1、Supply Chain Performance: Achieving Strategic Fit and Scope,2,Learning Objectives,Explain why achieving strategic fit is critical to a companys overall success.Describe how a company achieves strategic fit between its supply chain strategy and its competitive strategy.Discuss the importance of expan
2、ding the scope of strategic fit across the supply chain.Describe the major challenges that must be overcome to manage a 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 servicesP
3、roduct development strategy specifies the portfolio of new products that the company will try to developMarketing and sales strategy specifies how the market will be segmented and product positioned, priced, and promotedSupply chain strategy determines the nature of material procurement, transportat
4、ion of materials, manufacture of product or creation of service, distribution of productAll functional strategies must support one another and the competitive strategy,The Value Chain,Figure 2-1,Achieving Strategic Fit,Strategic fit competitive and supply chain strategies have aligned goalsA company
5、 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,Achieving Strategic Fit,The competitive strategy and all functional strategies must fit together to form a coordinated overall strategy. The different f
6、unctions in a company must appropriately structure their processes and resources to be able to execute these strategies successfully.The design of the overall supply chain and the role of each stage must be aligned to support the supply chain strategy.,How is Strategic Fit Achieved?,Understanding th
7、e customer and supply chain uncertaintyUnderstanding the supply chainAchieving strategic fit,Step 1: Understanding the Customer and Supply Chain Uncertainty,Quantity of product needed in each lotResponse time customers will tolerateVariety of products neededService level requiredPrice of the product
8、Desired rate of innovation in the product,Step 1: Understanding the Customer and Supply Chain Uncertainty,Demand uncertainty uncertainty of customer demand for a productImplied demand uncertainty resulting uncertainty for the supply chain given the portion of the demand the supply chain must handle
9、and attributes the customer desires,Customer Needs and Implied Demand Uncertainty,Table 2-1,Implied Uncertainty and Other Attributes,Table 2-2,Implied Uncertainty and Other Attributes,Products with uncertain demand are often less mature and have less direct competition. As a result, margins tend to
10、be high.Forecasting is more accurate when demand has less uncertainty.Increased implied demand uncertainty leads to increased difficulty in matching supply with demand. For a given product, this dynamic can lead to either a stockout or an oversupply situation. Markdowns are high for products with gr
11、eater implied demand uncertainty because oversupply often results.,Impact of Supply Source Capability,Table 2-3,Levels of Implied Demand Uncertainty,Figure 2-2,Step 2: Understanding Supply Chain Capabilities,How does the firm best meet demand?Supply chain responsiveness is the ability toRespond to w
12、ide ranges of quantities demandedMeet short lead timesHandle a large variety of productsBuild highly innovative productsMeet a very high service level,Step 2: Understanding Supply Chain Capabilities,Responsiveness comes at a costSupply chain efficiency is the inverse to the cost of making and delive
13、ring the product to the customerThe cost-responsiveness efficient frontier curve shows the lowest possible cost for a given level of responsiveness,Cost-Responsiveness Efficient Frontier,Figure 2-3,Responsiveness Spectrum,Figure 2-4,Step 3: Achieving Strategic Fit,Ensure that the degree of supply ch
14、ain responsiveness is consistent with the implied uncertaintyAssign roles to different stages of the supply chain that ensure the appropriate level of responsivenessEnsure that all functions maintain consistent strategies that support the competitive strategy,Zone of Strategic Fit,Figure 2-5,Roles a
15、nd Allocations,Figure 2-6,Efficient and Responsive Supply Chains,Table 2-4,Tailoring the Supply Chain,Achieve strategic fit while serving many customer segments with a variety of products across multiple channelsRequires sharing some links in the supply chain with some products, while having separat
16、e operations for other links,Changes Over Product Life Cycle,Beginning stagesDemand is very uncertain, and supply may be unpredictableMargins are often high, and time is crucial to gaining salesProduct availability is crucial to capturing the marketCost is often a secondary consideration,Changes Ove
17、r Product Life Cycle,Later stagesDemand has become more certain, and supply is predictableMargins are lower as a result of an increase in competitive pressurePrice becomes a significant factor in customer choice,Expanding Strategic Scope,Scope of strategic fit the functions within the firm and stage
18、s across the supply chain that devise an integrated strategy with an aligned objectiveIntraoperation scope minimize local cost viewEach stage of the supply chain devises strategy independently,Expanding Strategic Scope,Intrafunctional view minimize total functional costFirms align all operations wit
19、hin a functionInterfunctional scope maximize company profitFunctional strategies are developed to align with one another and the competitive strategy,Expanding Strategic Scope,Intercompany scope maximize supply chain surplusSupplier and customer work together and share information to reduce total co
20、st and grow supply chain surplusAgile intercompany scope a firms ability to achieve strategic fit when partnering with supply chain stages that change over time,Different Scopes of Strategic Fit Across a Supply Chain,Figure 2-7,Challenges,Increasing product variety and shrinking life cyclesGreater p
21、roduct variety and shorter life cycles increase uncertainty while reducing the window of opportunity within which the supply chain can achieve fitGlobalization and increasing uncertaintySignificant fluctuations in exchange rates, global demand, and the price of crude oil,Challenges,Fragmentation of
22、supply chain ownershipFirms are less vertically integratedTake advantage of supplier and customer competencies they did not haveNew ownership structure makes aligning and managing the supply chain more difficultAligning all members of a supply chain has become critical to achieving supply chain fit,
23、Challenges,Changing technology and business environmentCustomer needs and technology change may force a firm to rethink their supply chain strategyThe environment and sustainabilityGrowing in relevance and must be accounted for when designing supply chain strategyOpportunities may require coordinati
24、on across different members of the supply chain,Summary of Learning Objectives,Explain why achieving strategic fit is critical to a companys overall successDescribe how a company achieves strategic fit between its supply chain strategy and its competitive strategyDiscuss the importance of expanding
25、the scope of strategic fit across the supply chainDescribe the major challenges that must be overcome to manage a supply chain successfully,All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.,
