Supply Chain Strategy

A supply chain strategy is a plan with goals and objectives. It is about using all of the elements involved in the sourcing and procurement of goods and services to produce better results for the company. Typically, strategy is aimed at achieving objectives such as pushing a new product development faster, improving the use of current technologies, bringing products and services to market faster, minimizing resource investment, and reducing specific costs and response/cycle times. Supply chain strategy is often confused with supply chain management, even though it is a lot broader, which explains why many people traditionally call it “supply strategy”, “operations strategy”, and “logistics strategy”. It defines what processes within the firm should do well, as well as what the role played by each supply chain entity is. It also supports the firm’s competitive strategy by focusing on driving down operational costs and maximizing efficiencies. It establishes the way a firm will work with its supply chain partners, including suppliers, distributors, and customers. A well executed supply chain strategy results in value creation for the firm. Developing a good supply chain strategy requires the involvement of several issues. The first one is focus. The ultimate purpose of the focus is the establishment and communication of the technology road maps that will be needed to improve or design a company 's finished products. The need to develop processes for reviewing components and materials comes at the beginning of the planning. A major part of this process involves finding ways to maximize standardization efforts. A company needs to recognize its focus, core competencies, and means of differentiation. It needs to make decisions such as the needs to outsource processes that are not of its core competency, and rather focus at the ones it holds a competitive advantage. Doing so, there are two major advantages; first, the companies can specialize only on certain processes