5 Steps to Align Supply Chain with Corporate Strategy
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By Rebecca Langdon
To set the scene, you have recently become CSCP accredited and you have just started a new role as a Supply Chain Manager for a retail/distribution firm inthe UAE. The organization has a very clear and well thought out corporate strategy, and they understand the importance of the supply chain to delivering on that strategy. Your job is to align the supply chain with the strategy. What do you do? These are our 5 steps for success:
Identify which areas of the corporate strategy are enabled by the supply chain
The corporate strategy will typically be vast in the functional areas it touches, it will also likely link to external forces which may be outside of the remit of the supply chain. The first task you have is to review the strategy and work out where you need to be aligned, and where you don’t. For example part of the strategy may be to reduce delivery times to customers; this is where you come in. However if part of the strategy is focussed on retaining good members of staff through internal management; you don’t need to be involved.
Measure supply chain performance in line with the corporate strategy
If the corporate strategy is to reduce delivery times by 20%, then you need to ensure that your metrics are aligned to that target. At this stage you will need to consider if the supply chain as currently designed can be optimized to offer the time savings. It may be that you will need to completely redesign the supply chain to meet the strategy. A good place to start is seeing what your competitors are doing and how they are performing.
Review the end to end supply chain
This is a holistic review of the supply chain to see if it is structured to meet strategic goals. For example the strategy last year may have been cost saving, but this year it is flexibility. The direction of the corporate strategy will drive a change in the design of the supply chain.
Incentivize the supply chain
Now that you understand the objective of the supply chain you need to incentivize the various organizations involved. In simple terms that means ensuring suppliers’ objectives are aligned with yours. This may be done via contract, service levels, monthly review, and/or balanced scorecards.
Don’t stop moving
By this I mean that once your supply chain is optimized and you are hopefully meeting the organizational strategy that is not the time to take a back seat. Corporate strategy is not static, so you need to keep plugged into directional changes and keep ensuring your supply change is still delivering.
If an organization is going to delivery on its strategic goals, the supply chain will need to align to meet those objectives. This is the exciting part of being a Supply Chain Manager. For more information on the CSCP qualification, we have lots of information available on our website.