In global business, a supply chain is only as strong as its weakest link. It is critical to ensure that strategic plans are aligned with supply chain planning. Business strategy planning and supply chain planning must be on the same page for the organization to function profitably.
Rehash the basics
A global supply chain is a network that includes facilities, people, and distribution logistics. If the weakest link breaks, the entire business may find itself swinging precariously over a very deep chasm.
Strategic planning formulates plans based on the interconnected and interdependent aspects of the supply chain. With input from supply chain managers and operators, strategic planners put together the links in the chain to keep the supply network humming along in harmony.
Supply chain strategy
In a study by the University of Tennessee, 62 percent of the companies interviewed said they have a supply chain strategy in place. However, only 30 percent had an actual multi-year strategy documented. Even some using supply chain planning software or inventory optimization software found themselves in this 30 percent that could not produce a documented three-year supply chain strategy, or plan.
For a supply chain strategy to be effective, you must start with the needs of customers. You must recognize competition presented by foreign and domestic competitors. Take into account the possible socioeconomic and demographic scenarios in the coming year. An effective strategy incorporates the company’s strengths, opportunities, weaknesses, the evolution of technology, and potential threats.
The resulting supply chain strategy should include the following elements:
- Analyze input from all involved stakeholders
- Address identified critical issues
- Identify ways to deal with the identified critical issues
- Create action plans for developing and capitalizing on new and enhanced capabilities
Business strategy planning
Supply chain networks consist of three sub-networks: supplier, manufacturer, and distributor. Strategic business planning plays an important role in the overall performance of any company’s supply chain network.
- Improved efficiency: Strategic planning lays out how to procure the raw materials or supplies, where to get them, and when to get them. All of these steps working flawlessly together make for a speedier supply chain and increased efficiency.
- Improved economy: A speedy supply chain that runs up the end cost can bring down any business. Speed of delivery and price should walk hand in hand. The strategic plan must include how, when, and where to get the best materials at the best price to produce the best end product cost effectively. Price must be a consideration in the selection of supply chain links.
- Improved expectations: Strategic planning improves the expectations of organizations and businesses, lets them make informed decisions as to who can best acquire raw materials, deliver them fast and cheap, transform them into finished products, and move them to market at the best price.
Everything evolves, including business strategy and supply chains. Both are only as strong as their weakest links. Strategic planning can be the difference between a healthy, prospering business or one doomed to failure. Effective supply chains are the lifeline of any business. Working together, business strategy and supply chain can keep a business alive and thriving.