Scribd
Upload
285 views15 pages

Achieving Strategic Fit and Scope

This document discusses achieving strategic fit and scope within supply chain performance. It outlines that competitive and supply chain strategies must be consistent to achieve strategic fit, where the goals of both strategies are aligned. It also discusses how understanding customer needs and supply chain capabilities allows matching the appropriate supply chain strategy to the competitive strategy. Finally, it notes that expanding the scope of strategic fit across functions and partners is important for effective supply chain management.

Uploaded by

arujkapoor1987
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
285 views15 pages

Achieving Strategic Fit and Scope

This document discusses achieving strategic fit and scope within supply chain performance. It outlines that competitive and supply chain strategies must be consistent to achieve strategic fit, where the goals of both strategies are aligned. It also discusses how understanding customer needs and supply chain capabilities allows matching the appropriate supply chain strategy to the competitive strategy. Finally, it notes that expanding the scope of strategic fit across functions and partners is important for effective supply chain management.

Uploaded by

arujkapoor1987
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 15

Supply Chain Performance:

Achieving Strategic Fit and


Scope
Presented by:
Amit Kumar Nandan
Ankit Agarwal
Ankur Rathod
Dinesh Valiramani

OUTLINE
Competitive and supply chain strategies
Achieving strategic fit
Expanding strategic scope
Major challenges that must be overcome to
manage supply chain successfully

COMPETITIVE AND SUPPLY CHAIN


STRATEGIES
Competitive strategy:
defines the set of customer needs a firm seeks to satisfy through
its products and services
Eg. Walmart and McMaster Carr

Supply chain strategy:


determines the nature of material procurement,
transportation of materials, manufacture of product or
creation of service, distribution of product
Consistency and support between supply chain strategy,
competitive strategy, and other functional strategies is
important
Eg.Dell, Cisco, Amazon etc.

The Value Chain: Linking Supply


Chain and Business Strategy
Finance, Accounting, Information Technology, Human Resources
New
Product
Development

Marketing
and
Operations Distribution
Sales

Service

Achieving Strategic Fit


Strategic fit:
Consistency between customer priorities of
competitive strategy and supply chain capabilities
specified by the supply chain strategy
Competitive and supply chain strategies have the same
goals
A company may fail because of a lack of strategic fit or
because its processes and resources do not provide the
capabilities to execute the desired strategy
Example of strategic fit -- Dell

How is Strategic Fit Achieved?


Step 1: Understanding the customer and supply
chain uncertainty
Customer demand varies along several attributes- Qty. of
Product, Response Time, Variety, Service Level etc.
Demand uncertainty: uncertainty of customer demand for a
product

Implied demand uncertainty: resulting uncertainty for the supply


chain given the portion of the demand the supply chain must
handle and attributes the customer desires

Impact of Customer Needs on


Implied Demand Uncertainty
Customer Need

Causes implied demand


uncertainty to increase because

Range of quantity increases

Wider range of quantity implies


greater variance in demand

Lead time decreases

Less time to react to orders

Variety of products required increases Demand per product becomes more


disaggregated
Number of channels increases

Total customer demand is now


disaggregated over more channels

Rate of innovation increases

New products tend to have more


uncertain demand

Required service level increases

Firm now has to handle unusual


surges in demand

Correlation Between Implied Demand


Uncertainty and Other Attributes
Attribute

Product margin

Low Implied
Uncertainty
Eg. Salt
Low

High Implied
Uncertainty
Eg. Mobile
High

Avg. forecast error

10%

40%-100%

Avg. stockout rate

1%-2%

10%-40%

Avg. forced season- 0%


end markdown

10%-25%

How is Strategic Fit Achieved?


Step 2: Understanding the supply chain
Trade off between responsiveness and efficiency of
supply chain always exists
Supply chain responsiveness - ability to

respond to wide ranges of quantities demanded


meet short lead times
handle a large variety of products
build highly innovative products etc.

Supply chain efficiency: cost of making and delivering


the product to the customer

Understanding the Supply Chain: CostResponsiveness Efficient Frontier


Responsiveness

High

Low
High

Low

Cost

Achieving Strategic Fit


All functions in the value chain must support the competitive
strategy to achieve strategic fit
Two extremes: Efficient supply chains (Barilla) and responsive
supply chains (Dell)
Two key points
there is no right supply chain strategy independent of
competitive strategy
there is a right supply chain strategy for a given competitive
strategy

Comparison of Efficient and


Responsive Supply Chains
Efficient

Responsive

Primary goal

Lowest cost

Quick response

Product design strategy

Min product cost

Modularity to allow
postponement

Pricing strategy

Lower margins

Higher margins

Mfg strategy

High utilization

Capacity flexibility

Inventory strategy

Minimize inventory

Buffer inventory

Lead time strategy

Reduce but not at expense


of greater cost

Aggressively reduce even


if costs are significant

Supplier selection strategy

Cost and low quality

Speed, flexibility, quality

Transportation strategy

Greater reliance on low


cost modes

Greater reliance on
responsive (fast) modes

Expanding Strategic Scope


Scope of strategic fit
The functions and stages within a supply chain that devise
an integrated strategy with a shared objective
One extreme: each function at each stage develops its own
strategy
Other extreme: all functions in all stages devise a strategy
jointly

Five categories:

Intracompany intraoperation scope


Intracompany intrafunctional scope
Intracompany interfunctional scope
Intercompany interfunctional scope
Eg. Walmart and P&G

Major challenges to manage


supply chain successfully
Increasing Product Variety and shrinking life cycles
Globalization and increasing uncertainty
Fragmentation of supply chain ownership
Changing Technology and Business Ownership
The Environment and Sustainability

THANK YOU

You might also like