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Supply Chain Development
Part 2 of 4


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STRATEGY DEFINITION

It can never be assumed that everyone knows the definition of strategy in its primal sense. Thousands of definitions exist in the literal world. Again, concise wording is best. Strategy, to me, is a careful plan or method towards a goal.

 

The historical concept of strategy is military in nature and origin. Coined in the time of Napoleon, the term "strategy" is derived from the Greek word for "generalship." Generals develop broad-based plans (strategies) for winning a war. In the military, strategy is a battle plan to reach superiority at the point of contact. The strategy addresses win­ning with resources once the battle starts.

 

The purpose of a winning strategy is victory. Victory does not al­ways mean a battle must take place. Even for the military generals, the strategy sometimes avoids battle. A strategic victory means you have controlled your destiny which means goals have been achieved.

There are three simple key elements common to all strategies:

1.     simple objectives

2.   a deep understanding of customer(s) and competitors)

3.    objective judgement of value and effective use of resources.

The importance of a superior strategy comes into play when the environment changes faster than the organization's ability to adapt us­ing informal methods.

To what extent do you integrate the organizations strategy into a supply chain system to meet the vision and value your customer wants? If it's not 100 percent more than what you have right now, then close the doors because they will be closed for you sooner or later.

CONCEPT OF STRATEGIC REALITIES

Today, more than ever, there is an immediate need for competitive ad­vantage in a global marketplace. This positioning requires a solid busi­ness strategy integrated into a supply chain system.

The new realities forcing strategic development into supply chain implementation are these:

•   Technology, politics, economics, and life-styles are changing at a pace of lightening acceleration every few years.

     There are no more protected markets with the rise of global trade. The world is now filled with high-quality competitors from industrialized countries and low-cost competitors from developing countries.

     Increased competition has created more sophisticated and demanding customers. Good quality, on-time delivery, and good price products no longer can compete. Value is the competitive strategy for today. This means exceeding all expectations and total fulfillment of the customer's requirements.

The supply chain will ultimately drive strategy implementation. The organization's success strategy has transcended from being tradition­ally finance-driven to being customer-driven. The ultimate objective and key belief is shareholder value. The supply chain system's by­product is to create this value by stomping the competition.

SUPPLY VERSUS CONSUMPTION CHAIN

Profitable strategies are constructed on differentiation. This concept offers customers something of value that the competitors don't have. Most companies who seek to differ themselves focus their energy only on products or services.

 

Opportunities exist to differentiate at all points where there is cus­tomer communication or contact. This is from the moment there is customer consciousness of a product need to the time when they don't further want it or throw it away.

 

If a company opens up their creative thinking to the customers en­tire experience pertaining to the product or service, this is defined as the consumption chain. Creatively thinking about the customer's en­tire experience uncovers vast opportunities to position their products in a way competitors never dreamed possible.

 

If the company can truly analyze the customer's experience and map the "feel" of the consumption chain to match the "feed" of the supply chain, the ultimate combination would be devastating to the competition.

 

The customer's decision process needs to be understood and scanned to allow the necessary changes to the supply system. Customer's pri­orities will change based on these elements.

 

The sooner you understand your customers' decision structures, the sooner your supply chain can meet those priorities.

STRATEGIC PLANNING

Strategic planning is what a blueprint is to an architect's layout. It's a realistic plan to make a strategy work. In order to implement a realistic plan which reflects the blueprint or big picture, the supply chain system should be in constant evolution of customer purpose and improvement.

 

If there are breaks or barriers between the supply chain process, they must be immediately repaired, corrected, and reapplied. The sup­ply chain's strength is customer-driven in nature and holistically must permeate the entire system with no functional walls, only functional integration.

 

Strategic planning combines current and future organizational re­sources with organizational goals and objectives. It is a structured sci­entific methodology that is used to attempt to forecast what will hap­pen in the future.

To Be Continued

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 11


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