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INDUSTRIAL ENGINEER – VOLUME 47 NUMBER 1
There are nine components to create supply chains and the overall process of developing such supply chains is based on strategy, structure, implementation and execution.There are two main components in strategy foundation, which are business strategy, and the product, marketplace and service strategy. The structural activities include supply chain capabilities, network design, facilities design, transportation design and technology design.
Strategy: The foundation of supply chain excellence is a clear business strategy. The business strategy is used to define in what channels each product is to be sold, what marketplaces (forward and backward) should be deployed and what services should be offered to customers.
- Structure: Translating the strategy into the current and future supply chain capabilities such as fill rates, rate of delivery, capacity, and so on, is required to lay the foundation for the design of the supply chain. The design of a supply chain that works as a competitive weapon is an interactive process between the network, facilities, transportation and the technology. None of these components can be executed without full consideration of the other three components.
- Implementation: A correct structure that is poorly implemented will generate poor results. Change management and organizational understanding and acceptance are the keys to creating supply chains that become competitive weapons.
- Execution: The outcome of great execution is great performance. And to assure it, one must identify and calculate the correct performance measures. Ongoing diligence and responsiveness to these performance measures are required to ensure the supply chain becomes (and is maintained as) a competitive weapon.
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