In business, the phrase “supply chain strategy” has little implication unless people understand the meaning of a supply chain. A supply chain is a lattice of business stakeholders who include sellers, distributer, hauliers, luggage compartment facilities, and purveyors that take part in the manufacturing, distribution, and vending goods from manufacturers to consumers. Under a supply chain, several companies orchestrate dissimilar activities in order to beat competition. Thus, from the definition of supply chain, it is clear supply chain dwells on mechanised and consumer commodities.
Practically, internet technology, manufacturing industries, financial sector and logistic companies exhibit good examples of a supply chain. From a supply chain, comes a supply chain strategy. Supply chain strategy provides delivery chain operation with modes aimed at bringing competition in the market. Additionally, the supply chain strategy appraises all expenditures and benefits incurred in the supply chain. Every enterprise, for example manufacturers, has its own business strategy that provides the expectation of the firm. (Ayers 1).
In contrast, a supply chain strategy derives the authentic operation of business especially the supply chain, which leads to expectations when implemented successfully. Many people do not understand the difference between supply chain strategy and supply chain management, and they end up confusing them. Categorically, there is a big difference between the two. Supply chain management is the actual policing on how products reach consumers through supply.
This is because, within a supply chain, products make necessary stops before reaching the consumer. Thus, without supply chain management, there is a possibility that, the supply chain might disintegrate. To this point, it is clear a supply chain strategy is the one responsible for business success as without it, there cannot be a supply chain or supply chain management. The paper will examine the supply chain strategy of manufacturers. (Mentzar and DeWitt 1-25).
Importance of a Supply Chain Strategy
A supply chain strategy is a business progression whose principal role is to appraise benefits gained form an operational component. It provides a clear mechanism of applying supply chain in order to create competition with other business partners. Unlike a business strategy, which only gives direction and the expectations of an enterprise or organization, a supply chain strategy comprises well-defined channels of an organization (manufacturer) and sheds light on how an organization can apply its supply chain to realise its objectives. Most manufacturers do have a business strategy but lack a supply chain strategy. This is because; many of them do not understand the importance of having a supply chain strategy. Firstly, a supply chain strategy is imperative to business success in that, it machinates and shores up the existing business strategy. (Happek 1-5).
Manufacturers can execute their business strategy even without operational components like supply chain strategy but as times goes by, the business lacks competition hence, low cost-benefit trade-offs. Secondly, a supply chain strategy is paramount to manufacturers as it cuts down running overheads and maximises efficiencies. For example, if an organization is a manufacturer, then it must lay down its business strategy supported by an outgoing supply chain strategy, on how manufactured products will reach consumers at ease.
This will create competition among manufactures and provide clear supply management schemes. Lastly, a supply chain strategy will provide a platform of working with other supply chain business partners like suppliers, distributors and customers. No single business survives without competition hence; the need to work as a block is necessary. In consequence, a well-implemented supply chain strategy creates an unprecedented value to manufacturers. (Chen and Paulraj 119-150).
Developing a Supply Chain Strategy that Work
The first thing that supply chain manufactures must be conversant of is their business strategy. The business strategy is a procedure on how the firm will compete by availing their products to consumers. This is because, besides giving vision on how manufactures operate and compete in the market, competition illuminates the supply chain of manufactures to a level where, the operation becomes a customer-oriented entity dishing up the not only operational goals, but also competitive objectives. When manufactures understand that, supply chain strategy not only derives business strategy but also enables it; then they are heading in the right direction to compete.
Business strategy should be proportional to supply chain strategy. For example, if manufacturers want to operate under low cost, the supply chain strategy ought to reflect this situation. Before developing a supply chain strategy, manufacturer must first examine their competencies, objectives, and differentiation tactics. This will help manufactures fix the price of their products, which support their supply chain strategy and business strategy. In fact, every business stakeholder focuses of markets that give more efficiency to the supply chain. (Ayers 1-7).
Why Different Markets Require Different Supply Chain Strategies
All stakeholders must understand that, supply chain strategy is not a means to an end but rather, a platform of competition. This is because; the supply chain strategy alone cannot see business into success unless manufacturers deploy promotion, new product development, economics, and information technology as other strategies. Nevertheless, there is one precondition. These strategies ought to connect together in order to shore up the fundamental business strategy. Every manufacturer has its own strategies of doing business hence, varying supply chain strategies. This is what creates competition and uniqueness in business.
For example, some manufacturers possibly will be aiming basic needs, even as others settle on high fashion and articulacy. Food and beverage manufacturers require supply chain strategies, which favour squat life cycle commodities. Therefore, the market for these products will be different from those that exhibit high fashion and lucidity. In most cases, retailers can determine the movement of goods within a single supply chain. For example, retailers like Home Depot and Bunnings whose competency is solution, dwell more on efficient supply chain strategies for them to compete well in the market. On the other hand, bulk- product retailers for example, Tesco and Wal-Mart, develop efficient low-priced supply chains for them to enter into a competitive market. (Rajendra 30-34).
Supply Chain Strategy Trade-Offs
An efficient supply chain strategy induces a good supply chain management, which focus on fundamental trade offs of the organization for well-versed decision-making. The presence of a supply chain strategy, the probability of exuding unfocussed decisions is next to nil, as the organization stays clear on the objectives. Manufacturers, retailers, transporters and suppliers who lack a clear supply chain strategy sometimes make injurious business decisions, which affect their trade-offs.
The quality of organization’s supply chain strategy affects the supply chain management and consequently, creates new markets. Some manufacturers, retailers and suppliers may fail in their decision-making because of strange markets. In other words, if such situations occur, then that organization ought to change its supply chain strategy for a new supply chain management, which will go hand in hand with the expectations of the market. Different markets affect different strategies chain strategies by calling for adaptability and flexibility. (Lambert 8-22).
Depending on the competition in the market, the situation may force organizations to relax their stance in order to adapt new market conditions. For example, the global economic tumult has forced many organizations to change their supply chain strategies due to lack of competition. Manufacturing companies like General Motors, which faces bankruptcy, has cut down its supply to consumers and its human resource in order to lower production costs and increase trade offs. What General Motors did was value streaming its production in order to adapt to the new markets dominated by inflation and economic downturn. Strikingly, the global economic downturn has made the cost doing business in different countries skyrocket hence, the change in supply chain strategies. (Nagurney 4-27).
Different markets require different approaches in order to compete effectively. Many at times, the value of products at a particular time can cause a break in the supply chain. If the manufacturer fails to produce, the demand increases and so is the price. For example, there are products that if the supply goes down, the demand will increase and affect the supply chain. The collapse of a supply chain means that, organizations have to look for another supply chain strategy in order to compete again. (O’Byrne 1-2).
Market Demand and Supply Chain Strategy
Research shows that, products sold in groceries tend to assume this behaviour and cannot withstand different markets. These products split into three categories. The first category comprises of continuity products. Continuity products are goods that consumer need on daily basis. Therefore, such commodities enjoy a linear supply chain due to customer demand. The second category is that of non-continuity goods. Examples include high fashion and lucidity products. These products do not have a predictable demand and therefore, they involve a slow supply chain due to low demand. The supply chain strategy of these goods can only replenish if the amount of sales increase, and this can only happen if manufacturers and retailers take them into a different market where demand in high. The last category comprises seasonal goods, which come into the market once or twice a year. (O’Byrne 1-2).
Normally, when these products enter into the market, the demand is high. They therefore require an efficient supply chain strategy, which will ensure their availability to consumers. From this scenario, it is clear different markets affect supply chain strategies exhibited in value steams. Therefore, organizations need supply chain strategies as operational and tactical means of ensuring business success. It will be of great importance to organizations (manufacturers, retailers, transporters, suppliers) to deploy this pragmatic approach into their supply chain in such that, whenever markets fail to favour their products, there could always be an alternative of meeting objectives without collapsing the supply chain. (Market-driven and Customer- focused Supply Chain Strategies 103-104).
A supply chain strategy is paramount to the success of an organisation. No single organisation can underestimate the importance of a coherent supply chain into their supply chain. Most organisations that deploy supply chain strategy intro their supply chain mainstream, receive positive results. The supply chain strategy ensures free flow of products from the manufacturer to the consumer with ease. Additionally, the supply chain strategy lowers operation costs and increase efficiency within a supply chain.
Different markets affect different supply chain strategies perhaps because; the architects failed to consider such scenarios. Low demand can also affect the supply chain hence; it is up to organization to develop clear supply chain strategies, which ensure smooth flow of products to markets where demand is high. Failure to understand customer need, poor communication among supply chain partners, low buy in, and pitiable changes in management are some of the factors, which lead to supply chain strategy failure. Overall, supply chain strategy in an organisation develops new margins, lower the cost of operation, and enhance service delivery in order to meet objectives.
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