Understanding Supply Chain Strategies

Understanding Supply Chain

• Supply chains encompass procurement, process, distribution, resources, logistics, planning, assets, delivery, processes, product, manufacturer, business plan, strategic system, lifecycle, partnerships, network, delivery activities, and distribute.
• A supply chain strategy defines customer priorities regarding product cost, delivery time, variety, and quality.
• Defining supply chain strategy and explaining how creating a strategic fit between a company's competitive strategy and its supply chain strategy affects performance is key.

Competitive and Supply Chain Strategies

• A company's competitive strategy defines customer needs relative to competitors.
• Competitive strategy includes cost leadership, responsiveness, and product availability.
• Cost leadership involves offering the lowest prices to attract sensitive consumers.
• Responsiveness highlights quick and efficient service.
• Company strategies are determined by prioritizing customer needs that are unique and different among their competitors.
• Competitive strategies consist of specific strategies, competitive advantages, and customer needs.
• Methods are employed to achieve an advantage for the company.

Competitive Strategies Overview

• McMaster-Carr emphasizes convenience, product availability, and responsiveness.
• Walmart focuses on lower prices and product availability.

Competitive and Supply Chain Strategy Models

• Comparing online vs. retail diamond jewelry models highlights tradeoffs between immediate vs. delayed delivery, lower vs. higher margins, and extensive vs. limited product variety.
• Understanding the customer's priorities and the company's goals is critical for achieving strategic fit.
• Balancing Responsiveness and Efficiency in supply chains involves navigating trade-offs between cost and service.
• Supply strategy determines aspects like procurement of raw materials, transportation, manufacturing, distribution, customer service, and whether processes are outsourced or done internally.

Competitive and Supply Chain Strategies: A Product Development Strategy

• A product development strategy specifies the portfolio of new products that a company will try to develop.
• Key stages include plan/design, source, supply, produce, distribute, and sell.
• Marketing and sales strategies segment the market and position, price, and promote a product.
• Product positioning establishes a unique place in consumer minds.
• Pricing strategies determine optimal price points for maximum profitability.
• Promotion tactics craft communication strategies to reach target audiences.

Understanding the Customer and Supply Chain Uncertainty

• Aligning supply chains with customer needs involves optimizing the supply chain by integrating insights.
• Assessing uncertainty in supply, demand, and service is needed for appropriate adjustments.
• Understanding customer needs and supply chain uncertainties helps identify appropriate adjustments.
• Customers may have different needs for varying product variety, response times, and service levels.
• Customers may need various quantities (small to large orders) based on product demands and urgency.
• Customer demand reflects the availability and reliability of products, ranging from high to moderate levels.
• Product variety and price sensitivity indicate customer needs.

Understanding the Supply Chain Capabilities

• Supply chain responsiveness is the ability to respond to wide ranges of quantities demanded.
• Short lead times, handling a large product variety, building highly innovative products, and maintaining a high service level, are indicators of responsiveness.
• Supply chain efficiency is inversely related to the cost of making and delivering a product to the customer.
• The cost-responsiveness efficient frontier is the lowest possible cost for a given level of responsiveness.
• Companies should align their supply chains with the cost-responsiveness efficient frontier.
• Different companies have varying methods, such as production scheduling, delivery schedules, and product variety, reflecting different levels of supply chain efficiency and responsiveness.
• Examples include Integrated steel mills (highly efficient, little variety) vs. Seven-Eleven Japan (highly responsive, changing merchandise mix).

Achieving Strategic Fit

• Strategic fit matches customer priorities with supply chain capabilities.
• A company may struggle to reach optimal fit due to either a lack of strategic fit or if the company's overall supply chain design, processes, and resources do not match the necessary capabilities.
• No single supply chain strategy is perfect for all situations.
• Matching supply chain responsiveness with implied uncertainty from demand and supply is also crucial for strategic fit.
• Companies should consider different supply chain strategies to balance cost and service.
• Tailoring the supply chain to various customer segments and products is essential for achieving strategic fit.
• The scope of strategic fit refers to functions within a firm and stages across the supply chain for devising and implementing an integrated strategy.

Obstacles to Achieving Strategic Fit

• Increasing product variety, globalization, and changing technology/business environments present challenges to achieving strategic fit.
• Supply chain fragmentation (operational, geographic, technological, supplier, organizational) complicating strategic fit.

Achieving Strategic Fit in Dynamic Supply Chains

• Agile intercompany scope refers to a firm's ability to achieve strategic fit when partnering with supply chain stages that change over time.
• Understanding changes in customer needs, supply, and demand in a dynamic environment is crucial.
• Partnering, and coordinating with multiple suppliers and distributors is necessary for matching different product varieties and demands.