Throughout the past decade, many have been the changes that have occurred and brought a no less than dramatic shift in the very nature of today’s competitive landscape —technological advances and developments, especially in the information technology field, accompanied by the ongoing globalization, the level of complexity at different levels has risen to unthinkable figures: time horizons, procurement, order completion, etc., are just examples of some areas whose level of sophistication has determined the way to approach them under today’s supply chain management juncture.
This strong competition has a direct and marked effect on a company’s supply chain strategy and integration: integrating activities past organizational boundaries is arguably today’s most challenging issue for supply chain executives and managers. Integration efforts now go way beyond traditional product-process design and pragmatic integration to focus on extra-corporate and organizational links with both customers and suppliers. The whole idea behind it is to produce supply chain-driven products and services.
A much deeper analysis of supply chain integration focuses on two major issues: alignment and linkage—both within and across companies and organizations.
Alignment refers to general vision, common goals, purpose and objectives across corporations, companies and every organization, functions and other processes throughout the whole supply chain. Alignment ensures consistency in the direction and objectives as plans and other decisions are made.
The linkage is commonly associated with communication and sharing of important data needed for both planning and decision-making processes—and the interaction of individuals involved in both processes. Linkage ensures that the data necessary for the aforementioned processes is available in a timely manner and that different areas throughout the supply chain are working with the exact same information as decisions are made.
Supply chain alignment and linkage are both processes that simply do not happen all of a sudden. Supply chain management is just one area of the entire management of a company; thus, it must provide support to the main strategy.
As for strategy, business strategy defines how a company has decided to compete in today’s juncture and markets. A firm can compete using different approaches: low cost or differentiation. Supply chains can definitely bring a tremendous impact and contribute to both goals; however, since there are different business strategies, these are likely to be best accompanied by different supply chains. A corporate strategy based upon the pace of today’s level of innovation requires a different network of suppliers, a distinctive manufacturing infrastructure and a more complex distribution network based on a lower overhead. Thus, it is no less than obvious to state that it is key and vital that the strategies pursued and the decisions made by the whole supply chain group be in accordance and aligned with the overall objectives of a company.
In light of the aforementioned theoretical approach, supply chain strategy planning and decisions relating to coordinating all supply management decisions with corporate strategies, product and service design decisions and the supply chain itself. Thus, the having the right infrastructure to support this framework—paying special attention to people, technology, software, control systems, regulations, procedures, and relationships— is key in enabling such alignment and linkage.
David Kiger has previously addressed the importance of improving the quality of a supply chain, and throughout his ongoing research, he has identified at least four crucial and even critical supply chain strategy areas: supply chain strategy and vision, insourcing and outsourcing strategies, supply chain segmentation and framework and product and service design.
It is not possible to stress enough that when it comes to operation decisions in supply chain management, these must be tailored to the strategy. The design and the nature of these processes will ultimately determine whether the supply chain performs in accordance with the company’s expectations. The processes, therefore, define whether a business is able to supply with demand to provide their customers with a much higher sense of value. Of course, also included here are the processes for forecasting and procurement and demand management, aside from order completion, operations planning, materials planning, etc. The key, as mentioned earlier, in order to align and link operations across and throughout the supply chain, is to facilitate the flow of information, thusly facilitating communications for decision-making processes—which, of course, is vital for when it comes to achieving previously determined goals and meeting customer expectations.
These three major supply chain processes that supply chain managers ought to pay special attention to are: processes for order fulfillment from the supply standpoint, sales and operations planning and processes for order fulfillment from the customer standpoint. In the end, this puzzle can only be solved once the aforementioned processes are approached from both the alignment and the linkage point of view; otherwise, today’s juncture will certainly embody a much greater challenge for companies to cope with.
* Featured Image courtesy of Isaque Pereira at Pexels.com