Most available domestic studies on supply chain management focus on explaining the concept and essence of the idea, as well as presenting examples of its practical solutions. It should be noted that relatively little space in these publications is devoted to presenting the problems of strategic supply chain management. Few authors draw attention to the strategic dimension of the supply chain management process and the problems associated with it. The existing gap in the domestic literature on strategic supply chain management requires filling, which – in the authors’ opinion – will provide a basis for a fuller understanding of the discussed concept.
Strategic elements of the supply chain
Strategic supply chain management requires a change in the perspective on the supply chain. This means creating a supply chain configuration that enables the achievement of the organization’s strategic goals. To achieve the greatest efficiency of the supply chain, 5 elements influencing its configuration should be considered:
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operational strategy,
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outsourcing strategy,
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distribution channel strategy,
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customer service strategy,
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asset network.
The operational strategy is related to the adopted method of production and service provision. Decisions in this area concern production or outsourcing strategies regarding manufacturing, final product completion, management systems for production plants, warehouses, and order processing systems, as well as process and information system design. Within the supply chain, 4 types of operational strategies can be distinguished, which in many cases appear as combinations.
Regarding standard products classified as FMCG, the best strategy is make-to-stock production, which enables a quick response to growing demand. However, it involves the necessity of maintaining a high level of finished goods inventory. Another operational strategy is make-to-order production. It concerns products oriented towards satisfying specific customer needs and deliveries, which are reflected in current orders. It allows for maintaining a low level of finished goods inventory. Assemble-to-order is considered a hybrid strategy, combining elements of the strategies discussed above. Its essence lies in maintaining inventory in the form of semi-finished products, for example, modules, which become finished goods when orders appear. This strategy is preferred in situations where there is a high diversity of final products and when the goal is to achieve a low level of finished goods inventory. It is also associated with shortening order fulfillment times compared to the make-to-order strategy. The final operational strategy of the supply chain is engineer-to-order, which combines many characteristics of the make-to-order strategy and is used in industries where complex products and services are created to meet specific customer requirements. Decisions regarding outsourcing should be preceded by an analysis of the excellence of the solutions used in the supply chain. Such action allows for the identification of logistics processes and activities that should be kept within the organization and developed in the future. The most important effect of applying an outsourcing strategy is the ability to identify core competencies that should be improved. Including external partners in logistics operations can potentially bring benefits such as:
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increasing the scale of operations. Logistics service providers can offer cheaper services by serving a large number of customers, which affects the high utilization rate of their potential and low unit costs of services provided. External partners can also contribute to faster production growth without the need to incur investment expenditures related to increasing production capacity
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increasing the scope of operations. This is of particular importance for companies that want to expand their business into new markets or regions. External partners can enable the implementation of logistics activities in locations where it was previously economically unjustified due to the duplication of processes within the organization
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utilizing world-class technological solutions. External partners can facilitate the technological development of products and processes, which requires significant financial outlays if implemented within the organization.
The distribution channel strategy is another element influencing the strategic configuration of the supply chain. Decisions in this area concern the way in which products and services are delivered to customers or end-users. The strategy includes the use of direct channels, indirect channels involving distributors, and virtual solutions in the form of Internet sales. Differences in achieved profit margins result directly from the adoption of specific distribution methods, so a strategic issue is the optimal determination of the combination of distribution channels. Another issue that must be included in the supply chain is determining delivery priorities in situations of product shortages or rapidly growing demand.
The customer service strategy is based on determining sales volume, its profitability, and understanding the needs of individual customers. Such a holistic view allows both for setting priorities in customer service and for delivering products at lower costs, which is associated with understanding customer needs. Therefore, adjusting the level of service to customer requirements leads to the best trade-off between costs and service level, and consequently supports the supply chain strategy.
The article comes from the magazine “Logistyka” 6/2010.