How Does Supply Chain Strategy Support the Business Strategy?
In today’s fast-paced business environment, a company’s supply chain strategy plays a crucial role in supporting and driving its overall business strategy. Supply Chain Strategy refers to the approach and plans a company takes to manage and optimize the flow of goods, services, and information from suppliers to customers. It encompasses all the activities involved in sourcing raw materials, manufacturing products, and delivering them to customers
On the other hand, business strategy is the most effective method to get an advantage over opponents since it provides a comprehensive picture of how a company will compete in the market. Perhaps not surprisingly, a supply chain strategy can support the company’s business goals and help the company remain a leader in the industry.
This is especially true for companies like Unilog, a leading supply chain solutions provider, dedicated to providing high-quality supply chain solutions by using advanced technology.
Let’s delve deeper into the various ways in which supply chain strategy supports business strategy and the benefits it provides for businesses across different industries.
What is Supply Chain Strategy & Why Do You Need It
A supply chain strategy describes how efficiently a company will bring products into the business and provide them to its customers. The strategy optimizes operations to lower costs and boost revenues while taking each stage of the supply chain into account, including sourcing products, shipping, and delivery.
Supply chain strategies have gained attention as supply chains have become increasingly complicated due to shifting demand and complex global markets.
A good supply chain strategy is all about making sure customers are happy, being able to respond quickly, giving them more value, making sure the company is financially successful and building strong relationships. To make sure your supply chain is working well, the main goals should be accelerated cash flow, increased efficiency, and quicker delivery. One of the best ways to stand out from the competition, move ahead faster, provide more value, and be more flexible in the face of change and unexpected events is to have a supply chain that aligns with your company’s overall strategy.
Considering this, advanced companies started using the supply chain strategy as a sophisticated and dynamic tool to stand out in the fiercely competitive race to generate profit for shareholders and customers. So, if you plan to create value for the company, focus on the supply chain strategy, as it will help you recover quickly and keep your competitive advantage.
How to Align Supply Chain Strategy with Business Strategy
Successful supply chain planning demands a careful balance of effectiveness, resilience, and alignment with the overall business strategy. While a company’s business strategy sets its overall course, its supply chain strategy determines how that company and its extended supply chain will work together to achieve a given set of supply chain goals.
So, let’s take a closer look at 6 predefined steps on how to align supply chain strategy with business strategy.
- Define and communicate a clear corporate strategy
When the supply chain organization is unsure about which strategy to align with, it is one of the main failure points. Strategies should not be overly constrained and should take into account and prioritize each market necessity as well as the factors on which participants compete.
Furthermore, a strategy cannot be a generalization that promises everything to everyone. The business strategy should establish clear, quantifiable objectives and explain how you will outperform your competitors.
- Figure out areas of your corporate strategy that are made possible by the supply chain
You should make the connection between your strategic objectives and how the business achieves them. You can prioritize supply chain goals using the process, which outlines the competencies your supply chain should possess.
Ask yourself what portion of your core competencies and competitive advantages are a result of your supply chain activity or how they relate to it. Making internal or external decisions requires extra attention to this step.
- Align supply chain performance metrics with the corporate strategy
The idea that there are set supply chain performance metrics and the business should aim to maximize them all is one of the most prevalent problems. This assumption ignores the fact that there are trade-offs when maximizing various objectives and that there are no absolutes in competitive strategy. Goals should be established depending on how you perform in comparison to your opponents.
- Structure your supply chain to optimize the strategic goals
Design your supply chain in a way that helps you reach your main objectives. This might involve looking at things like how your company is set up, who you work with, where your facilities are located, and what your policies around things like inventory and planning are. Depending on your goals, you might need a supply chain that’s really good at keeping costs low or one that can change and adapt quickly. Keep in mind that different parts of your company might have different needs, and the same goes for your employees.
- Align incentives end to end
Make sure everyone is working towards the same goals by aligning incentives throughout the entire process. This means that the way you evaluate and reward your employees should match up with the overall objectives. You should also make sure that the way you work with suppliers is aligned with what you’re trying to achieve.
For example, if sales and marketing overestimate demand, it can cause the supply chain team to end up with too much inventory.
- Keep refreshing the strategy and alignment process
Although the majority of businesses have one to three years between strategic planning cycles, we have observed businesses that go for literally decades without updating their supply chain strategy. That’s why you should sync up your supply chain strategy with the rest of your planning schedule.
5 Benefits of Supply Chain Strategy for Your Business Goals
Producing the highest-quality product for the customer while maintaining a dependable profit margin is the overarching objective of any supply chain strategy.
Here are some reasons why having a supply chain plan can be beneficial for your business, as well as some tips on how to create a solid one.
- Supports your business objectives
Knowing what is expected of your vendors and distributors to get there is crucial to attaining your goals. Any supply chain strategy should begin by describing how your products are transported from the original supplier to your business.
Create a flowchart that shows the sources of your raw materials and how they get to your business if you use them to manufacture a final product.
- Allows you to understand your historical data
Start by listing the number of goods or raw materials that your business purchased from each supplier over the previous year, as well as their associated costs. Check their track record for delivering products on schedule and at the price they promised.
To estimate each vendor’s potential value in your supply chain strategy, it is useful to compare their annual performance.
- Helps you understand the location of your inventory
Every business needs to understand where its finished inventory or raw materials are in the supply chain to meet consumer demand while maintaining a sustainable profit. Luckily, you can track every piece of merchandise from their warehouse to store shelves using cloud-based solutions.
Having the right systems in place is important for any supply chain strategy. Examples of systems include things like points of sale, inventory management, and warehouse management. To make sure your supply chain is running smoothly, you need to be able to see what’s happening at every step of the process.
- Ability to adapt to changing customer demand
Markets change frequently; thus, to remain profitable, companies need to be able to quickly identify changes in prices, delivery, and client demand. Based on the daily data their cloud-based systems transmit to them, growing companies with a supply chain strategy can make dynamic modifications.
- Adjusting to alterations in internal product management or design
Rapid innovation is essential for expanding companies, and choices taken in the early stages of product development can ultimately decide the success of the final product. Companies can optimize designs for “manufacturability” and long-term supply levels by implementing the proper supply chain strategy.
Using Logivice to Execute Supply Chain Strategy
Having the right tools and technology in place is key to creating a supply chain strategy that works well. By using the right software, you can save time and make things more efficient. Plus, it can help to lessen supply chain risks, which helps to safeguard already tight revenues.
After many years in the logistics industry, Unilog created a platform that makes businesses feel “at home.” To address the digitalization of the supply chain, Logivice, a platform offering an inventory management system, pays close attention to automation and data quality. While evolving in response to a real-world need, the platform is founded on listening to people and examining what truly bothers everyone.
With the help of Logivice, Unilog can expand each current module or develop new modules based on the current information architecture. Our cloud-based platform is accessible and secure for anybody from anywhere.
In conclusion, it’s important to remember that the ultimate goal of a supply chain is to help your company stay competitive in the global market. The functional strategies that support supply chain management should also be consistent with the business plan. Keep in mind that factors like time, distance, and collaboration play a big role in how well your supply chain can adapt to changes in the marketplace.
To fully understand how to employ a supply chain strategy to support the overall business strategy, it’s important to communicate with experts who specialize in supply chain management processes. So, why delay enhancing your business strategy? Reach out to us immediately and start improving your business strategy.