Strategic Supply Chain Management - Supply Chain Online

20 Strategic Supply Chain Management
another option is to move to a low-cost manufacturing base closer to the
target market. For example, many companies serving the European market
have moved production from Asia to central European locations such
as Romania and Hungary. This approach lowers both production costs and
in-transit inventory levels.
The product life cycle drives many asset network decisions. In rapidly
evolving industries such as consumer electronics, companies may start
with a global model during new product ramp-up to test the manufacturing
process or to benefit from colocation with R&D and then transition to a
regional model to improve customer service. At the end of the product life
cycle, the global model once again may be a better choice as a way to fulfill
demand at the lowest product cost and inventory investment.
FOUR CRITERIA OF A GOOD SUPPLY CHAIN STRATEGY
The configuration components—operations strategy, channel strategy, outsourcing
strategy, customer service strategy, and asset network—are the fundamental
building blocks of your supply chain strategy. However, to drive
forward your strategic business objectives and really gain a competitive edge,
these components and the choices you make about each one must be
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Aligned with your business strategy
Aligned with your customers’ needs
Aligned with your power position (your influence)
Adaptive, because competitive advantage is temporary and market
conditions change
These four criteria may sound elementary, but few companies actually
follow them. In fact, the practice of developing and managing a supply
chain strategy is not widespread. Many of our clients over the years
have had only the most rudimentary supply chain strategy process in
place, indicating that these concepts are either not well understood or difficult
to implement. Let’s examine them one by one.
Align with Your Business Strategy
Your supply chain strategy should directly support and drive forward your
business strategy. We believe that an effective business strategy begins
with a core strategic vision (see Figure 1-3) that lays down the boundary
conditions for your business: what you are, what you’ll do, and—just as
important—what you are not and what you won’t do.