
  3. Coverage: the supply chain strategy should address all important areas.
  4. Sufficiency: the goals should be fully satisfied by the supply chain strategy.

Effective implementation and continued reevaluation of the supply chain strategy will ensure that the organization will meet its business objectives and be successful.

REFERENCES

Happek, S. (2005). Supply Chain Strategy – The Importance of Aligning Your Strategies. Retrieved from http://www.ups-scs.com/solutions/white_papers/wp_supply_chain.pdf

Perez-Franco, R., Singh, M., & Sheffi, Y. (2011). An approach to evaluate a firm’s supply chain strategy as a conceptual system. Retrieved from http://web.mit.edu/sheffi/www/documents/Robertopaper23-14-11.pdf

 

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One Response to Supply Chain Strategy

  1. Sripada says:

    Sam, I agree that corporations should pay special attention to supply chain strategies as in this competitive world, organization no more compete on the product but on the supply chain efficiency. An organization may have multiple supply chain based on the product categories (functional products vs innovative products). In order to develop a strategic supply chain model, organization should focus on the following areas:
    • Organization Design
    • Supply Chain Processes
    • Systems and Technology
    • People
    • Metrics
    One feedback on the supply chain is that supply chain doesn’t stop at customer. We will typically encounter “reverse supply chain” for either recall, or remanufacturing. Also, supply chain loop back. Potential customer can be suppliers as well.

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