06 - Supply Chain Design and Operation Strategy - ISC

Strategies define what to do in the next 5, 10 maybe 15 years time.

• Set of objectives, policies and action plans of an organization.
• Business expression where a company is or want to be
• Statement of how a company intends to compete in the market
• Expression of the way to create value for our costumers more effectively than our competition
• Development and use of competitive ???

Business strategy

• Vision mission values
• ???

Supply chain strategy

Components

• Mission - Why do we exist
• Values - What we believe
• Vision - What would we like to be in the future
• Key competences and strategic lines - Specific qualities
• Strategic targets and map - Link objectives
• Strategic scorecard (indicators) - Strategic KPI
• ???

Mission

The mission is the purpose of a company. Why the company exists

• Clear
• Concrete
• Concise
• Relevant
• Customer oriented
• Set direction
• Challenging
• Break barriers

Vision

The definition of what we would like to be in the future or how would like to be seen/perceived

• Realistic
• Aspirational
• Concise
• Challenging
• ???

Values

Key competences

The knowhow that the organization must have...

Strategic lines

What is giving the direction where to go

Strategic objectievs

The milestone to go in a certain direction

Strategic map

A graphic that shows a logical, cause-and-effect connection ...???

In class exercise - What are mission/vision/values...?

McDonald's

• Mission
  • Provide quick easy food
  • Buy high value land
• Vision
  • Build a strong brand
  • Localize food
• Values
  • Standardization
  • Recognizability
  • Safety
  • Playfulness
  • Land ownership

hp

Strategy formulation process

• Know who you are - Set mission and vision
• Diagnosis
  • Evaluate where you are
  • How to win
  • Where to play
  • Create a value proposition
    • The group of things on how you approach the costumer
• Strategic decisions
  • Concept
  • Capabilities needed
  • Technologies needed
• Results and reformulate
  • Results review
  • Financials
  • Deviations
  • ...

Competitive winning factors

What are the 4 operations winning factors?

• Cost
  • Very efficient
  • Economy of scale
• Quality
  • High quality standards
• Service
  • Related to availability (go to supermarket and you find it)
  • Reliable
  • Customer priority above other variables
• Flexibility
  • Prepared to all costumer requests
  • Related to service but: special preparations, like giving delivery window...

The winning factor is a decision we make. It's not given by the market.
We cannot have all the 4 winning factors. Only 1, maybe 2

COST + SERVICE

• Commodities - drinks, papare, sugar....

QUALITY + FLEXIBILITY

• Luxury
• Loyal costumers
  • Nike, POLO, Rolex

COST + QUALITY

• Smart purchasing
  • VW, Toyota

SERVICE + FLEXIBILITY

• Ecommerce - Amazon

QUALITY + SERVICE

• New entries - Starbucks

COST + FLEXIBILITY

• Leader brands - Zara, Dell

3 levels of operation decision

• Strategic
  • About the what
    • Objectives
    • Supply policies
    • Network design
• Tactical
  • About how
    • Demand forcasting
    • Production, procurement
    • Inventory targets
• Operational
  • About the "do"
    • Daily life activities
    • Execution KPIs

Tips creating strategy

• The sum is more important than the parts
  • Integrate all the parts of the system
• The strategy MUST be aligned with Business strategy
• The design, the process optimization and management are key competitive advantages
• Successful recipes pass - results review and formulation
  • It's important to know our history but don't get stuck on "it's always been like this"
• A good strategy prepares you to face potential problems

Strategy is key but don't forget execution.

Competitive advantages are not always durable over time.