PAMANTASAN NG LUNGSOD NG MAYNILA

Pamantasan ng Lungsod ng Maynila

Intramuros, Manila

Supply Chain Strategies

Submitted by:
Aziel Jeanne C. Balkin
Rhicelle Cerene DC. Burgos
Leah Raquel R. Del Rosario
Ethan Jeremy M. Paredes
Anne Lorraine B. Sabado
Hanna Marie M. Ugaddan
Anthony Jr. D. Tesil

Submitted to:
Prof. Emiliani R. Rizon
 I. Strategic Dimensions
Supply chain management is essentially linked to strategic decisions. Simply put,
the role of the strategy is to plan the use of resources to reach the goal (Bracker, 1980).
In other words, a strategy is a set of plans to integrate an organization's long-term goals
to support the market. It's different from the corporate philosophy of dealing with the way
you do business. It also differs from the doctrine of economics, which expresses norms
of belief such as the slogan. Strategies can be divided into three categories, depending
on their reach (Hill, 2000).

➢ Corporate Strategy -These deals with decisions made by the entire enterprise
regarding the industrial sectors in which it wants to compete (transportation,
cosmetics, automobile manufacturing, construction, utilities, etc.).

➢ Business Unit Strategy – This corresponds to decisions about target markets that
the company is currently competing with or will compete with in the future (e.g.,
seniors, teens, women). The Focus Strategy develops its own market niche to
focus on the company's current strengths (Porter, 1998; Webster, 2008).

➢ Functional Strategy – It focuses on managing and controlling missions that

support specific business functions such as marketing, operations, purchasing,
logistics and finance. It also determines the basis on which the function supports
the desired competitive advantage (Wheelwright, 2004)

The formulation of the supply chain strategy may begin with answering the
following fundamental business questions:
• What do we do best?
• How can we improve what we have been doing?
• Where do we go from here?

Four Types of Focus Dimensions Used in Operations Management

➢ Finance - Profit is central to the financial aspects of most companies, but short-
term financial goals can mean sacrificing current profits to enhance future
capabilities.
 ➢ Customers -are the foundation of your business. Without the flow of their money
through your organization, everything will stop. Managers aim to maximize the flow
of their customers' funds, but that doesn't necessarily mean attracting as many
customers as possible.

➢ Internal process -Optimizing internal processes leads to more profitability and

customer satisfaction. The manager ensures that the production department is in
sync with the shipping department to make orders even faster and deliver orders
to customers faster.

➢ Learning and innovation - As technology advances, so do companies. Good

managers keep up with technological changes. Good leaders anticipate and
initiate change by encouraging organizations to focus on learning and innovation.

What Are Strategic Dimensions?

➢ Marketing offers different ways to look at a product and make it publicly available.
Various aspects of marketing are sometimes referred to as strategic aspects
because of the potential depth of each tactical element.

➢ Internal marketing is marketing for employees. This strategic aspect allows

everyone in your organization to understand and enjoy your product and
understand your current strategic marketing campaign.

➢ Integrated Marketing aims to provide a consistent marketing message to

everyone who comes into contact with the company or its products. Information
technology has driven the growth of integrated marketing and related strategic
aspects by increasing the points of contact between businesses and consumers.

➢ Relationship marketing is a strategic aspect focused on building lasting

connections with customers, media members, distributors and other companies.
Customer relationship marketing (CRM) is a popular element of this strategic
aspect.
 ➢ Performance Marketing deals with the outcome of marketing campaigns and the
evaluation of the application of strategic aspects to business processes. Evaluation
of these programs typically involves analysis of sales reports and management of
customer surveys.

II. Push versus Pull Strategy

According to Lander (2019), supply chain strategy determines when products
should be fabricated, delivered to distribution centers and made available in the retail
channel. Generally, a push strategy involves building products and stockpiling these
products well in advance of actual customer orders and purchases based on the forecast
of anticipated customer demand. As an alternative to this strategy, a pull strategy is a
demand-driven strategy that determines the production, distribution, and service delivery
schedules based on the actual customer demand.

Key benefits of Pull Strategy according to Hagel and Brown, (2005); Simchi-Levi et al.,
(2008):
• Shorter lead times thanks to the better anticipation of customer orders and demand
• Decreased inventory levels throughout the supply chain, including retailers and
manufacturers
• Decreased system variability
• Wider ranges of production and distribution options
• Better response to changing markets

However, the pull strategy may pose these problems:

• It’s harder to leverage economies of scale due to small-lot production and
distribution based on only what is needed by the end user or customer.
• It does not work in all cases (and is especially not suitable for standardized
products with high sales/demand volume).
• It’s difficult and more time-consuming to implement due, in part, to its disciplined
approach and the need for accurate, real-time demand information.
Push-Pull Strategy
A push-pull strategy determines the production, distribution, and service delivery
levels based on a combination of forecasts and specific customer orders by integrating
forecasted data into pull-based production and distribution schedules. In this strategy, the
initial portion of supply chain activities will be scheduled based on long-term forecasts,
whereas the later or final stages of the supply chain will be scheduled based on actual
customer orders.

Postponement Strategy
In the postponement strategy, a company delays some supply chain activities such
as assembly, packaging, labeling, and painting until true customer demand is revealed,
while building products in semi-finished forms based on the projection of their future
demand. Once actual orders come in, these semi-finished products will be customized
immediately in production and distribution facilities close to customers and then
distributed quickly to the customers.

III. Internal Supply Chain Strategy

As customer needs and preferences change, the supply strategy used by the
company must be able to adapt and be tailored according to these changes. A way to do
this is to have an internal supply chain strategy audit in which the focus should be aligning
all units within the organization achieve the strategic priorities together with the shared
organizational objectives. All of this will be supervised by the supply chain manager.
When the result calls for a new supply chain strategy, a shift in strategic priorities must
be planned. The following steps can be taken when conducting an audit of supply chain
strategy as proposed by Stock and Lambert (2001):
1) Establish a task force to assist in the audit process.
2) Prepare a list of key questions to be asked by the task force for audit interviews.
3) Develop a performance metric use to measure the firm’s strengths, weaknesses,
challenges, and opportunities.
4) Collect the firm’s records while collecting the opinions of the employees.
5) Identify alternative strategies that can be substituted.
6) Recommend the required changes.

Why should Internal Supply Chain Audit be done?

For most, audits are part of their daily routine. Its purpose is to make sure things
are in their place and everyone is playing by the rules. As defined by The Institute of
Internal Auditors (IIA), internal auditing is an independent, objective assurance, and
consulting activity designed to add value and improve an organization’s operations. It
helps in accomplishing the organization’s objectives by evaluating risk management,
control, and governance processes through a systematic and disciplined approach.
If done right, the internal supply chain audit can result in significant financial
paybacks. Audits can also improve working conditions, health and safety, environmental
sustainability, and anti-corruption and anti-bribery efforts in the workplace.
According to research done by Sedex, one of the world’s leading ethical trade
membership organizations which is working with global supply chains, those
organizations that undergoes regular audits are more likely to reduce non-compliance
occurrences and, as a result, enhance their working conditions.
Internal auditing is important because it helps executives and logistics decision
makers see the effectiveness of the business’s operations and control and apply new
policies. Establishing such practices over time will result in a more competitive and
profitable organization in the future.

IV. External Supply Chain Strategy

The external supply chain strategy audit focuses on how much the chosen supply
chain strategy helps to deliver a better customer service and to the market share growth.
It is based on the operations or activity that have been executed.
To obtain external audit, the auditor/strategist must conduct a random customer
survey, forums with specific supply chain partners, and in-depth interviews with selected
customers from various market segments.
As a result, obtaining feedback from the firm's ultimate consumers and supply
chain partners, such as suppliers and third-party logistics providers, is a requirement of
the external supply chain strategy audit.

5 ways of supply chain audit composed of:

Strategy- Clear strategy that is tuned to business expectations and servicing customer
requirements.
Organizing- Enabling the enterprise to work with its partners to achieve its supply chain
goals.
Processes- Processes for implementing the strategy, embracing all plan-source-make-
delivery operations.
Information- Researching the enterprise's management past information and
determining its errors is crucial to have an effective supply chain for planning, execution,
and decision-making.
Performance- Determining if the enterprise is managing supply chain performance in a
way that will increase the bottom-line, cash flows, and shareholder returns.

Key questions to be addressed by the external audit include the following:

• What core competencies has your firm been building to compete for scarce
resources and market share?
• Which segments of the market has your firm targeted for its niche and future
growth?
• How does your firm stack up against its most effective competitors in terms of price,
quality, delivery services, and product innovation? Can your firm’s current strategy
attract new customers?
• How does your firm identify its “order-winning” and “order-qualifying” criteria? How
dynamically do those criteria change over time? How quickly and proactively can
your firm respond to those changing criteria by reformulating supply chain
strategies?
• Which chosen supply chain strategies are considered value-adding or non-value
adding strategies from the customer perspectives?
• How well is your firm’s supply chain strategy in sync with its supply chain partners’
corporate missions and organizational structures?
• How often and willingly can the supply chain–related information regarding
demand forecasts, new product development, shipment status, and supply chain
network restructuring be shared among supply chain partners?
How compatible are your firm’s communication capabilities with those of its supply
chain partners?
• What performance metrics should be used to evaluate the effectiveness and
efficiency of your firm’s entire supply chain? What value propositions does your
firm prioritize?

V. Summary
Supply chain strategies are embedded in a company or a firm’s core, it leverages
and supply value not just for the company but also to its customers as it also helps to
drivingly maintain an advantage over its competitors. This chapter tackles the different
strategies and approaches on a company’s supply chain. It also emphasized the three
classifications of a supply chain strategy namely corporate, business unit, and functional.
The chapter also tackled that the different deciding factors of a company’s
competitive priorities are based on these categories: quality, price, time, innovation, and
customization. According to Hill (2000), to earn the consideration of the targeted
customers, the “order-qualifying” criteria must include competitive minimum pricing,
punctual delivery services, and product warranty. Companies that are introducing more
innovative products or services and are able to transcend the norms of the industry tend
to attract new customers/clients and get the better of the competition.
The chapter also emphasized the importance of a supply chain strategy’s
coordination and alignment with the supply chain member’s core competencies,
competitive priorities, and organizational structure. Requisition of feedback from the
customers, stakeholders, and supply chain partners is crucial not just for the effective
implementation of a supply chain strategy, but also for its necessary transformation.
 VI. References
Min, H. (2015, June). The Essentials of Supply Chain Management: New Business
Concepts and Applications (FT Press Operations Management). (1st ed.). Ohio,
USA: FT Press.
N/A (2021, March 25). About Us. Sedex. Retrieved from https://www.sedex.com/about-
us/.
N/A (2021, June 14). A Step-By-Step Guide to Doing an Internal Audit of Your Supply
Chain. BlueGrace Logistics. Retrieved from https://mybluegrace.com/bluegrace-
logistics/a-step-by-step-guide-to-doing-an-internal-audit-of-your-supply-chain/.
N/A (2021, August 7). A step-by-step guide to doing an internal audit of your supply chain.
Pulse. Retrieved from https://www.pulsepro.ai/blog/supply-chain-audit-a-step-by-
step-guide/.
Hill, T. (2000), Operations Management: Strategic Context and Managerial Analysis, New
York, NY: Palgrave.

Lander, S. (2019, March 5), Chron: Push vs. Pull Supply Chain Strategy. Retrieved from
https://smallbusiness.chron.com/push-vs-pull-supply-chain-strategy-77452.html
on March 20, 2022.