Expert's Corner: Developing a Successful Supply Chain Strategy January 2014
Business strategy consists of the choices executives make on where to play and how to win to maximize long-term value.
“Where to play” specifies the target market in terms of the customers and the needs to be served.
“How to win” spells out the value proposition that will distinguish a business in the eyes of its target customers, along with the capabilities that will give it an essential advantage in delivering that value proposition.
To “maximize long-term value” means — when there are mutually exclusive options — to select those that will give the greatest sustained increase to the company’s economic value.
Business strategy is a unified, comprehensive, and integrated plan designed to explain how an organization intends to compete and succeed in the market place.
There are two main strategic directions:
1.Operational effectiveness = the replication of the industry best practices
2.Strategic positioning = creating a unique and sustainable competitive advantage.
Companies like Walmart, Toyota, and HP demonstrated that operational efficiency can lead to tremendous business success, while companies like Zara, Tesla, and Apple prevailed by differentiating themselves through strategic positioning. An organization strategy provides the context that enables the leaders of various business units and departmental functions of an organization to act congruently with each other.
Today, supply chain strategy has become a competitive weapon essential to success in launching products, entering markets and responding to competitive threats while navigating the challenges of globalization, supply risk, currency fluctuations, volatile commodity prices, and ever increasing energy costs.
The main steps of the process of designing a successful supply chain strategy are:
1.Set up a comprehensive supply chain strategic planning process
2.Review of the corporate strategic direction
3.Design the supply strategy and select the supply objectives in congruence with the corporate business objectives
4.Define the supply key performance indicators
5.Evaluate the strategic fit between the supply strategy, the economic environment, and the corporate strategy.
Supply chain professionals need to be strategically savvy and focus on the development of effective and efficient supply chain strategies, aligned with the organization’s overall strategy, that enable rapid and flexible reaction to the changes in the economic environment in order to create a sustainable competitive advantage for themselves and their organizations.
This new type of competence will differentiate the successful supply chain professional within their organization as well as in the global market place.
Dan Georgescu currently works as the Supplier Technical Assistance Resident in Global Purchasing for Ford Motor Company of Canada. He is in charge of supplier development for the over 600 suppliers of the Oakville Assembly Complex. Dan is an SCMA education strategy consultant and instructor, and serves as the Chair of the Academic Content Review round table, and the Chair of SCMA’s Instructors Development Education Committee. He is a member of the Mechanical and Electro-Mechanical Engineering Program Advisory Committee at Sheridan College, and a member of the National Accreditation Review Panel of the Canadian Supply Chain Sector Council (CSCSC). Dan graduated with the Gold Medal for Academic Excellence from the Wilfrid Laurier Supply Chain Management MBA program in 2006. He also holds a Master of Science degree, is a certified Six Sigma Black Belt, and a Professional Engineer.
