Question

Justify why an organisation’s supply chain strategy should be aligned with the organisation’s corporate strategy?

Answer 1

Manufacturers are finding new competitive advantages by aligning their procurement and Supply Chain strategy with their corporate strategy.due to ever increasing volatility in the global manufacturing environment, companies can no longer rely on the strategy of lowest price, shortest lead time, acceptable quality. Today, high performance procurement / supply chain are collaborative throughout their multiple tiers. They quickly identify and mitigate volatility and have the capability to develop, manufacture and distribute new or improved product more rapidly than even before.

Historically, the accepted thinking has been that the functions of procurement and Supply Chain are to find suppliers and manage delivery of the raw materials necessary to make the products and services delivered to the customers, this is a buyer mindset. But in today’s rapid business cycle environment, that paradigm is challenged. The reality is that a strategically aligned and highly trained procurement organization, with proper foundational education, business systems and tools, can be the leading functional group to solve long-term challenges and maximize total value for the organization. The objective of this solution-sourcing approach is to develop an organization’s procurement and Supply Chain teams, shifting away from a tactical focus of getting things to the right place at the right time. This strategic method allows the organization to provide actionable visibility, optimize efficiency, build better Supply Chain relationships, and generate long-term profitability.

The financial benefits of enhanced procurement and Supply Chain programs are often gained quickly. When we look at the total amount of where the dollars are consumed, it becomes apparent that for many organizations, more is spent in the Supply Chain than in all other areas of the organization combined. A study by Bain & Company, showed that companies employing sophisticated Supply Chain methods enjoyed 12 times greater profit than companies with unsophisticated methods. Manufacturers that are making investments in procurement/Supply Chain programs, linking corporate strategy with Supply Chain strategy, are increasing revenue, generating more profit, reducing costs, identifying and mitigating risks better, reducing volatility and unpredictability, and generating shareholder value faster than their competitors. Equally important, they are able to better anticipate customers’ needs and distribute superior products at a lower cost.

TechSolve, an Affiliate of NIST’s Manufacturing Extension Partnership, offers Supply Chain Optimization services which consist of a strategic consultative approach to convert Supply Chain strategies into tangible Supply Chain collaboration, equipping manufacturers with the tools needed to resolve gaps, and increase competitiveness. TechSolve leverages our extensive “boots-on-the-ground” national network to deploy strategy and implementation consistently and effectively.