Confirm Activity Fit

As indicated at the beginning of this chapter, Porter maintains that sustainable advantage comes from the fit between activities. In adapting this idea to supply chains, we can describe three flavors of fit  

First order fit between the activity and strategic theme. In the activity map, activity costing fits the notion of measuring contribution on different pieces of the business. Its application is as an internal control to evaluate product and customer profitability. Product R D is another example of first-order fit. The Product R D activity supports the Technical Leadership theme. 

Second order reinforcing activities. This type of fit is between activities where one activity supports another. For example, Activity Costing also reinforces another activity, Service-Based Pricing. Activity costs provide the data to set service-related prices. (The term activity in this case is also used in Activity-Based Costing, ABC. This is a separate use of the term from its application in Activity Systems.) Changing the way scheduling is done (Varied 

Scheduling activity) will enable maintenance of finished goods inventory (Finished Goods activity). 

Third order optimization of effort across the activities and with suppliers and distribution channels. Third-order fit includes the elements often referred to as supply chain integration. Flexible Production and Finished Goods provide options for distributor customers competing with just-in-time contracts. Flexible Interfaces increases the ability to link up with the supply chains of Acme s customers — notably distributors. 

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