When setting up a supply chain strategy, important decisions lie ahead. Do you want to run an efficient supply chain organization? Or do you want to be able to respond quickly to market changes and grow your company? Are you dealing with ever more events, that may disrupt your supply chain? Is being sustainable, or becoming circular of strategic importance to you and your business? You cannot be everything at the same time, whatever choice you make, trade-offs have to be dealt with. On the other hand, not all combinations are mutually exclusive, maybe some choices fit well together to a certain degree? Read more about these supply chain strategies below.
Lean supply chain management is about eliminating waste, and as a result reducing cost. The lean approach is focused on efficient, streamlined operations and eliminating anything in the process that does not add value to the product or service that is delivered to customers. Lean supply chain management focuses on reliability and predictability rather than on flexibility and adaptability. The strategy is to pre-plan everything in advance in order to find economies of scale in production.
Agile supply chain management prioritizes adaptability. It is designed for a highly flexible environment to react in accordance with the market changes and volatility. This makes a supply chain more responsive and able to deal with sudden changes with the required speed and flexibility. This strategy allows organizations to quickly adjust their sourcing, logistics, and sales to counter unanticipated external economic changes. These can include changes such as economic swings, changes in technology, or changes to customer demand.
The resilient supply chain requires two critical capacities : the capacity for resistance and the capacity for recovery. The first, resistance, defines the supply chain’s ability to delay a disruption and reduce the impact once the disruption occurs. The second, recovery, defines the supply chain’s ability to recover from a disruption.
Green Supply Chain Management aims to integrate environmental thinking into supply chain management. This includes product design, material sourcing and selection, the manufacturing process, delivery of the final product to consumers, and end-of-life product management.
Now we have briefly discussed a number of supply chain strategies, the next question is which one should we choose? In principal there is no ‘right’ supply chain strategy. However, what is prevalent in most successful transformations is that the supply chain and the overall company goals are well aligned. And the opposite is also true: if they are misaligned, then business outcomes will suffer. In other words, a company's supply chain strategy should be derived from its corporate strategy.
If the company strategy is e.g. being a leader in operational excellence, then lean supply chain management probably fits very well. However, if say customer intimacy is the corporate focus, then being agile is likely a better fit. Some form of supply chain resilience will always be helpful, but to what extent will be heavily influenced by from where you source, or to where you deliver. Finally, sustainability and circularity are becoming cornerstones on corporate agendas, so it is only logical that supply chain strategies need to support this too.
With the help of Inchainge’s business simulations, companies can get familiar with the four supply chain strategies that were described: Lean, Agile, Resilient and Green. And more importantly, how alignment can drive business results. Dependent on desired learning outcomes, and learner audiences, our programs