Strategic supply chain management
What is strategic supply chain management?
Before you can implement strategic supply chain management for the supply chain you must initially identify your corporate strategy and how your consumers perceive ‘value’ from your product or service offering. In essence you are identifying why consumers buy your product or service over that of your market competitors.
Once the corporate strategy is defined, this will cascade into the functional areas of the business, where each function will set their own strategy which is aligned to the corporate strategy.
For example, if your corporate strategy is to be a cost leader in the market, this will influence operational decisions.
- Procurement may focus on driving cost out of the procurement activities by sourcing suppliers with favourable terms, negotiating quality improvements that reduce waste activities or stronger contractual terms.
- Operations may look to remove the seven wastes from their existing processes.
- Logistics may look to invest in equipment to support removal of waste activities or review their operational processes.
How do you develop a supply chain strategy?
To develop strategic supply chain management there needs to be two-way communication between the functional and operations teams of your organisation.
Once you have an awareness of the corporate strategy you may consider looking at SWOT and STEEPLED analysis to identify micro and macro factors that may impact supply chain activities.
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Micro factor is internal to your organisation such as a shortage of specialised skill in your labour force.
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Macro factor is external to your organisation, such as a global disruption that may impact your raw material supply.
Once you have identified your strengths and weaknesses you can then look to address these challenges and build a business case for investment in those areas.
There are three core areas to consider when developing your strategic supply chain management and business case:
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People: Do you have the right number of staff with the right skill set?
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Process: Are there waste activities within your current operating processes?
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Systems: Are your systems enablers to the strategy or are legacy systems holding you back?
How do you implement a supply chain strategy?
Once you have undertaken the analysis, implementing strategic supply chain management will require:
- Building a business case: To gain investment for the areas requiring development.
- Stakeholders buy in: To gain support for the roll out of the strategy, by ensuring existing members of staff within the team understand their objective.
- Setting KPI’s: You can’t measure what you don’t know, identify your starting point, and then review on a regular basis to ensure you remain on target
What is the strategic importance of supply chain management?
Without a strategy the supply chain activities cannot be aligned to an overall objective. Think of an organisation with no functional or operational strategy much like a ship setting sail without letting the crew know the destination. The crew could be making decisions that could unwittingly impede the ship arriving safely at its end destination.
Strategies need to be clear, voiced to ALL staff members and have buy in from stakeholders.
Supply chain optimisation
Every link in the supply chain costs money and takes time to improve it. When improved, you can reduce the amount of money that link costs. Take a look at the opportunities to consider for optimisation.
Find out more about Supply Chain Optimisation
Supply chain management key themes
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