Strategy is a Greek word historically used in the army, which describe military tactics to achieve winning position over your enemy (Lysons and Farrington 2016). According to Ohmae (1975) in business, strategy means achieving competitive advantage. Furthermore, the author argued that business strategies concerns in three directions – company, customers, and competitors naturally formed a strategic triangle or 3 Cs model.
In accordance with Ohmae model of corporate strategy Smith (2014) believe that company needs to consider and carefully planning how to gain an advantage over its competitors by offering greater customer value. Additionally, companies with good practices should determine areas of superiority and price efficient, competitive strategy.
Importance and implication of achieving strategic fit. Cost-Responsiveness Efficient Frontier
According to (Qrunfleh and Tarafdar, 2013; Chopra and Meindl, 2016,) achieving a strategic fit between competitive and supply chain strategies are critically important and affect the business performance. If competitive advantage is achieved through interaction between customers, company and competitors logically (SCS) supply chain strategy needs to consider its facilitation. Again, Chopra and Meindl (2016) state that strategic fit including all functional strategies and the overall supply chain strategy needs to determine suitable design aligned to support achieving. Furthermore, strategic fit is achieved through understanding customers and supply chain uncertainty and capabilities.
According to Murray (2016), companies use lean supply chain strategy to eliminate waste, reduce cost, and activities which do not benefit the company. According to Lim (2016), Lean supply chain strategy is suitable for companies which make high purchase orders since in this process wastes and costs can easily accumulate. On the other hand, agile supply chain strategy is designed to help adapt with ease to changes in situations since it is more flexible. It is essential where the company expects changes in technology, economic changes and changes in market trends. By using Agile chain supply strategy, companies are able to adjust their operations and adapt quickly to change (Bruce et al. 2004)
According to Christopher and Towil (2001), when choosing between lean and agile chain supply strategies, there are a number of factors that a company should consider. The company should analyze the market orientation by using market winner and market qualifier concepts. Lean and agile supply chain strategies have different focus as shown in the figure below;
|
Agile Supply
Lean supply |
1. Quality 2. Cost 3. Lead time |
1. Service level |
|
1. Quality 2. Lead time 3. Service level |
1. cost |
Market Qualifiers Market winners
Source: Mason Jones et. al. (2000)
Lean and Agile supply chain strategies can be used together in the following ways.
Most of the companies in a supply chain with a variety of products very few companies make the whole amount (20% make 80% volume). Where there is a high volume of products, the Lean strategy is the best to use while agile strategy is suitable for low volume products (Christopher and Towill 2001).
This involves using the inventory to apply lean and agile strategies at different points in the supply chain. It is beneficial where the point is identified correctly
The two strategies can be used together where the demand pattern shows a base demand. Demand could be identified using lean strategy while agile strategy is more suitable for surge implements (Christopher and Towill 2001).
Source Mason-Jones et al. (2000)
Lean and agile strategies can be used together in the supply chain. But also each of them can be used independently depending on the situation.
Efficient supply chain strategy & Responsive supply chain strategy
According to Christopher, et al. (2006) efficient chain supply ensures that the products of a company reach the market on time while using the most cost- effective way. According to Cooper and Ellram (1993), it is essential for a company to ensure that it has an efficient supply chain since if its competitors have better supply chains, they will be able to offer their products at a lower price.
Optimization- the company should ensure that it utilizes its existing infrastructure fully to avoid waste example, the company should not be operating empty warehouses since they waste its resources Christopher, et al. (2006)
High-quality partners- ensure that the company operates in an open and transparent way.
Inventory management- an efficient supply chain balances between the need to have too much inventory and also too little inventory.
Customer satisfaction- an efficient supply chain aims at satisfying the customer. A good supply chain ensures that the products of a company reaches the customer when needed and at a fair price (Cooper and Ellram, 1993).
Responsive supply chain
Responsive supply chain responds to the needs of the company and also to the needs of the customer.
In conclusion, both efficiency and responsiveness supply chain can be utilized together to get the best results.
According to Vitasek (2014), a company should put into consideration Corporate Social Responsibility in its supply chain. Its supply systems must work together while observing ethic and social responsibility. According to Cantor and MacDonald (2009), MacDonald’s supply chain is an efficient, adaptive and collaborative supply system. It seeks to build long-lasting relationships with the suppliers, the customers, and the government. The system considers the conservation of the environment by taking part welfare programs. The system is designed not only to benefit the company but also to impact the community positively.
References
Aronow, S Burkett, M Romano, J and Nilles, K 2016, The 2016 Supply Chain TOP 25: Lessons from Leaders. Supply Chain Management Review, 20(5),10-21.
Cantor, DE and Macdonald, JR 2009, Decision-making in the supply chain: examining problem-solving approaches and information availability. Journal of Operations Management, 27(3), pp.220-232
Christopher, M 2000, The Agile Supply Chain: Competing in Volatile Markets. Industrial Marketing Management, 29(1), 37-44.
Christopher, M Peck, H and Towill, D 2006, A taxonomy for selecting global supply chain strategies. The International Journal of Logistics Management, 17(2), pp.277-287
Gunasekaran, A Lai, KH and Cheng, TE 2008, Responsive supply chain: a competitive strategy in a networked economy. Omega, 36(4), pp.549-564.
Qi, Y Huo, B Wang, Z and Yeung, H 2017, The impact of operations and supply chain strategies on integration and performance. International Journal of Production Economics Available from https://www.sciencedirect.com/science/article/pii/S092552731630408X
Qrunfleh, S and Tarafdar, M 2013, Lean and agile supply chain strategies and supply chain responsiveness: the role of strategic supplier partnership and postponement. Supply Chain Management, 18 (6). Available from:https://search.proquest.com/docview/1442893787?accountid=14775
Vitasek, K 2016, McDonald’s “Secret Sauce” for Supply Chain Success. Supply Chain Management Review, 20(7), 4-9. Available from: https://eds.a.ebscohost.com/eds/pdfviewer/pdfviewer?sid=e100f2f3-5b8a-4193-b07b-12a7ad20e77e%40sessionmgr4007&vid=7&hid=4202 Accessed: 03/05/2017
Bruce, M Daly, L and Towers, N 2004, Lean or Agile: a solution for supply chain management in the textiles and clothing industry?. International journal of operations & production management, 24(2), pp.151-170.
Christopher, M and Towill, D 2001, An integrated model for the design of agile supply chains. International Journal of Physical Distribution & Logistics Management, 31(4), pp.235-246.
Cooper, MC and Ellram, LM 1993, Characteristics of supply chain management and the implications for purchasing and logistics strategy. The International journal of logistics management, 4(2), pp.13-24.
Smith, T 2014, Kenichi Ohmae and Pricing Strategy. The Wiglaf Journal Sales, Marketing & Entrepreneurship. Available from: https://www.wiglafjournal.com/pricing/2014/01/kenichi-ohmae-and-pricing-strategy/
Towill, D and Christopher, M 2002, The supply chain strategy conundrum: to be lean or agile or to be lean and agile?. International Journal of Logistics, 5(3), pp.299-309.
Murray, M 2016, Lean supply chain management. The Balance. Available from: https://www.thebalance.com/lean-supply-chain-management-2221274
Vitasek, K 2014, Trust and Collaboration: MacDonald’s supply chain strategy. Global Source council. Available from: https://www.gscouncil.org/trust-and-collaboration-mcdonalds-supply-chain-strategy/
Randall, T and Morton, AR 2007, Efficient Versus responsive supply chain choice: an empirical examination of influential factors. Journal of Product Innovation Management. Vol 20(6) Available from https://www.researchgate.net/…/229611752_Efficient_Versus_Responsive_Supply_C…Books:
Bourlakis, MA and Weightman, P 2004, Food supply chain management. Oxford: Blackwell Publishing. Available from: https://books.google.co.uk/books?hl=bg&lr=&id=TQtankUfrxQC&oi=fnd&pg=PR3&dq=UK+FAST+FOOD+SUPPLY+CHAIN&ots=c2i-Th_GEQ&sig=BK1_hhvEc4p14aJ60NJ7fW-tMOc&redir_esc=y#v=onepage&q=UK%20FAST%20FOOD%20SUPPLY%20CHAIN&f=false
Chopra, S and Meindl, P 2016, Supply Chain Management: Strategy, Planning, and Operation. 6th ed. Pearson Education.
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