SCM and Strategy

The assumption that underlies the notion of facilities focus is that a factory or, for that matter, any organizational entity will perform better when assigned a narrower, more clearly defined set of tasks than it would when required to perform a broader, more nebulous set of tasks. 

Restoring Our Competitive Edge, Competing through Manufacturing 

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SCM and Strategy Description of models for strategy development and how they affect SCM... 

Joint objectives of all members along the whole supply chain and strategies in accordance with the needs of SCM are crucial for cui efficient cuid effective realization of ECR. However, at least one part of the interviewed dairy companies, namely early adopters, does not fulfil the essential requirements for the successful ECR implementation. The investigation verifies that the implementation of ECR is dominated by IT while the important economic objectives are insufficiently realised. Distrust in the relationship between dairy companies and retailers and a lack of strategic orientation are the main obstacles for its consequent implementation. 

Alignment of SCM with Business Strategy and Product/Market/Customer Characteristics... 

SCM needs to be aligned with and support the overall business strategy, and therefore to be in line with product, market, and customer characteristics. As different products, customers, and markets might need to be supported with different strategies, SCM needs to be tailored accordingly. 

Figure 22.5 shows how product, customer, and market characteristics can determine different SCM strategies and design implications. For example, the strategic choice to serve niche customers with high price specialty chemicals is only tenable if the high-value inventory is centralized to reduce costs, and if a fast, responsive supply chain is set up to fill customer orders within the requested lead time from central inventory. 

Fig. 22.5 Alignment of SCM with business strategy and product/market/customer characteristics.

From a structural point of view, top-performing SCM requires a full understanding of and alignment with the business strategy and product-market-customer characteristics, a set of structural elements that make all functions involved work together in unison - transparency of performance, clearly defined processes,... 

Many companies, both within the chemical industry and in other sectors, have recognized benefits from involving their suppliers and customers in various aspects of their business. The area of supply chain management (SCM) has become a critical element in the overall business strategy of improved productivity, reduced costs, and better control of the quality and potential risks associated with raw materials and intermediates. Proactive management of supplier environmental performance, as practiced by Hewlett Packard, can lead to product and process simplification, improved resource efficiency, product quality enhancement, reduced liability, and customer perception of the company as an industry leader. 

Levy and Powell (2003) found that some SMEs see strategic potential in e-business and will invest in it. They suggest that owners recognition of the business value of the Internet, combined with owner attitude towards business growth, are key factors determining Internet adoption strategies. One would expect these two factors to apply to e-SCM, as it is a form of e-business. 

SCM was part of the overall business strategy (and hence a CEO-level agenda item), and where companies were willing to reorganize the supply chain itself when appropriate, rather than simply making adjustments within the existing supply chain structure (sometimes called breaking the mould ). 

For SCM strategists, RFID facilitates detailed data collection and statistical analysis, from gross to very fine-grained levels. For instanee, RFID readers in a retailer s store can capture data on product arrival, placement, and movement, whieh can present the cyclieal patterns. This key eapabil-ity of RFID allows the executives to link the date received with the date sold. Moreover, it ean help to identify possible points of information leakage throughout the entire supply chain. As a result, RFID increases the visibility in the supply ehain, which can be used to make strategie deeisions to further increase eompetitive advantage. 

Bakowski, M. (2002). C-commerce. Would mixing ERP, CRM, e-procurement and SCM be an efficient strategy forthe future InProceedings of the Ky " International Systems Integration Conference, Prague, Czech Republic (pp. 107-114). 

This definition acknowledges the breadth of SCM. It also refers to business model, which includes strategy for competing and the extended product features that distinguish an enterprise from its competitors. 

Some view supply chain design as integral to their strategies for competing. For them, competing successfully centers not only on products, but also on the operations that make up the extended product as described in Chapter 1. These operations deliver the physical and extended products to customers hands. With this viewpoint, supplier relations, logistics, and information systems support customer satisfaction and fall within the definition of SCM. This, in turn, leads to increased market share and profit. Costs, while important, are secondary with this viewpoint. Efforts to reduce cost must also support strategy. 

We begin by summarizing the five tasks for better SCM, shown in Table 5.6. These tasks are not necessarily new. Managers have always developed strategies, measured employees, cut costs, implemented new systems, and sought out partners for cooperative efforts. However, the need for better SCM requires new ways of performing old tasks. 

Few supply chain efforts will not require collaboration with upstream suppliers and downstream customers. After all, this is the essence of SCM. Strategy components include information sharing up and down the chain, new roles for suppliers or distribution channel partners, the role of product and process technology, and trading partner contributions to our own effort. The charter should anticipate the need for this participation, and authorize the team to prepare requirements accordingly. 

Michael Porter, Harvard Business School professor and a thought leader on strategy, maintains that linked activities and processes are especially resistant to competitive pressures. He refers to these linked activities as activity systems. The concept of activity systems has valuable application in SCM because a well-linked supply chain is one type of activity system. 

Figure 15.3 provides yet another view of the supply chain project called the Work Breakdown Structure, or WBS. The WBS is a deliverable, or work product, view. For the supply chain project, this overall deliverable is the Implemented SCM Strategy shown at the top of the WBS. The components of the implemented strategy range below in the WBS structure. Projects A, B, and C, which could include partnership development, process improvements, or new systems or facilities, will also have their own deliverables. Table 15.2 summarizes each of the WBS deliverables. 

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