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Part - VII

Supply chain strategy includes what many traditionally call supplier strategy, operations strategy, and logistics strategy. Decisions regarding inventory, transportation, operating facilities, and information flows in the supply chain are all part of supply chain strategy.

Achieving Strategic Fit

For any company to be successful, its supply chain strategy and competitive strategy must fit together. Strategic fit refers to consistency between the customer priorities that the competitive strategy is designed to satisfy and the supply chain capabilities that the supply chain strategy aims to build.

There are three basic steps to achieving this strategic fit: -

Step 1: Understanding the Customer

To understand the customer, a company must identify the needs of the customer segment being served. Customer demand from different segments may vary along different attributes: -

• The quantity of product needed in each lot

• The response time that customers are willing to tolerate

• The variety of products needed

• The service level required

• The price of the product

• The desired rate of the innovation in the product

Each customer in a particular segment will tend to have similar needs, whereas customers in different segments can have very different needs. The first step in achieving strategic fit between competitive and supply chain strategies is to understand customers by mapping where their demand is placed on the implied uncertainty spectrum (Figure 2).

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