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Part - X

To achieve complete strategic fit, a firm must consider all functional strategies within the value chain; it must ensure that all functions in the value chain have consistent strategies that support the competitive strategy. All functional strategies must support the goals of the competitive strategy, and all sub-strategies within the supply chain - such as manufacturing, inventory, and purchasing - must also be consistent with the supply chain's level of responsiveness.

Other Issues Affecting Strategic Fit

Multiple Products and Customer Segments

Most companies produce and sell multiple products and serve multiple customer segments, each with different characteristics. When devising supply chain strategy in these cases, the key issue for a company is to create a supply chain that balances efficiency and responsiveness given its portfolio of products and customer segments.

There are several possible routes a company can take. One is to set up independent supply chains for each different product or customer segment. This strategy is feasible if each segment is large enough to support a dedicated supply chain. It fails; however, to take advantage of any economies of scope that often exist between a company’s different products. Therefore, a preferable strategy is to tailor the supply chain to best meet the needs of each product's demand. Tailoring the supply chain requires sharing some links in the supply with other products while having separate operations for other links. The links are shared to achieve maximum possible efficiency while providing the appropriate level of responsiveness to each segment.

Product Life Cycle

As products go through their life cycles, the demand characteristics and the needs of the customer segments being served change. High-tech products are particularly prone to these life cycle swings over a very compressed time span. A product goes through life cycle phases from the introductory phase, when only the leading edge customers is interested in it, all the way to the point at which the product becomes a commodity and the market is completely saturated. Thus, if a company is to main strategic fit, its supply chain strategy must evolve as its products enter different phases.

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