Challenges to Achieving and Maintaining Strategic Fit

Increasing Product Variety and Shrinking Life Cycles 

Globalization has increased both the opportunities and risks for supply chains. The twenty-first century has started with significant fluctuations in exchange rates, global demand, and the price of crude oU, all factors that affect supply chain performance. In 2008 alone, the euro peaked in value at about 1.59 and went as low as 1.25. In 2001, the euro went as low as 0.85. After demand for antomobiles in the United States peaked at more than 17 million vehicles, demand dropped significantly between November 2007 and October 2008. In October 2008, auto sales in the United States dropped by more than 30 percent relative to the same month the previous year. The drop in sales of larger vehicles was much more significant than the drop for smaller, more fuel efficient, cars. Crude oil peaked at more than 145 a barrel in July 2008 and was less than 50 a barrel by November 2008. 

Over the past several decades, most firms have become less vertically integrated. As companies have shed noncore functions, they have been able to take advantage of supplier and customer competencies that they themselves did not have. This new ownership structure, however, has also made aligning and managing the supply chain more difficult. With the chain broken into many owners, each with its own poUcies and interests, the chain is more difficult to coordinate. This problem could potentially cause each stage of a supply chain to work only toward its local objectives rather 

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