Strategic Supply Chain Management - Supply Chain Online

CHAPTER 1 Core Discipline 1: View Your Supply Chain as a Strategic Asset 27
share information. Every night, data on consumption, inventory levels,
and usage forecasts are recorded at the customer’s site and forwarded to
Shell. At predetermined inventory trigger points, Shell places a refill order
for the customer, schedules order transport, and tracks the shipment until
it arrives. The system is invoiceless. Each month, based on consumption
figures that both parties share, the customer sends payment electronically.
Shell’s solution makes life easier for everyone. By cutting administrative
costs for customers and the safety cushions of stock that result from
forecast uncertainty, the solution reduces the total amount of inventory in
the supply chain and vastly simplifies inventory management. Shell gains
an added bonus. In exchange for using the company’s service, and
because the solution couldn’t work if inventory from different suppliers
were mixed in the same tanks, customers agree to use Shell as their exclusive
vendor for products managed under SIMON. By offering a valueadded
service and integrating with its customers’ IT systems, Shell is able
to forge extremely tight relationships with its customers—a powerful supply
chain-driven, strategic advantage. 11
The best companies understand that they can’t be all things to all
people. They identify how they will differentiate themselves and drive
their supply chain to best-in-class performance for that basis of competition.
This sharp focus sets them apart from the competition and helps them
gain a competitive edge.
The supply chain supports every business strategy, so make alignment
a top priority. Remember, though, that strategy is a balancing act. No cost
leader can afford to ignore customer service. Nor can an innovator ignore
the price ceiling of a market. Supply chain performance leaders understand
the trade-offs among service levels, lead times, assets, and costs and make
decisions that best fit their overall strategic mission. By choosing where to
focus and achieving best-in-class supply chain performance in those key
areas, companies can set themselves apart from the competition.
Align with Your Customers’ Needs
Barlean’s Organic Oils identified freshness as a key differentiator. Shell
Chemical realized the advantage of providing a new service concept to its
customers. Zara understood the market for high fashion at attractive price
points. Each of these companies identified solutions that would create a
competitive advantage and aligned their supply chains accordingly.
Do you really know what your customers want Are there opportunities
that you’re not exploiting simply because you can’t envision them