What Are The Supply Chain Strategies – This article provides operations and supply chain professionals with a framework for developing an integrated supply chain strategy for their organization.
To learn more about the different methods and tools your organization can use in the strategy development and deployment process, see our training material Strategy Planning and Deployment.
What Are The Supply Chain Strategies
An effective and efficient supply chain is demand-driven and customer-centric. Therefore, developing an integrated supply chain strategy should begin with an assessment of current and future supply chain requirements from the customer’s perspective. In some cases, organizations may need to segment their customers and develop different logistics approaches for each customer segment. Questions should include customer requirements for delivery frequency, delivery duration, inventory levels, order fulfillment times, return and exchange policies, packaging requirements and damage in transit, product labeling, store network changes, and special delivery services. there is.
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Determining gaps between an organization’s current performance and current and future customer requirements requires a thorough assessment of internal supply chain functions. Challenges common to most organizations across industries include product complexity (too many products, too many SKUs), inventory management (time consuming, outdated), and product development products (not part of product design). supply chain considerations), supply and demand balancing (ineffective matching of supply and demand), physical network design (supply and demand networks are not optimized), and challenges of globalization (global problems and outsourcing Problem of),
To ensure that a comprehensive, honest and detailed evaluation leads to objective results, it is often beneficial to have an external impartial body conduct such evaluations. Additionally, the external organization should be able to suggest best practices to fill some of the identified gaps in supply chain performance and/or capacity.
It is important for organizations to consider key supply chain trends and determine how to address each as part of an integrated supply chain strategy.
Current trends that we suggest organizations should investigate and assess include: internal or external requirements.
Supply Chain Cost Modeling
To make good strategic choices about what to do and what not to do, it is important for an organization to understand what competitors are and what they might do. Don’t let your competitors control your profits.
Many organizations prefer to focus on comparing basic performance data, but it is far more beneficial to focus on understanding the processes, technologies, and capabilities underlying competitor networks. It is recommended that there be Understanding your competitors’ capabilities greatly increases the reliability of your analysis of available performance data. However, just because your competitors also use the “inventory turns” metric doesn’t mean it’s defined the same way.
Sources for competitive analysis include internet searches, annual 10-K reports, executive interviews, conference presentations, interviews with employees who have worked for competitors, mutual suppliers, mutual customers. , online databases, and external consulting firms. He specializes in benchmarking and competitive analysis.
Technology can help organizations enable and sustain the new processes and capabilities they need to execute their supply chain strategy.
Supply Chain Strategy
Reviewing existing supply chain technologies and technology trends will give you ideas on how to combine new technology capabilities with identified customer requirements. J. Paul Dittmann (1) provides an excellent sample list (Figure 2) of supply chain technologies that organizations should investigate and evaluate as part of their supply chain strategy development process. Keep in mind that customer requirements, not technology, should drive the development of new supply chain capabilities.
How effectively some of these technologies will improve or even transform an organization’s supply chain will largely depend on how successful an organization is at recruiting and retaining people who understand and use them. Depends. Therefore, talent training and planning should be part of any technology strategy.
The lack of robust processes for identifying, prioritizing, managing and mitigating risks is a clear threat to an organization’s supply chain and its strategy. A systematic risk assessment becomes even more important when an organization decides to compete globally or to extend its supply chain to other countries or regions. Unfortunately, without a crisis that calls to action, risk planning often falls to the bottom of the priority list.
A long list of factors that cause risk in an organization’s supply chain can be grouped into three categories as visualized in Figure 3.
Importance Of Supply Chain Management Strategy For Your Business
I. Manuj andJ. T. Mentzer (2) presents his six risk management strategies (postponement, speculation, hedging, avoidance, security, control-share-transfer) that organizations use to address specific supply chain risks. increase.
In general, a supply chain strategy should look at least three years into the future of the organization. However, this does not mean that the organization will follow the plan for the next three years without any changes or amendments. The global environment is too dynamic to be without modifications to deal with major and significant changes in an organization’s competitive landscape.
To define and prioritize new supply chain functions, the organization formed a cross-functional strategy team that included sales, IT, and finance resources, and he spent two to three days to begin the process. We recommend holding an offsite meeting. The offsite meeting begins with a review of the information collected so far. This includes customer requirements, internal supply chain assessments, supply chain trends, competitive analysis, supply chain technology, and supply chain risks. During the review process, a current list of all potential new supply chain features that may be developed should be maintained.
To rank and prioritize potential supply chain functions, the strategy team should assess the estimated impact and , human considerations must be determined. and the financial resources required to implement each supply chain function. Some organizations add a “probability of delivery” element to this rating matrix to include elements that describe the complexity and risk associated with each potential feature.
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Once the strategy team has established that the new supply chain function it has chosen will actually enable it to achieve the goals and objectives of the organization, especially within resource constraints, the team will develop a detailed plan for the new supply chain function. A project plan should be established. .Selected. The overall project plan identifies how the individual projects are related to each other to visualize that a project with a low ROI is actually the facilitator of a project with a significantly higher ROI There is also a need.
Implementing a new supply chain strategy can mean the need for a different organizational structure for your supply chain organization. This may include adding headcount, reducing headcount, separating existing teams, or merging two of his teams that are now in different parts of the organization. Therefore, organizational design review should be part of the supply chain strategy implementation process.
Developing and managing new supply chain capabilities over time often requires new skills and capabilities. The strategy team should develop a complete list of required skills and competencies for each position and evaluate existing employees based on whether they already have or can acquire these skills. To be able to implement and manage new competencies effectively, a specific development plan should be established for each individual. Requirements for new hires and associated transition plans should be developed.
New supply chain organizations and functions also require a new set of performance indicators. Key performance indicators (KPIs) should align with your supply chain strategy and help propel your organization toward its desired future state. It also requires sustaining change and enforcing the new behaviors necessary to address trade-offs and conflicting priorities. Read the article Supply Chain Performance Indicators for 16 commonly used supply chain performance indicators.
Outsourcing To Enhance Assurance Of Supply: Application Of Counterintuitive Supply Chain Strategies — A Case Study
Best-in-class organizations achieve this by using a balanced scorecard across their supply chain organization. For more information on developing and using Balanced Scorecards, see the training material Developing and Implementing Balanced Scorecards.
Implementing a supply chain strategy is a major cross-functional effort and requires the buy-in and support of nearly every function within the organization. A strong business case for change is often not enough to get buy-in, but it is an absolute necessity.
The process of getting buy-in at all levels of the organization should start on day one of strategy development. As previously mentioned, as supply teams begin identifying and prioritizing new supply chain functions, it is highly recommended to form a cross-functional strategy team that includes sales, IT, and finance resources. .
We also suggest providing regular updates to senior management and key stakeholders throughout the strategy development process, highlighting the significant impacts and benefits your supply chain can have. This activity should be part of the more comprehensive communication and change management plan it supports
Executing Supply Chain Strategy For Designing Logistic Strategy For Better Supply Chain Performance
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