Supply Chain Strategy
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This document provides an overview of supply chain strategy and how it relates to business strategy. It discusses various views on defining supply chain strategy, including: - Matching supply chain strategy to product characteristics, such as using efficient supply chains for functional products and responsive supply chains for innovative products. - Considering demand and supply uncertainty, such as using agile supply chains for high supply and demand uncertainty. - Examining market characteristics and using lean strategies for stable markets with predictable demand, and agile strategies for dynamic markets with unpredictable demand. - The concept of "leagile", using elements of both lean and agile strategies such as applying lean upstream and agile downstream. The document serves as an introduction to
Supply Chain Strategy
- 1. Dr. Behzad Behdani Lecturer, Consultant, Principal Researcher Supply Chain Management/ Logistics Module 1: How to define Supply Chain Strategy?
- 2. • Supply Chain Managers: • To decide about an appropriate strategy for their Supply Chains • Logistics Service Providers: • To understand the expectation of companies based on the type of Supply Chain • MBA Students/Researchers: • To get an overview of existing literature on “Supply Chain Strategy” This lecture is useful for:
- 3. What is the role of “Supply Chain Strategy” Business Strategy Supply Chain Strategy Supply Chain Capabilities Supply Chain Performance Source: Morash, E.A. (2001). Supply Chain Strategies, Capabilities, and Performance. Transportation Journal, 41(1), p. 37-54.
- 4. Business Strategy: the organization’s positioning in terms of following dimensions of competence: • Quality (performance, consistent quality, reliability) • Time (delivery speed, development speed) • Flexibility (mix of products, mix of volume/packaging) • Cost (labor, material, engineering, quality- related) Defining Business Strategy Source:BozarthC.andR.Handfield (2008). Introduction toOperationsandSupplyChainManagement, 2/e.Prentice Hall.
- 5. Defining Business Strategy Conflicting dimensions High Quality High Flexibility Low Cost Short Delivery Time
- 6. Form Business to Supply Chain Strategy High Quality High Flexibility Low Cost Short Delivery Time
- 7. From Supply Chain Strategy to Supply Chain Capabilities Facilities Inventory Transportation Information Logistical Sourcing Pricing Cross- Functional Business Strategy Supply Chain Strategy Efficiency Responsiveness Source:ChopraS.andMeindl P.(2012).SupplyChainManagement: Strategy,Planning,andOperation,5/e,PearsonEducation.
- 8. • Fisher (1997, p.106): “The root cause of the problems plaguing many supply chains is a mismatch between the type of product and the type of supply chain” Other views on defining Supply Chain Strategy Supply Chain Strategy and Product Characteristics Source:Fisher, M. L. (1997). What is the Right Supply Chain for Your Product? Harvard Business Review 75(2), p. 105–116. match matchmismatch mismatch Responsive SupplyChain Efficient SupplyChain Functional Products Innovative Products
- 9. • Multiple products: • Separate supply chains or Tailored supply chains? • Product life cycle: • Supply Chain Strategy moves toward efficiency as innovative products (if successful) will eventually evolve to become functional products. • Product Customization/Standardization: • As companies move away from customization toward standardization, there is a shift from flexibility and a high-performance design quality to a consistent quality and cost. Some relevant issues
- 10. Other views on defining Supply Chain Strategy Supply Chain Strategy and S/D Uncertainty Source:Chase,R.B.,Aquilano, N.J.andJacobs, R.F.(2000).Operations ManagementforCompetitive Advantage, 9/e.,McGrawHill. Demand Uncertainty Low (Functional products) High (Innovative products) Efficient Supply Chain Responsive Supply Chain Risk-Hedging Supply Chain Agile Supply Chain Low (Stable Process) High (Evolving Process) SupplyUncertainty
- 11. Other views on defining Supply Chain Strategy Looking at Market Characteristics: Lean vs. Agile Agile: Speedy reaction to a dynamic/ unpredictable Market Lean: Efficient reaction to a stable Market
- 12. • Christopher (2000, p. 39): “Agility is needed in less predictable environments where demand is volatile and the requirement for variety is high” and “Lean works best in high volume, low variety and predictable environments.” Other views on defining Supply Chain Strategy Looking at Market Characteristics: Lean vs. Agile Source:Christopher,M.(2000).Theagilesupply chain: competing involatilemarkets.IndustrialMarketingManagement29(1),p.37–44. Agile Lean LowHigh Low HighVariability Variety
- 13. Other views on defining Supply Chain Strategy Looking at Market Characteristics: Lean vs. Agile Source:Christopher,M.,Peck,H.,andTowill, D.(2006).Ataxonomyforselecting globalsupplychain strategies. International JournalofLogistics Management17(2),p.277–287. Lean Plan and Execute Agile Quick Response Lean Continuous Replenishment Leagile Postponement Predictable Unpredictable Demand Characteristics SupplyCharacteristics Long Lead Time Short Lead Time
- 14. • Two views on “Leanagile” Supply Chain: • Dividing the total demand for a product can be to “base” and “surge” demand; considering lean for “base” demand which is more predictable and using agile strategy to cope with “surge” demand (Christopher et al., 2006). • Operating cost-effectively (i.e. lean) in the “upstream” of supply chain and responsively (i.e., agile) in the market “downstream” (Bruce et al., 2004). Other views on defining Supply Chain Strategy Looking at Market Characteristics: Lean vs. Agile Source: • Christopher, M.,Peck,H.,andTowill, D.(2006).Ataxonomyforselecting globalsupply chainstrategies. International JournalofLogisticsManagement 17(2),p.277–287. • Bruce,M.,DalyL.,andTowers,N.(2004).Leanoragile.Asolutionforsupply chain managementinthetextilesandclothing industry? International JournalofOperationsandProduction Management24(2),p.151-170.
- 15. Thanks for your attention. Questions? Or suggestion? [email protected]