Part - I

Executive Summary

Fierce Competition in today’s global markets, the introduction of products with short life cycles, and the heightened expectations of customers have forced business enterprises to invest in, and focus attention on, their supply chains.

In a typical supply chain, raw materials are procured, items are produced at one or more factories, shipped to warehouses for intermediate storage, and then shipped to retailers or customers. Consequently, to reduce cost and improve service levels, effective supply chain strategies must take into account the interactions at the various levels of the supply chain.

The objective of supply chain management is to be efficient and cost-effective across the entire system; total system wide costs from transportation and distribution to inventories of raw materials, work in process, and finished goods, are to be minimized.

A company’s competitive strategy defines the set of customer needs that it seeks to satisfy through its products and services. A supply chain strategy determines the nature of procurement of raw materials, transportation of materials to and from the company, manufacture of the product or operation to follow-up service. Supply chain strategy includes supplier strategy, operations strategy, and logistics strategy.

For any company to be successful, its supply chain strategy and competitive strategy must fit together. A competitive strategy will specify, either explicitly or implicitly, one or more customer segments that a company hopes to satisfy. To achieve strategic fit, a company must ensure that its supply chain capabilities support its ability to satisfy the targeted customer segments.

There are several obstacles like increasing product variety, decreasing product life cycle and increase in the demanding customers, which are making it more difficult for companies to achieve strategic fit. These obstacles also represent a tremendous opportunity in terms of untapped improvement within the supply chain. The increasing impact of these obstacles has led to supply chain management's becoming a major factor in the success or failure of firms.

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* Contributed by -
Amit Mishra,
PGP 19188,
Indian Institute Of Management, Lucknow.