Supply Chain Strategy | SCM

In today’s environment, Supply Chain Management must be an integral element in developing a corporate strategy. Corporate strategies determine the target markets for companies to pursue, and companies then decide if they want to compete on price, service, quality, innovation, flexibility, or a combination thereof.
For example, Walmart pursues a low-cost strategy for everyday goods. Many items offered to consumers at Walmart can be purchased in other retail stores, but they might not be sold at prices as low as those at Walmart.

In fact, the supply chains of two different retail stores, even selling the same items, can be quite different. Walmart owns its distribution centres and has its own fleet of trucks to serve its immense number of retail stores and control the flow and availability of products.

Supply Chain Strategy | SCM | Texpedia

Meanwhile, smaller retail stores such as boutiques and other speciality shops do not have as many retail outlets, and the products they offer are not guaranteed to have the lowest prices; additionally, they do not have their own trucks or warehouses, so they must depend on other supply networks for product availability. The competitive strategies companies choose to influence product price, delivery time, variety, and quality.

Walmart customers shop at that store primarily because of the low price, but consumers may shop at boutique retail stores because of unique product offerings and additional services offered, like gift wrapping and engraving. 

Supply chains are designed to fit strategically with defined corporate strategies; the numerous organizations and activities in supply chains work together to contribute to the overall goals and objectives associated with those strategies. Understanding customers and supply chain capabilities are important when determining if certain supply chains will be able to support corporate strategies.  

Several functions within organizations—research and development, procurement, finance, manufacturing, etc.—work together to support their specific supply chains. If the strategic goal for a company is low costs, these functions need to contribute to that goal, such as designing a transportation network that minimizes expenses and procurement’s seeking low-cost suppliers.

Fahad Mahmud 
Lecturer (Technical), SKTEC 
Department of textiles, Ministry of Textiles & Jute

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