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Among the many interesting things that Larry Lapide, demand management research director at MIT, covered at our recent Kinexions user conference, were his comments on balanced strategic supply chain management objectives.   Larry was talking about the critical need to align business objectives and supply chain management objectives when he put up the following graphic.

Larry’s comment was that every company’s supply chain management strategy fits somewhere within this triangle.  For example, WalMart aligns with the supply-side strategy since their goal is clearly to be the low cost provider.  A company with a goal to be the market share leader would align itself with a demand-side strategy and a company who’s goal it was to deliver the highest profitability and return on assets (ROA) would align itself with the supply-demand strategic supply chain management strategy.

But, Larry’s most critical point was that it’s essential that a company’s placement aligns with their business strategy.  You don’t want a business strategy focused on market share leadership but a supply chain management strategy focused on supply-side strategic objectives.  Unfortunately, it happens too frequently.

And, Larry cautions about sitting in the middle.  If you waffle in the middle, you don’t differentiate yourself in the market place.  You must pick a supply chain management strategy to excel at, and one that is aligned with your strategic business objectives.

Are your business and supply chain management strategies aligned?  Which one are you?  I think this is a good tool for company’s to pause and reflect on since the implications of mis-alignment are huge.

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Tags: Supply chain, Supply chain management
Posted in Sales and operations planning (S&OP), Supply chain management
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