Supply Chain Strategy: Development and Execution

Introduction

Industry strategies are in most cases involved with the interior competencies of the organization to accomplish a defined high level goal or even a high level objective. It also comprises of the analytic and the decision making processes that surrounding what is to be offered (e.g., products and/or services), when the substance is to be offered (timing and the inclusive business cycles, etc), and where it is to be offered (e.g., markets available and market segments) as part of the competitive plan (Mentzer, et al. 2001, 23).

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While the company strategy comprises of the overall course that a certain organization wishes to set out, the supply chain strategy on the other hand constitutes of the actual operations of the organization at hand and the also extended supply chain to convene a certain set of specific supply chain objectives (Movahedi, et al., 2009, 85).

That said and done, most companies today have a business strategy, though they are unlikely to have the overtly designed supply chain strategy. This brings in the most important question to this matter. What is the basic importance of a supply chain strategy and what is its impact to a business. Well, one good explanation is to make the business operational and also to support your business strategies. At some position, a business strategy should be carried out and in typical cases; this is done in the course of the operational machinery of a company. Supply chain strategy as well focuses on motivating down the operational costs and assists in maximizing of business efficiencies (Kaushik & Cooper, 2000, 61).

As an example, an association may prefer a strategy bound for the supplier management related issues as a way to stay competitive (Ketchen Jr. & Hult, 2006, 579). By providing a comprehensible purpose, the association keeps prospect of the strategy and is capable to devise calculated steps to accomplish these goals. Another motivation for having the supply chain strategy is for the establishment of how you work with the supply chain partners (Haag, et al. 2006). They include suppliers, the distributors, the clientele, and even the customers’ clients. As the bazaar becomes more aggressive, it is significant to underpin existing interaction and work jointly. And for all these grounds, a well implemented supply chain strategy will result in value formation for the conforming organization (Halldorsson, et al., 2007, 281).

Development of the supply chain strategy

Understanding of the business strategy

The initial step is for supply chain management to clearly recognize how the project chooses to contend. This is imperative not only for the understandable reason of functioning differently but also for the motive that it forces that supply chain maneuver to see itself as a client facing unit serving the spirited goals of the venture—not just an operational section.

Supply chain strategy is not just a linearly derivation of the company strategy.

At its best, supply chain strategies can be the unit responsible for the enabling of the business strategy of that particular company (Hines, 2004). If the company strategy under mentioned is to be a low rate supplier, the supply chain strategy is supposed to be in support of this. Just like when mounting a business policy, look to the core competency, the main focus, and the means in which to differentiate when mounting a supply chain strategy.

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Being able to tactically source some of the required parts at an eye-catching price may hold up both the supply chain strategy and also and more importantly, the business strategy. This is the case if the people involved in this undertaking have the urge to make this a responsible and effective approach. It is wise to look at the supply chain competency and influence what one does well. One may want to focus on a fastidious market or market segment in which to increase supply chain efficiency. Or one may desire to make a distinction between the organizations operationally through providing of lower costs to the clientele or providing some unique services that other business players are not capable to do (Lavassani, et al., 2009, 88).

Assessment of the extended chain of supply

The next important step is to carry out a thorough, sensible assessment of the qualifications that do happen to exist within the association and even within the comprehensive supply chain. In this realm, one should begin by strictly inspecting the organization’s chattels and assess how well they hold up the developing strategy. Old equipment and incongruent systems may lead to eventual high operating costs and more costly progression inefficiencies and also redundancies – which are clearly not helpful to a low rate contributor strategy (Larson and Halldorsson, 2004, 22).

A prescribed supply chain evaluation by a non-biased external party may lend a hand to the management in enhanced understanding of the operational strengths and the consequent opportunities which are required for development. Look for a company that can offer one with operational standards both in and outside of your business in order to estimate central part competencies (Kouvelis, 2006, 453).

Once the appraisal is complete, bring together a group to appraise and prioritize the recommendations outlined, validate all the opportunities, define all the associated risks, and the requisites for the implementation. At the end of the day, if there is a disparity between that supply chain policy and the outfitted assets, one may have to create principal investments. The other major alternative is to alter the assumptions and consequently alter the strategy to a whole new thing.

Development of an implementation plan

From this decisive work there emerges the “proceed” supply chain strategy which is directly attached to the business approach, highly precise as to the enablers and also the associated metrics, and with a distinct set of realization requirements and the desired contingencies. The expansion of an implementation map should take account of the activities and the tasks, tasks, major responsibilities, a resultant timeline, and the required performance metrics. Establishment of a sub-team which will be responsible for the marshalling, the carrying out and the provision to the project management the responsibility to resolve pertinent issues and also track status is required (Halldorsson, 2008, 290).

Development of considerations

Cooperation and Collaboration with the Partners

Throughout the improvement process keep in mind to take account of the supply chain partners. While you don’t necessarily need to reveal the full details of the strategy, you can undoubtedly exchange a few words on how you would want to do production. Ideally, try to find mutual objectives that both the organizations can carry out on. Not only will the business be one tread closer to taking in the supply chain strategy, one will also gain knowledge of more about the corporations that he or she does business with. For example, group effort in product blueprint may meet your requirement to trunk the R&D costs and also will tend to alert you to new manufactured goods’ concepts that you wouldn’t have discovered without functioning with your customers.

Outsource Where it is Appropriate

Part of developing a very good supply chain strategy includes the evaluation of opportunities to the outsource regions that are not your interior capability. If somebody else can do it cheaply, it may be significant to outsource not only to downgrade costs, but in addition to focus additional resources on the middle competencies the institute does well.

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Execution of the supply chain strategy

Performance Management

Execution involves strongly following your discharge plan and relating the best project governance. One can perk up your chances for achievement by managing routine throughout execution and beyond. Tracking the performance gives consent to an organization to gauge how triumphant it is in appreciating the goals of a certain strategy. It also makes the people concerned to understand their input and errands, therefore creating a more unified, in harmony, society.

Performance administration works at its best when community stakeholders are rewarded for their piece and reporting is carried out on a regular course. Moreover, routine goals should be utilized to converse on business prospects to outside individuals as well. The more the comprehensive supply chain is concerned, the more the under mentioned supply chain strategy is held up and consequently reinforced.

Iteration of the Process of Cost – Benefit Evaluation

On a sporadic basis (e.g., monthly or annually) one should officially re-examine the supply chain strategy. Did it meet the goals of the industry strategy? Have the requirements of the supply chain associates changed? How has the business changed i.e., new participants, industry practices, products, expertise? At this moment in time, you may still want to have another look at the supply chain association, if the changes are noteworthy enough to justify it. Also, use this endeavor to search for new opportunities to extra place your business for success (Nagurney, 2006).

Keep in Communication with the associates

Execution of a supply chain strategy is a way of dealing with many dissimilar entities, both on the inside and on the outside. Just as it is vital to bring into line the supply chain strategy with the company strategy, it is by the same token as important to carry it out in a manner that is consistent with these diverse factions or stakeholders. The objectives of the supply chain apparatus and those that one deals with must be comparable and carried out at the same pace. The organization may be capable to move about at some speeds other supply chain units are unable to uphold, resulting in mis-alignment and underprivileged efficiency. Some of the supply chain associates may not have the assets to consign to realizing these aspirations. Good communiqué can make the extended supply chain to remain in sync.

Avoiding of the potential pitfalls

Even prior to the well publicized “dot com” collapse, company failures due to inadequately implemented approach were very recurrent. Fortune Magazine accounted in a previous study that CEO policy failures took place primarily for the reason of failure in implementation, not with the visualization and policy development. The main problem happens to be bad implementation of the strategy, doing things impartially, indecisiveness and lack of delivery to commitments (Chen and Paulraj, 2004, 120). There are some challenges which are involved in this concept as discussed below.

Aligning of the supply chain strategy with the company Strategy

Most corporations build up a supply chain strategy subsequent to the business strategy definition. While this method can bring some worth to the business, it does not hold up the combination into the business strategy expansion of extremely dominant supply chain model alternatives, which could considerably perk up the business strategies.

A supply chain strategy is supposed to always hold up the aim of the business approach and it is specifically for the reason that these dissimilar “levels” of the project at which the said strategies essentially must be put up (Cooper, et al., 1997, 7). Companies so frequently have main gaps between their uppermost level business strategies and their consequent supply chain strategies. There are some extra risks linked with developing these disjointedly, which includes:

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  • Development of a supply chain strategy which is without an accurate understanding of the company value intention – the expenses and remuneration happen not to be known.
  • Utilization of different or novel assets in the operational model’s progress that weren’t clear to the inventive industry strategic thinking, in so doing diluting and deteriorating the development of the supply chain strategy.
  • Puzzling or contradictory interactions to the association where objectives might be conflicting (Simchi-Levi, et al., 2007)

Conclusion

This paper has been an insight into the development of a supply chain strategy and its implementation in an organization. There are various ways in which this concept can be approached though the paper has focused on how best this issue can be approached such that the supply chain strategy can best fit into the company and be of help to the partners of the said organization. A proper follow up of the stated steps is critical in enhancing competitive advantage and at the same time improving the profitability of the business.

References

Nagurney, A. (2006) Supply Chain Network Economics: Dynamics of Prices, Flows, and Profits, Edward Elgar Publishing.

Chen, I. J., Paulraj, A. (2004) Towards a theory of supply chain management: the constructs and measurements. In: Journal of Operations Management, 22/2: 119-150.

Cooper, M.C., Lambert, D.M., & Pagh, J. (1997) “Supply Chain Management: More Than a New Name for Logistics”. The International Journal of Logistics Management; Vol 8, Iss 1, pp 1–14.

Haag, S., et al. (2006) Management Information Systems For the Information Age (3rd Canadian Ed.), Canada: McGraw Hill Ryerson.

Halldorsson, A., et al (2007) Complementary theories to supply chain management. Supply Chain Management: An International Journal, Volume 12 Issue 4 , 274- 282.

Halldorsson, A., et al. (2008) Complementary theories to supply chain management. Supply Chain Management: An International Journal, Volume 12 Issue 4 , 284- 296.

Hines, T. (2004) Supply chain strategies: Customer driven and customer focused. Oxford: Elsevier.

Kaushik K.D., & Cooper, M. (2000). “Industrial Marketing” Management; Volume 29, Issue 1 P 65–83.

Ketchen Jr., G., & Hult, T.M. (2006) “Bridging organization theory and supply chain management: The case of best value supply chains”. Journal of Operations Management; 25(2) 573-580.

Kouvelis, P.; Chambers, C.; Wang, H. (2006) Supply Chain Management Research and Production and Operations Management: Review, Trends, and Opportunities. In: Production and Operations Management; Vol. 15, No. 3, pp. 449–469.

Larson, P.D. and Halldorsson, A. (2004) “Logistics versus supply chain management: an international survey”. International Journal of Logistics: Research & Application; Vol. 7, Issue 1, 17-31.

Movahedi B., Lavassani K., Kumar V. (2009) “Transition to B2B e-Marketplace Enabled Supply Chain: Readiness Assessment and Success Factors”, The International Journal of Technology, Knowledge and Society: Volume 5, Issue 3, pp. 75-88.

Lavassani K., Movahedi B., Kumar V. (2009) “Developments in Theories of Supply Chain Management: The Case of B2B Electronic Marketplace Adoption”, The International Journal of Knowledge, Culture and Change Management; Volume 9, Issue 6, pp. 85-98.

Mentzer, J.T. et al. (2001) “Defining Supply Chain Management”, Journal of Business Logistics, Vol. 22(2) pp. 1–25.

Simchi-Levi D.,Kaminsky P., Simchi-levi E. (2007) Designing and Managing the Supply Chain, third edition, New York: Mcgraw Hill.

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