Dr. Mohamad Fazle Rabbi - supply chain strategy

Towards Development of a Supply Chain Strategy

15 December, 2011

Agenda

• Introduction

• Business Strategy and Supply Chain Management

• Proposed Supply Chain Classification

• SCM Strategy Development

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Introduction

• The presentation is based on a current research in the Supply Chain Management Strategy at the College of Business Administration (CBA) in Jeddah, KSA

• Relationhip between business strategy and supply chain strategy is emphasized

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Mission of an Enterprise

• An enterprise must have a mission which states the purpose- what it is going to contribute to the society.

• The mission drives the specific goals and objectives to be achieved

• Business Strategy- addresses the various ‘how’ questions.

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Company Mission

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Vision or guiding philosophy: what we want to be

Vision or guiding philosophy: what we want to be

PurposeWhat we are here for

Core values and beliefs

Who we want to be

MissionWhat we want to achieve

Business Strategy

Definition (APICS Dictionary, 13th Edition):“the strategy of enterprise identifies how a

company will function in its environment. The strategy specifies how to satisfy customers, how to grow the business, how to compete in its environment, how to manage the organization and develop capabilities within the business, and how to achieve financial objectives.”

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Business Strategy and Supply Chain Management Strategy

• Business Strategy identifies:– Customers– Needs– Order qualifiers and order winners

• Qualifiers: Minimum functions and characteristics that meet the minimum needs of potential customers

• Winners: Functions and characteristics that wins the customers (functionality, quality, costs, time, price, etc.)

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Aligning Business Strategy and Supply Chain Management Strategy

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Matching Demand with Supply

• Marketing determines market and demand – Global demand – by region, by customers for the

finished products (by SKU’s)– Marketing strategy

• Supply Chain Management- assist in meeting the demands – Supply Chain Strategy

• Finance– Supports business strategy

• Supports marketing and supply chain

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Supply Chain Process

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Market Demand

Order Winners

Product Design

Factors Impacting Strategic Supply Chain Process

• Product– Product design

• Materials and components used

• Product characteristics

– Number of products

– Redesign

• Demand characteristics– Stable- unstable- seasonal for each end product

– Markets- regions, customer segments

– Product life cycle

• Order winners– Price

– Speed

– Availability

– Quality

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Classification of the Supply Chain

• Proposed ABC classification of Supply Chain

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Classification A B C

Product ComplexityLife cycleInnovationVarieties

HighShortHighHigh

MediumMediumMediumMedium

LowLongLowLow

DemandVolatilitySeasonalityVolume

HighHighAny

MediumMediumMedium

StableMinimumHigh

Order WinnersPriceQualityAvailability

HighSix-SigmaCritical

ReasonableFour sigmaVery important

LowThree sigmaImportant

Supply Chain Strategy Options

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Strategic Options

• Outsourcing– Assembly– Packaging– Fabrication– Raw materials– Logistics

• Locations– Distribution network– Plants and facilities

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Strategic Options

• Processes– Process design– Equipments– Operations Planning

• Integration– Key partners– Collaboration

• Design

• Planning

• Inventory management

• Other

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Strategic Options

• Technology– ERP– Interface and integration– Joint development

• Organization– Supply Chain Organization

• People– Development– Recruitment

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Summary

• Successful business needs to align business strategy with SCM Strategy

• Need to have different strategies for different business scenarios

• A supply chain classification scheme is presented to assist development of different strategies for different supply chain classes

• Further research needed

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Questions?

Thank You!

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