Different supply chain strategies

Different Supply Chain Strategies

Wikipedia defines Supply Chain Management (SCM) as “the management of a network of
interconnected businesses involved in the provision of product and service packages required by
the end customers in a supply chain. Supply chain management spans all movement and storage
of raw materials, work-in-process inventory, and finished goods from point of origin to point of
consumption.” However, for managing a well-designed and well-planned supply chain that allows
on time delivery of value added goods, a well thought out strategy is required. Just as “one size
does not fit all” a generic supply chain strategy will not be able to meet the demands and
requirements of companies manufacturing different kinds of products for various markets. Not all
products have the same demand and the same lifecycle. Hence, depending on a generic supply
chain strategy for manufacturing products would be in no way effective. The ultimate goal of
designing a supply chain strategy is to improve efficiency and reduce costs. And this is possible
only by coming up with a well-designed strategy that takes into account product attributes,
customer requirements and market characteristics. Supply chain strategies are divided into various
categories namely Lean, Agile, Postponement and Speculation. Let’s look at each in detail.
Lean It revolves around the concept of designing a well-run supply chain by reducing waste and
non-value added activities. In any form of supply chain, waste happens in the form of time, costs
and inventory. To build a lean supply chain, companies must look at every process in their supply
chain (such as manufacturing, warehousing, transportation and returns management) and
implement corrective measures to reduce waste and resources. A lean supply chain strategy helps
companies to enhance performance and profitability.
Agile Agile supply chain strategy helps companies to respond to constantly changing customer
demand. The key aspects of agile supply chain strategy are flexibility and speed. It revolves around
the concept of ensuring customer satisfaction through swift, accurate and effective implementation
of various supply chain activities.
Postponement Supply chain postponement strategy deals with the concept of delaying the final
manufacturing until the receipt of the actual customer order. Such a strategy helps in minimizing
risks of wrong manufacturing or incorrect inventory. Moreover, supply chain postponement helps
companies to not only avoid stocking unwanted products but also enhance customer satisfaction
by delivering customers with latest products.
Speculation This supply chain strategy focuses on increasing savings by manufacturing and
distributing finished goods in bulk. It helps to reduce costs by maximizing the uses of resources,
warehousing and transportation.