What’s Driving Your Supply Chain Strategy?

The recent report on Supply Chain Strategy in the Board Room by the Cranfield School of Management and Solving Efeso listed the top 10 functional drivers of supply chain strategy at the 181 companies surveyed in the report. While all are valid considerations, the reality is that there should be only one driver of corporate supply chain strategy, because there’s a big difference between a consideration and a driver.

Customer service, distribution, and planning are all valid considerations, but none should drive the supply chain strategy. The supply chain strategy should be driven by the corporate strategy and corporate strategy alone. It does not matter what level of service the supply chain supports, how efficient or cost effective the distribution is, or how simplified planning becomes if the supply chain strategy is not in line with the corporate strategy. If the corporate strategy is to be the lowest cost provider, then customer service (which can be costly) is not at the top of the list — cost and availability are. If the strategy is immediate availability, quick distribution is a must, even if air shipments are five times as expensive as ocean freight. And if the business is subject to the whims of the market (like fashion), plans are short term.

The reality is that the customer service strategy, distribution strategy, customer proposition, production processes, planning, purchasing strategy, product design processes, returns management, and the disposal strategy should all be determined from the corporate strategy, not the other way around … because if the supply chain is not in synch with the rest of the business, it’s full value proposition will never be realized.

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