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Introduction to Strategic Supply Chain Management

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Updated December 12, 2019

SUPPLY CHAIN MANAGEMENT STRATEGIC MANAGEMENT

MARTIN MURRAY

Supply chain management operates at three levels: strategic, tactical, and operational. At

the strategic level, company management makes high-level strategic supply chain

decisions that are relevant to whole organizations.

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The decisions that are made with regards to the supply chain should reflect the overall

corporate strategy that the organization is following.

The strategic supply chain processes that management has to decide upon will cover the

breadth of the supply chain. These include product development, customers,

manufacturing, vendors, and logistics.

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marketing and advertising will be targeted.

Manufacturing

At the strategic level, manufacturing decisions define the manufacturing infrastructure

and technology that is required. Based on high-level forecasting and sales estimates,

company management has to make strategic decisions on how products will be

manufactured.

The decisions can require new manufacturing facilities to be built or to increase production

at existing facilities. However, if the overall company objectives include moving the

manufacturing overseas, then the decisions may lean towards using subcontracting and

third-party logistics.

As environmental issues influence corporate policy to a greater extent, this may influence

strategic supply chain decisions with regards to manufacturing.

Suppliers

The company management has to decide on the strategic supply chain policies with

regards to suppliers. Reducing the purchasing spend for a company can directly relate to

an increase in profit and strategically there are a number of decisions that can be made to

obtain that result.

Leveraging the total company’s purchases over many businesses can allow company

management to select strategic global suppliers who o�er the greatest discounts. But

these decisions have to correspond with the overall company objectives.

If a company has adopted policies on quality, then strategic decisions on suppliers will have

to fall within the overall company objective.

Logistics

As well as strategic decisions on manufacturing locations, the logistics function is key to

the success of the supply chain. Order fulfillment is an important part of the supply chain

and company management needs to make strategic decisions on the logistics network.

The design and operation of the network have a significant influence on the performance of

the supply chain.

Strategic decisions are required in warehouses, distribution centers, and determining

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which transportation modes should be used. If the overall company objectives identify the

use of more third-party subcontracting, the company may strategically decide to use

third-party logistics companies in the supply chain.

Strategic decisions determine the overall direction of the company’s supply chain. They

should be made in conjunction with the companies overall objectives and not biased

towards any particular product or regional location.

These high-level decisions can be refined, as required, to the specific needs of the

company at the lower levels which allow for tactical and operational supply chain decisions

to be made.

Summary

The primary and overriding goal of any supply chain is to make sure a company is delivering

the orders its customers want when its customers want those orders—and accomplish this

by spending as little money as possible. Only by lowering costs and improving performance

can a supply chain be truly optimized.

When a supply chain is managed at the operational, tactical and strategic levels—it has the

best chance of helping its company reach its goals.

When the strategic supply chain is optimized, a company is delivering what its customers

want, when its customers want it—and spending as little money as possible getting that

done. Starbucks' method of supply chain management is a great example of this.

SUPPLY CHAIN SPECIFICS

What Do Companies Need Tactical

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What Do Companies Need Tactical Supply Chain Management?

GLOSSARY

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SMALL BUSINESS

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How Amazon Is Changing Supply Chain Management

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STRATEGY & PLANNING

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STRATEGIC MANAGEMENT

Where Are Your Supply Chain's Hidden Costs?

SUPPLY CHAIN BASICS

How to Pick the Best Supply Chain for Your Product

SUPPLY CHAIN BASICS

How to Hire a Supply Chain Manager

SUPPLY CHAIN BASICS

How Supply Chain Can Impact Your Business

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SUPPLY CHAIN SOFTWARE

Using POOL4TOOL Supply Collaboration Platform

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STRATEGIC MANAGEMENT

Strategic Supply Chain Forecasting for Manufacturers

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Product Development

Senior management has to define a strategic

direction when considering the products that

the company should manufacture and o�er to

their customers.

As product cycles mature or product sales

decline, management has to make strategic

decisions to develop and introduce new

versions of existing products into the

marketplace, rationalize the current product

o�ering, or developing a new range of products

and services.

These strategic decisions may include the need to acquire another company or sell existing

businesses. When making these strategic product development decisions, the overall

objectives of the firm should be the determining factor.

Customers

At the strategic level, a company has to identify the customers for its products and

services. When company management makes strategic decisions on the products to

manufacture, they need to then identify the key customer segments where company

marketing and advertising will be targeted

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