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Strategy & Strategy into Action

Strategy & Strategy into Action. Maturity scan: Strategy. A Supply Chain and its traditional conflicts. High inventory turns Maximum flexibility. VP Supply Chain. Components. Finished product. Supply. Production. Distribution. VP Purchasing. VP Operations. VP Sales.

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Strategy & Strategy into Action

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  1. Strategy & Strategy into Action

  2. Maturityscan:Strategy

  3. A Supply Chain and its traditional conflicts • High inventory turns • Maximum flexibility VP Supply Chain Components Finished product Supply Production Distribution VP Purchasing VP Operations VP Sales • Lowest purchase price • Full truckloads • High utilization % • Long runs – minimize changeovers • Low unit costs • High service level • Safety stocks

  4. Flexibility • customization • variety • volume Time • delivery speed • on-time delivery • development speed Competitivestrategy What must your supply chain excel at? Benefit driven by customer value Cost: • low cost Quality : • top quality • consistent quality

  5. Companies shouldknowtheirOrder Winners (andOrder Qualifiers) • An order winner is a characteristic that will win the bid or customer's purchase. To provide order winners, firms must be better than their competitors. • An order qualifier is a characteristic that is required for a product or service to be considered by a customer. Firms must provide the qualifiers to get into or stay in a market. To provide qualifiers, they need only to be as good as their competitors. Source: Hill, 2000

  6. The relation between competitive strategy and supply chain strategy • Value is created through a chain of value adding processes/functions that must be performed for a successful sale. Other process/functions support and facilitate • 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 Finance, Accounting, IT and HR New product development Marketing and Sales Operations Distribution Service Supply Chain Value Chain Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007

  7. Cost Quality Time Flexibility Supply Chain strategy • Supply chain strategy must fit with competitive strategy Competitive Strategy Competencies Supply Chain Strategy Resources Processes Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007

  8. Achieving strategic fit • Step 1: Understanding the customer and the company’s value proposition • Step 2: Understanding the supply chain capabilities • Step 3: Achieving strategic fit Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007

  9. A one-dimensionalworld • Fisher (1997) distinguishestwo product types • … andjusttwo relevant supply chain strategies Functionalproducts Stable, predictabledemand Innovativeproducts Dynamic, unpredictabledemand responsiveness efficiency Source: Marshall L. Fischer ‘What is the right supplychain foryour product?’, HBR 1997

  10. Differences in demand Source: Marshall L. Fischer ‘What is the right supplychain foryour product?’, HBR 1997

  11. Different supply chains Source: Marshall L. Fischer ‘What is the right supplychain foryour product?’, HBR 1997

  12. Match productsandsupply chain   standardize efficiency Strategy refocus on efficiency refocus on responsiveness   responsiveness innovate functional innovative product Source: Marshall L. Fischer ‘What is the right supplychain foryour product?’, HBR 1997

  13. Responsive supply chain Zone of Strategic Fit Responsiveness spectrum Efficient supply chain Functional products Demand uncertainty spectrum Innovative products Achieving a strategic fit: Choose your ‘right’ supply chain High shelflife % Low shelflife % Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007

  14. Supply Chain Performance • 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 • All functions in the value chain must support the competitive strategy to achieve strategic fit Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007

  15. Questions ?

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