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1.04 - Supply Chain Strategy

What is a supply chain?

“A network of organisations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate customer”

The supply chain transformation process

Why should organisations have a supply chain strategy?

  • Improved management of the supply chain is a major area for competitive improvement.
  • Lean enterprises must have lean supply processes to respond to customer demands and compete effectively in the rapidly changing marketplace.
  • Reduced working capital and stock will generate the revenue needed for investment activities.
  • Maximise end customer satisfaction, value and service at minimum cost.
  • Improved effectiveness of the new product introduction process and shortened production lead times

Strategic Issues – design of the supply network

Typical Approaches to Supply Chain Management

  1. Supplier / Customer Partnerships
  2. Re-structuring and removal of levels in the chain
  3. Supplier assessment and development activities
  4. Outsourcing of Non-Core activities (e.g. warehouse, logistics)
  5. Use of IT/IS to differentiate and shorten physical routings and information flows e.g. – EDI links, self billing systems, material flow control, bar code systems, etc,
  6. Segmentation by customer service needs
  7. Flexible supply base, manufacturing processes
  8. Just-in-time transformation processes and delivery
  9. All parts of the supply chain considered as one pipeline.
  10. Customer focused business units

Characteristics of Supply Chain Management Best Practice

  1. Coalitions NOT hierarchies
  2. Focused on satisfying “end customers”
  3. Focused on core competence NOT best at everything
  4. Supported by the very best Information Technology
  5. Flexible and opportunistic not defensive
  6. Based on trust and relationships not adversarial transactions.
Further Reading