Strategic Supply Chain Management - Supply Chain Online

CHAPTER 1 Core Discipline 1: View Your Supply Chain as a Strategic Asset 21
FIGURE 1–3
Boundary conditions of the core strategic vision.
Customer Requirements
External
Internal
Market Size and
Competition
Core
Competencies
Core
Strategic
Vision
Competitive
Situation
Financial
Goals
Key Business Policies
The core strategic vision clarifies the answers to key business strategy
questions such as: What are your overall strategic objectives What
value do you deliver to your customers How does your company differentiate
itself in the marketplace Unless the answers to these key questions
drive your supply chain strategy and configuration, your supply
chain will be operating in a vacuum.
Here’s one example of many. We worked with an electronics company
that had spent millions to improve production and order-fulfillment
times. The company’s on-time delivery performance was excellent. There
was only one problem—delivery performance was no longer the key to
profitable growth. Increased competition meant that customers were
demanding, and getting, lower prices. What’s more, a slowdown in several
of the company’s primary markets was cutting into revenues and sharply
reducing return on assets. The company’s president recognized the need
to move to a much lower breakeven point, but supply chain operations
were focusing on yesterday’s priority—customer delivery excellence.
Where does this type of disconnect come from Simply put, the new
business vision of the company’s president had not been translated into
new objectives for the supply chain. Although the overall business plan
clearly showed the volume and price declines and their impact on margins,
the implications for supply chain operations had not been considered.
It was only when the company began to lose money that a major
supply chain reorganization occurred, which led to factory closures, facility
consolidation, and outsourcing of manufacturing.