1. Strategy
&
Strategy into Action

2. Maturity scan: Strategy
Stage of evolution
Characteristics
Stage I:
Ad hoc
Ad hoc decisions, fire fighting problems, no clear strategy
Stage II:
Functional
Functional organization with each function making separate decisions in its own silo, based on a functional vision and policy
Stage III:
Integral
Shared cross functional strategy and vision, translation to all functional areas not yet implemented on tactical level
Stage IV:
Visionary
Shared cross functional strategy and vision, clear translation to all functional areas, guideline for all tactical measures

3. A Supply Chain and its traditional conflicts
High inventory turns
Maximum flexibility
VP Supply Chain
Components
Finished product
Supply
Production
Distribution
VP Purchasing
VP Operations
VP Sales
Lowest purchase price
Full truckloads
High utilization %
Long runs – minimize changeovers
Low unit costs
High service level
Safety stocks

4. Competitive strategy What must your supply chain excel at?
Benefit driven by customer value
Flexibility
customization
variety
volume
Time
delivery speed
on-time delivery
development speed
Cost:
low cost
Quality :
top quality
consistent quality

5. Companies should know their Order Winners (and Order Qualifiers)
Competitive factors:
If customers value these
Performance objectives:
Then we need to excel at these
Low price
Cost
High quality
Quality
Fast delivery
Speed
Reliable delivery
Dependability
Innovative products and services
Flexibility (product/service)
Wide range of products and services
Flexibility (mix)
The ability to change the timing or quantity of products and services
Flexibility (volume and/or delivery)
An order winner is a characteristic that will win the bid or customer's purchase. To provide order winners, firms must be better than their competitors.
An order qualifier is a characteristic that is required for a product or service to be considered by a customer. Firms must provide the qualifiers to get into or stay in a market. To provide qualifiers, they need only to be as good as their competitors.
Source: Hill, 2000

6. The relation between competitive strategy and supply chain strategy
Copyright 2007 J. A. Van Mieghem. All rights reserved. For permissions, contact
The relation between competitive strategy and supply chain strategy
4/15/2017
Value is created through a chain of value adding processes/functions that must be performed for a successful sale. Other process/functions support and facilitate
Supply chain strategy: determines the nature of material procurement, transportation of materials, manufacture of product or creation of service, distribution of product
Consistency and support between supply chain strategy, competitive strategy, and other functional strategies is important
Finance, Accounting, IT and HR
New product
development
Marketing
and
Sales
Operations
Distribution
Service
Supply Chain
Value Chain
Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007
Do no copy nor poste on the Internet.

7. Supply Chain strategy
Supply chain strategy must fit with competitive strategy
Cost
Flexibility
Quality
Time
Competitive
Strategy
Supply Chain
Strategy
Resources
Processes
Competencies
Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007

8. Achieving strategic fit
Step 1: Understanding the customer and the company’s value proposition
Step 2: Understanding the supply chain capabilities
Step 3: Achieving strategic fit
Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007

9. A one-dimensional world
Functional products
Stable, predictable demand
Innovative products
Dynamic, unpredictable demand
responsiveness
efficiency
Fisher (1997) distinguishes two product types
… and just two relevant supply chain strategies
Source: Marshall L. Fischer ‘What is the right supply chain for your product?’, HBR 1997

10. Avg. forced season-end markdown
Differences in demand
Functional products
Innovative products
Product life cycle
More than 2 years
3 months to 1 year
Contribution margin
5% to 20%
20% to 60%
Product variety
Low
High
Avg. forecast error
10%
40% to100%
Avg. stockout rate
1% to 2%
10% to 40%
Avg. forced season-end markdown 0%
10% to 25%
Source: Marshall L. Fischer ‘What is the right supply chain for your product?’, HBR 1997

11. Different supply chains
Physically efficient supply Chain
Market responsive supply chain
Primary goal
Supply efficiently a lowest possible cost
Quickest possible response
Manufacturing focus
High utilization
Capacity flexibility
Inventory strategy
High inventory turns, minimize inventory
Buffer stocks
Lead time focus
Reduce but not at expense of higher costs
Invest aggressively to reduce lead time
Supplier selection
Cost and quality
Speed, flexibility and quality
Source: Marshall L. Fischer ‘What is the right supply chain for your product?’, HBR 1997

12. Match products and supply chain
G4 Planning en besturing - Logistieke doelstellingen
Match products and supply chain
product  
responsiveness
innovative
efficiency
functional
Strategy
standardize
innovate
refocus on efficiency
refocus on responsiveness
Source: Marshall L. Fischer ‘What is the right supply chain for your product?’, HBR 1997

13. Achieving a strategic fit: Choose your ‘right’ supply chain
Demand uncertainty spectrum
Responsive supply chain
Efficient supply chain
Functional products
Innovative products
Responsiveness spectrum
Zone of Strategic Fit
High shelflife %
Low shelflife %
Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007

14. Supply Chain Performance
Two key points
there is no right supply chain strategy independent of competitive strategy
there is a right supply chain strategy for a given competitive strategy
All functions in the value chain must support the competitive strategy to achieve strategic fit
Source: Sunil Chopra, Peter Meindl, ‘Supply Chain Management’, 3rd ed., 2007

15. Questions ?