Align and develop your Supply Chain Strategy
Align your strategies
Just as stars need to align for amazing astronomical events to occur, a company needs to align its strategies in order to be able to orchestrate, monitor and execute them in a manner that will maximise the potential to increase revenue, reduce costs and sharpen its competitive edge.
When we talk about alignment of strategies here, we of course mean the alignment of the following strategies:
- The corporate Strategy* – this is the overarching direction that the whole company wants to take. Everyone in the organisation should be working and contributing to achieve the goals set out by it.
- The competitive Strategy – this is the Strategy that dictates how you will compete in a given market (category, geography, etc..). It may be that depending on product complexities or targeted customer segments a company has multiple competitive strategies. The competitive Strategy is if you like the customer of the Supply Chain Strategy.
- The Supply Chain Strategy – this is the translation of the above strategies into operational steps, actions and decision levers. The Supply Chain Strategy is not a one size fits all. To this effect a company may have multiple Supply Chain strategies; each one serving a different competitive Strategy (is the aim to compete on price or on responsiveness for example?).
*Some companies also refer to the combination of corporate and competitive strategies as business Strategy.
Developing a Supply Chain Strategy
Successfully developing a Supply Chain Strategy, I believe rests on five pillars.
- Understanding of the strategies. This may be a given to some, but the number of employees that do not know what their company’s Supply Chain Strategy is and indeed how it fits within the corporate Strategy is significant. People must be educated and made aware of the goals the company is trying to achieve – and importantly how they contribute to it.
- Supply Chain process design. The Supply Chain processes and procedures must be defined and formalised in compliance with your Strategy.
- Supply Chain Network design. This is where you assess and identify the assets (special tooling, warehouses, production facilities, transportation lanes, etc..) that your Supply Chain will require (what is their capacity) , where you will require them (geography), when you will require them (timing)…
- Information systems. What systems are you going to use to communicate data across your Supply Chain? What systems are you going to have at your disposal to ‘virtually’ walk along your Supply Chain? What information are you going to share with your partners and what data are they going to share with you? Importantly also, what are your reporting systems requirements going to be? What data are you going to need to make real time decisions and what is the data for which a time lag is permissible?
- Human resources and organisational structure. This is THE key element. It is of paramount importance that you have the right (informed and motivated) people doing the right job. Get this element wrong and your Supply Chain is sure to fail.
In the words of John Taras, “your Supply Chain is only as strong as its weakest link”. Having clarity of your Supply Chain strategy has never been more important, especially so as we see a real shift in the market where it’s no longer companies competing against companies but entire Supply Chains competing against Supply Chains. A well defined and executed Supply Chain Strategy can prove to be the key to not only your success but also that of your partners and customers.