Supply Chain Strategy

 

Developing a functional strategy for the supply chain requires a structured process and significant resources. However, the prize is also significant.


 

When linked to End 2 End Supply Chain Design, you create a roadmap of which links facilities, to operating policy and capability development allowing you to fully align the development of the supply chain to the business strategy and deliver long term, sustainable competitive advantage.

 


Although there are just about as many definitions of a business strategy as experts, most of them talk about, "Where to play" and, "How to win". 

 

"Where to play", specifies the target markets - the customers and their needs.  This is highly situational depending on where the customers are, how they buy, when they buy and so on. 

 

"How to win", defines the value proposition that will distinguish a company in the eyes of its customers together with the competencies that will give it an competitive advantage in delivering the value proposition. Although competing on cost is a valid strategy, most successful FMCG companies use differentiation to provide value for their target customers.

 

A Supply Chain Functional Strategy aligns the competencies required in the supply chain to the requirements of the Business Strategy.  So for example, if a main component of the business strategy is Market Development i.e. selling existing products in new markets, then the supply chain needs the capability to support that strategy.  The competencies required will have some commonality with a supply chain where the business strategy has a Product Development focus i.e. selling new products into existing markets, but there will be subtle capability differences. In the former, the focus might be about the least cost sourcing while managing sales uncertainty and dealing with multiple new channels.  In the latter, the focus may be about the flawless and timely delivery of innovation. In both cases, quality management will be important.

 

The outline process flow is shown below.

 

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Outline Process Flow

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