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    How To Achieve Strategic Fit in SCM

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    Sindhu Nath Chowdhury
    Supply chain surplus represents the value added by a company's supply chain and is calculated as revenue from customers minus total costs of production and delivery. Competitive strategy defines customer needs a company seeks to satisfy, while supply chain strategy specifies operations, distribution, and services. Strategic fit means the competitive and supply chain strategies have the same goals and the supply chain capabilities satisfy customer priorities. Strategic fit is achieved by understanding customer demands and supply chain responsiveness, and ensuring the supply chain can respond to a variety of quantities, lead times, products, and service levels needed to meet the competitive strategy. Maintaining strategic fit grows more challenging over time due to increasing product variety, globalization, and demanding customers.

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    How To Achieve Strategic Fit in SCM

    Uploaded by

    Sindhu Nath Chowdhury
    1K views2 pages
    Supply chain surplus represents the value added by a company's supply chain and is calculated as revenue from customers minus total costs of production and delivery. Competitive strategy defines customer needs a company seeks to satisfy, while supply chain strategy specifies operations, distribution, and services. Strategic fit means the competitive and supply chain strategies have the same goals and the supply chain capabilities satisfy customer priorities. Strategic fit is achieved by understanding customer demands and supply chain responsiveness, and ensuring the supply chain can respond to a variety of quantities, lead times, products, and service levels needed to meet the competitive strategy. Maintaining strategic fit grows more challenging over time due to increasing product variety, globalization, and demanding customers.

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    Achieve strategic fit in SCM & Other Issues Affecting Strategic Fit

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    How to achieve strategic fit in SCM

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    Supply chain surplus represents the value added by a company's supply chain and is calculated as revenue from customers minus total costs of production and delivery. Competitive strategy defines customer needs a company seeks to satisfy, while supply chain strategy specifies operations, distribution, and services. Strategic fit means the competitive and supply chain strategies have the same goals and the supply chain capabilities satisfy customer priorities. Strategic fit is achieved by understanding customer demands and supply chain responsiveness, and ensuring the supply chain can respond to a variety of quantities, lead times, products, and service levels needed to meet the competitive strategy. Maintaining strategic fit grows more challenging over time due to increasing product variety, globalization, and demanding customers.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    1K views2 pages

    How To Achieve Strategic Fit in SCM

    Uploaded by

    Sindhu Nath Chowdhury
    Supply chain surplus represents the value added by a company's supply chain and is calculated as revenue from customers minus total costs of production and delivery. Competitive strategy defines customer needs a company seeks to satisfy, while supply chain strategy specifies operations, distribution, and services. Strategic fit means the competitive and supply chain strategies have the same goals and the supply chain capabilities satisfy customer priorities. Strategic fit is achieved by understanding customer demands and supply chain responsiveness, and ensuring the supply chain can respond to a variety of quantities, lead times, products, and service levels needed to meet the competitive strategy. Maintaining strategic fit grows more challenging over time due to increasing product variety, globalization, and demanding customers.

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    Download as docx, pdf, or txt
    of 2

    Chapter-2

    Supply chain surplus is the value addition by supply chain function of an organization. Supply chain
    surplus, also known as supply chain profitability, is a common term which represents value addition by
    supply chain function of an organization. It is calculated by the following formula:

    Supply chain surplus = Revenue generated from a customer - Total cost incurred to produce and deliver
    the product.

    Competitive and Supply Chain Strategies

     Competitive strategy: defines relative to its competitors, the set of customer needs that it seeks
    to satisfy through its products and services

     It is defined based on how the customer prioritizes product cost, delivery time, variety
    and quality
     Product development strategy, marketing & sales strategy and how the product will be
    positioned, prices and promoted

     Supply chain strategy: Supply chain strategy specifies what the operations, distribution and
    service functions whether performed in-house or outsourced.

     Nature of procurement raw materials,


     Transportation of materials, to and from the company,
     Manufacture of product or creation of service,
     Distribution of product
     Support services
    Example: Walmart & Mc Master Carr

    What’s Strategic fit?

    It means that both the Business /Competitive strategy of the company and supply chain
    strategy should have the same goal .It refers to the consistency between customer priorities that the
    competitive strategy is designed to satisfy and the supply chain capabilities that the supply chain
    strategy aims to build up .

    How is Strategic Fit Achieved?

    Step 1: Understanding the Customer and Supply Chain


    Uncertainty

     Quantity of product needed in each lot


     Response time customers will tolerate
     Variety of products needed
     Service level required
     Price of the product
     Desired rate of innovation in the product

    Sensitivity: Internal
    Step 2: Understanding the Supply Chain Capabilities
    Supply chain responsiveness includes a supply chain’s ability to do the following…

     respond to wide ranges of quantities demanded


     meet short lead times
     handle a large variety of products
     build highly innovative products
     meet a very high service level and handle supply uncertainty

    Step 3: Achieving Strategic Fit

    Other Issues Affecting Strategic Fit

     Multiple products and customer segments


     Product life cycle
     Competitive changes over time
     Growing supply chain uncertainty
     The environment and sustainability

    Multiple Products and Customer Segments: Firms sell different products to different customer
    segments (with different implied demand uncertainty). The supply chain must be able to balance
    efficiency and responsiveness given its portfolio of products and customer segments which has Two
    approaches:
     Different supply chains
     Tailor supply chain to best meet the needs of each product’s demand

    Product Life Cycle

     The demand characteristics of a product and the needs of a customer segment change as a
    product goes through its life cycle
     Supply chain strategy must evolve throughout the life cycle
     Early: uncertain demand, high margins (time is important), product availability is most
    important, cost is secondary
     Late: predictable demand, lower margins, price is important

    Competitive Changes Over Time


     Competitive pressures can change over time
     More competitors may result in an increased emphasis on variety at a reasonable price
     The Internet makes it easier to offer a wide variety of products
     The supply chain must change to meet these changing competitive conditions

    Obstacles to Achieving strategic fit

     Increasing variety of products


     Fragmentation of supply chain ownership
     Decreasing product life cycles
     Increasingly demanding customers
     Globalization
     Difficulty executing new strategies

    Sensitivity: Internal

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