Business strategy is tacitly linked and strongly influenced by the supply chain. From global supply networks, delivery streams, through to performance management and instability. The supply chain can be a key constraint in how businesses targets growth and product development.
Most business strategies will consist of goal and policy setting. Typically goals will relate to products and strategies targeted toward gaining market share and increasing customer value both of which requiring increasing levels of competitiveness and agility.
Whilst strategy has a significant part to play in setting the requirements and objectives on business functions the instability of the supply chain can act as a significant constraint (or accelerator) setting the speed at which the business moves and reacts.
Instability, often associated with supply chains, and business strategy are not commonly seen as being easily combined. For example, strategies targeting business growth may be a key part of the business strategy, but business growth will be difficult if the supply chain is constrained by capacity or the supplier network (let alone obsolescence or broader commodity issues).
Once a strategy has been defined careful management will be required to reach objectives ensuring that issues in terms of cost, quality and delivery are kept to a minimum. Objectives may well necessitate change – be this at a supplier level (e.g. lower costs) or at a sourcing level (for new products) or within the broader logistics channels to target reducing lead times to the customer. Many manufacturing organization’s business strategies are tightly coupled with commodity markets. For example, when wheat rises by 45% in only a very short time, then the business strategy of a pasta making firm is almost as directly affected than that company’s supply chain.
With broadening compliancy and environmental policies many business strategies include responsibility targets which while are not exactly attuned to the physical product may well require re-configuration of the material flow.
The close interdependence of the business strategy and supply chain needs to be openly acknowledged, so that the two can be viewed in the context of how they affect each other. There are a myriad of different ways in which the supply chain and business strategy are closely intertwined and if a company thinks that the supply chain and the business strategy are independent from each other, then this can severely hamper the implementation of any plans that are established or goals that are set.