What Is The Place of Supply Chain In Supporting The Company Strategy

I was recently asked, "what is the place of supply chain in a company in your opinion?"

My response, "it is central to the success of the business".

Most businesses view supply chain as a support function, supporting the commercial targets.

While this article is not meant to weigh in on this debate, I am of the opinion that supply chains are central to the success of any organization, no matter the size.

Truth is, if supply chain coughs, the whole business inadvertently catches a cold. And by supply chain I mean end to end; Demand, supply, quality, procurement, manufacturing et al

An effectively managed supply chain is not just a support function but a strategic asset that can contribute significantly to the achievement of a company's overarching goals and objectives

Through alignment, the supply chain becomes a key function of competitive advantage and business success and here is how

Alignment with Business Objectives:

How can two walk together unless they agree?

Supply chain strategy must be aligned with broader business objectives.

This is why goals should be derived from the business vision and mission and then these goals are cascaded downwards for adoption into the different functions.

Supply chain ought to adopt the business goals and align with these to answer the question, how can supply chain help the business to meet its objectives?

For instance, if a company's strategy is to deliver products faster than competitors, the supply chain must prioritize speed and agility in sourcing, manufacturing, and distribution. eg metrics that read, "reduce lead time from X to Y to ensure delivery of products faster than competitor"

Cost Efficiency:

Remember the last time that you lost money?

Or placed it somewhere safe but just couldn't remember where the safe place was?

Do you also remember how you felt when you found the "lost" money?

Or how you feel when you find money in a hoodie or jacket that you had totally forgotten about?

Supply chain management if the function in the company that is tasked to minimize costs and losses at every stage of the process, from planning to procurement to delivery.

By optimizing inventory levels, streamlining transportation routes, and negotiating favorable terms with suppliers, the supply chain contributes to cost reduction, which is often a key component of the company's strategy.

This is why every supply chain aims to minimize if not completely eradicate the 8 wastes; Transport, inventory, motion, waiting, overproduction, overprocessing, Defects, skills.

And also why robust supply chains measure lead times, inventory levels, cost savings, loss avoidances etc

Quality Management:

When you are having your bottled water, do you stop to think if it passed quality control or do you assume it must have if it is in market for consumers?

Quality control is an arm of supply chain.

Ensuring product quality is essential for maintaining customer satisfaction and brand reputation.

Supply chain management involves selecting reliable suppliers, implementing quality control measures throughout the production process, and establishing robust inspection procedures to deliver products that meet or exceed customer expectations.

Flexibility and Responsiveness:

The dodo bird went extinct because it couldn't adapt to the introduction of predators by humans to its environment.

In today's dynamic market environment, companies must be able to quickly adapt to changes in demand, supply, or external factors such as natural disasters or geopolitical events.

A well-designed supply chain allows for flexibility in production schedules, sourcing alternatives, and distribution channels, enabling the company to respond rapidly to changing conditions while still meeting customer needs

What happened to the dinosaurs..........?

Innovation and Technology Integration:

At The Fort Jesus Museum in Mombasa, Kenya, there is a display called "The Evolving Man" and if we are to go with Darwin's' Theory of Evolution, the current advent of AI and robotics calls for conscious and intentional evolution.

Leveraging technology and innovation within the supply chain can drive competitive advantage.

Whether it's implementing advanced forecasting algorithms to predict demand more accurately, adopting automation and robotics to improve efficiency in manufacturing, or utilizing blockchain technology for enhanced traceability and transparency, innovation within the supply chain can support the company's strategic goals.

Risk Management:

Supply chain disruptions can have significant impacts on a company's operations and bottom line.

Supply chain management involves identifying potential risks, developing contingency plans, and building resilience into the supply chain to mitigate the impact of disruptions.

By proactively managing risks, the supply chain supports the company's strategy of ensuring continuity of operations and minimizing financial losses.

Customer Focus:

Ultimately, the goal of the supply chain is to deliver value to customers. By understanding customer preferences, managing inventory levels to meet demand, and providing timely and reliable delivery, the supply chain enhances the overall customer experience, which is often a central component of the company's strategy to build brand loyalty and increase market share.

In you opinion, What Is The Place of Supply Chain In Supporting The Company Strategy?