SCC Joint Goal Planning: Decide the Right Supply Chain

Partners in the strategic collaboration should focus on building right supply chain relevant to the business/industry. A study by Cranfield University in 2010 states that the most important of supply chain performance drivers are cost focus, customer lead-time and customer quality but these vary by sector.” Hence the shared goals or objectives (whether cost-focused or lead-time focused or quality-focused) chosen for the supply chain collaboration should be relevant to the business/industry in which the firm operates. Which means dominant partner should focus only on those relevant strategic focus elements in Product/Material/Production/Logistics which reflect customer behaviour pattern in the business. Therefore to ensure relevancy, joint goal planning process should be driven by the most desirable supply chain capabilities in a given business/industry context. John Gattorna, thought leader in SCM, and author of the books “Living Supply Chains” and “Dynamic Supply Chain Alignment” has proposed four generic supply-chain types viz., Continuous Replenishment Supply Chain, Lean Supply Chain, Agile Supply Chain, Fully Flexible Supply Chain based on customer behavior patterns observed across industries. 

 Strategic Focus Matrix

 Business Objective                   (in terms of SFAs) 
 for stage i  (i= 1 to n)
Product
Inventory
Production
Logistics
RFI
Q
RPI
B
C
R
U
S
C
R
U
S
C
R
U
S
Tier i        Supplier(s)
SUPPLY ALIGN
















 Tier i +1 Supplier(s) [10]
















My Organization                                     (Business Strategy)
















Supplier Collaboration Opportunities
















Channel Collaboration Opportunities
N/A




N/A




Level n-1[        ]
CHANNEL ALIGN
















Level n[      ]
















Supply Chain Type
Key Focus
RFI
Q
RPI
B
C
R
U
S
C
R
U
S
C
R
U
S
Continuous Replenishment(C)
R, S





x

x

x

x

x

x
Lean (L)
Q, C, U

x


x

x

x

x

x

x

Agile(A)
RFI, R, S
x




x

x

x


 x
x

x
Fully Flexible (F)
RFI, RPI, R, S
x

x
 x

x

x

x

x

x

x
SCM Goals (Focus Areas)                            



IR

IS

PR

PS

LR
LS

Strategic focus in case of continuous replenishment type should be on service reliability; customer account profitability and retention of the relationship over the long-term. Here improving supply chain RELIABILITY in terms of maximizing availability and minimizing risks  besides improving SPEED of inventory, production and logistics resources become important focus (see strategic focus matrix). Building lean supply chain means focus should be clearly on delivering a low-cost predictable service to customers (Measures: accuracy, delivery-in-full-on-time (DIFOT); cost per unit, quality ;). Both EFFICIENCY and QUALITY are the focus areas. Hence, cost structures (C), utilization (U) of inventory, production and logistics resources along with product quality (Q) are the focus areas. In agile supply chains, the emphasis moves from reliability to time sensitivity (ability to respond quickly to customers) in an unpredictable world. Time to respond to unpredictable demand/needs depend on SPEED of supply chain resources at various points in the pathway to customer. So it is more of optimizing resources than utilization of resources, because redundant capacities mean extra cost.  Fully flexible supply chains, means ability to offer acceptable and new solutions quickly to the customers for unplanned events. INNOVATION and SPEED are key capabilities in this type of supply chain. So capabilities to ensure availability of whatever resources and systems required for producing and delivering acceptable products quickly have to be built along supply chain points. 

The dominant partner should set focus on those strategic focus elements under product, inventory, production and logistics based the supply chain type relevant to his business/industry. The generic supply chain framework integrated with strategic focus matrix (see figure) should broadly guide collaboration partners in deciding/deriving relevant collaboration objectives.  For example, if the type of supply chain required is continuous-replenishment, then the strategic focus areas desirable for the strategic alliance are supply chain RELIABILITY in terms of maximizing availability and minimizing risks  besides improving SPEED of inventory, production and logistics resources.

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