The supply chain strategy is informally used and always confused with supply chain management. However, supply chain strategy is controlled for cost reduction purposes. Supply chain strategy is usually broad, and it provide the definition for the operation of the supply chain for it to be complete. Moreover, supply chain strategy is an iterative process that assesses the cost-benefit tradeoffs of the operational components (Hines, 2004, p. 57). The strategy of any business involves leverage of major competencies of the organization in achieving its defined and high-level objective. It also involves the analytic and process of decision making that surrounds what the organization offers such as products and services, when to offer regarding time and business cycles, and where to offer, for instance, markets and its segments as a competitive plan.
The business strategy is composed of the general trend that a company may wish to go. On the other hand, the supply chain strategy is composed of the actual operation of the company and its comprehensive supply chain to fulfill the exact objectives of the supply chain. Supply chain management integrates all activities that are involved in the supply of goods and services to meet the needs of the customer and ensure that they are fully satisfied (Frazelle, 2001, p. 5).
Eventually, customer satisfaction is directly proportional to the bottom line of the organization and the number of satisfied customers in an organization and this would mean more proceeds. Therefore, supply chain management ensures that all operations involved in the provision of the goods and services to the clients are conducted in a most cost effective way thereby leading to positive effects on the profit margin of an organization. Consequently, any company that would wish to attain its mission and objectives in a profitable way will possess proper functional and effective supply chain management. This essay will provide an explanation for the importance of an effective supply chain strategy in obtaining the objectives of an organization. On the other part, the paper will analyze how an organization can compete with the supply chains.
Competitive Edge via major Competencies
The business climate at present is changing rapidly. Therefore, it has become more competitive as ever before in nature. An organization today does not only need to operate at a lower cost for competition, but it must develop its key competencies to distinguish itself from the business rivals and stand out in the market. In the process of creating the competitive edge, organizations need to divert their resources to make a focus on what they can perform best and outsource the process and duties that are not necessary to the overall objective of the organization. Therefore, supply chain strategy has allowed companies to rethink about the whole operation and restructure it to focus on their key competencies and outsource processes that are not existing within the core competencies of the company. Due to the present competitive market, the company can only survive through the supply chain strategies.
The strategy of applying the supply chain management will influence not only the market positioning of the company but also the strategic decisions on selecting the appropriate business partners, resources, and manpower. While focusing on the key competencies, the company will be allowed to create market niches and specialization of core business areas. According to Cham Kim, for a company to create a niche for any competitive advantage, it has to look at the big picture of the entire process and figure out the exact process that can be reduced, eliminated or created (Murray, 2004, pp. 7-14).
Value Advantage
The supply chain management strategy allow companies not just to have the productivity advantage but also the value advantage. That is the productivity advantage will provide a lower cost profile for the company while the value advantage will give the products offered by the company to have a differentiation over the competitive offering. Similarly, the maximum value added will reduce the cost of production in an organization.
Complexities of the job
In challenging and provide any complexities in the job, a company will need to have skilled and trained employees that can reemphasize on the importance of the supply chain management strategies. Consequently, they will communicate and integrate with the human resource department to ensure that quality individuals are hired and trained properly before taking on their job responsibilities. This will enable them to be capable of meeting any complex situation that the job will need them to solve.
Demand for the products and services
For an organization to achieve a successful quotation, it will require supply chain strategy communication and integration with its stores and workshops to ensure that no delay occurs for instance, in repair and maintenance of the standby equipment due to the unavailability of stocks. The supply chain strategies in coordination with sales and marketing will put forth the sales forecasts to the management informing them in advance of any capital investment decisions.
Satisfaction of customers
The supply chain strategies through a properly managed logistics will ensure that the appropriate product reaches the right client at the right time and place (Christopher, 2010, pp. 420-422). Thereby, it ensures that customers are satisfied with the delivery issues. After the delivery satisfaction of the customers has been met, supply chain strategies will ensure that there is constant communication with the customers for their feedbacks on the products and services. SCM also ensures that customers should not face any operational problems. The supply chain strategies also ensure that any complaint arising from the customer is looked into as soon as possible by the concerned departments to ensure that the company does not lose the business because of customer dissatisfaction.
Safety
Since the business operation of some companies may be technical and requires involvement of high capital venture, there is high compliance to safety needed to every operational stage. Since supply chain management strategy involves the coordination and communication with the customers and suppliers, an organization should ensure that every aspect of safety of the operation is met effectively thereby limiting the lost time injury. Therefore, SCM through employees of the organization ensures that the safety policies of the clients are properly understood.
Sustainability
In achieving social, environmental and economic sustainability, a lot of efforts from the company is needed with a lot of strategic decisions and policies to be implemented. The achievement of social sustainability is the major task because when it is neglected, it might lead to reputational damages in the organization. Therefore, the supply chain strategies will enable a company to ensure that its suppliers are the reputed ones. Similarly, the employees of a company’s should operate in a hygienic environment and not in a substandard condition. However, corporations such as Apple was one time criticized when its employees in China were operating in a substandard condition (Ma, Assche and Hong, 2009, pp. 640-654). Therefore, in ensuring that all stakeholders of a company are the reputed ones, there should be proper strategic plans in place.
The aim of any organization is to achieve sustainability in their operations so that the importance of economic sustainability is not undermined. Therefore, all the resources and capital at their disposal for conducting business should be utilized in a sustainable manner to ensure that profitability exists in their business activities in the coming years. The supply chain management through its channels of communication will coordinate with different stakeholders of the company to ensure that the objectives are achieved in their sustainable operations.
As explained in the above points, the effectiveness of supply chain strategy will play an important role for any organization to achieve its business objectives. Consequently, an effective SCM strategy will assist any organization to identify its major competencies as it restructures the whole operations by outsourcing processes that do not exist within their key competencies. The strategy for the application of effective supply chain management will positively influence the market positioning of a company. Thus, it will assist the company to achieve their first objectives of being the leaders in the market. Additionally, it will help companies in selecting the appropriate business partners. Thus, ensuring that all major stakeholders play equal roles towards the achievement of the mission statement of the company.
Performance management
Execution involves close follow up in the implementation of business plan and application of good project governance. Therefore, a company can improve its chances of success through performance management and implementation. Moreover, the strategic supply chain management will track performance, and this will allow an organization to measure its success especially in realizing the objectives of the strategies. It will also make employees understand their contribution and duties in creating a more cohesive organization. The strategic management will work best when employees are rewarded for their good work. However, it requires regular reporting. Moreover, the strategic goals should be applied in communicating business expectations especially to the outside entities and the more the supply chain is involved, the more the supply chain strategy will be supported and reinforced.
Alignment of the Supply Chain Strategy
Most organizations develop the supply chain strategy after the definition of business strategy. However, the approach can deliver some value, but it does not support the infusion into the business strategy development of each powerful supply options of supply chain models. Consequently, this will improve the business strategy. Therefore, by aligning the business strategy of a client with its operating processes, the supply chain solutions of an organization can create a high performing supply chains, and this will generate a quick benefit realization (Happek, 2015, p.4).
Question two
Greater and a powerful competition, and global value chains are the leaders in a substantial shift in what is expected from the function of a supply chain (Mangan et al., 2012, pp, 320-325). Therefore, it is not enough in connecting supply and demand at the optimal cost and level of services. Consequently, business leaders are making more demand from their supply chains including the competitive advantage. Some organizations may experience operational challenges, and this may make the role of the supply chain extremely complex. However, several organizations have managed to go beyond the challenges to developing chains that can lead to competitive advantage. Therefore, an organization may compete with the supply chains in the following ways:
Collaborating to integrate a virtual value chain
The level of collaboration can be across functions, beyond the value chain, and across the value chain. For this to function, collaboration has to be led by a dominant player that is based on a win-win partnership with mutual objectives that are focused on a long-term and clear success of the market.
Replacement of one size with a tailored approach
The organizations should be more diverse than ever. Therefore, by making a consideration in one size that fits all supply chain approach will compromise the segments for the specific needs.
The supply chain managers in an organization should be capable of seeing the big picture as they focus on the supply details. This will help in frequent and multi-horizon planning for the short term, and regular review for long term planning (Chopra and Meindl, 2009, pp. 120-125).
An organization should reconfigure its supply chain by including the management capabilities. Consequently, the shift in the expectations of the supply chain for the basic rethinking of the capabilities will require the supply chain. Therefore, current organizations should have business management skills in addition to their supply chain experiences. Lastly, organizations should actively manage their complexities because the best supply chain is the one that integrates the management of complexities in all processes of planning to eliminate the one that is not valuable and capitalize on the one that can add value to the organization (Stadtler and Kilger, 2007, p.320.)
Conclusion
The supply chains have shifted from a cost focus to a customer focus and currently to a strategic focus. The need to think strategically concerning the supply chain is not important. Consequently, the success of a good strategy depends on the ability of the company to execute fully and properly the supply chain strategy (Chaffey, 2009. pp. 467-469). Therefore, a good supply chain that is linked to the operational excellence can lead to success for the company, its partners, and customers.
References
Chaffey, D. (2009). E-Business and E-Commerce Management: Strategy Implementation and Practice. 4th ed. Prentice Hall.
Chopra, S. and Meindl, P. (2009). Supply Chain Management: Strategy, Planning and Operation. 4th ed. Pearson Education.
Christopher, M. (2010). Logistics and Supply Chain Management. 4th ed. Prentice Hall.
Frazelle, E. (2001). Supply Chain Strategy. McGraw Hill Professional, pp.3-5.
Happek, s. (2015). Supply Chain Strategy. The importance of Aligning your Strategies, pp.3-4.
Hines, T. (2004). Supply Chain Strategies: Customer-driven and Customer-focused. Routledge, pp.50-57.
Ma, A., Assche, V. and Hong, C. (2009). Global Production Ventures and China's Processing Trade. Journal of Asian Economics, 20(6), pp.640-654.
Mangan, J., Lalwani, C., Butcher, T. and Jaradpour, R. (2012). Global Logistics and Supply Chain Management. 2nd ed. John Wiley & Sons.
Murray, J. (2004). Global Sourcing Strategy and Sustainable Competitive Management. Industrial Marketing Management, 33(1), pp.7-14.
Stadtler, H. and Kilger, C. (2007). Supply Chain Management and Advanced Planning: Concepts and Case Studies. 4th ed. Springer.
