Supply Chain Strategy and SC Drivers

Drivers of supply chain performance and logistics

drivers
A framework for structuring the following drivers:
Drivers:
Logistics Drivers: Facilities; Inventory; Transportation,
Information
Cross Functional Drivers: Sourcing; Pricing; Information
Role played by each driver in Supply chain and
Competitive Strategy and their Decision Components
Performance Metrics for each Driver
Obstacles to achieving fit

Drivers of Supply Chain

Performance

Facilities
places where inventory is stored, assembled, or fabricated
production sites and storage sites
Inventory
raw materials, WIP, finished goods within a supply chain
inventory policies
Transportation
moving inventory from point to point in a supply chain
combinations of transportation modes and routes
Information
data and analysis regarding inventory, transportation,
facilities throughout the supply chain
potentially the biggest driver of supply chain performance
Sourcing
Pricing

A Framework for
Structuring Drivers
Competitive Strategy
Supply Chain Strategy
Efficiency

Responsiveness
Supply chain structure

Facilities
Information

Transportation
Sourcing

Inventory
Pricing

Logistics Drivers

Cross Functional
Drivers

Note

Traditionally, supply chain drivers

focused upon were the logistics drivers
These still continue to remain very
important drivers
However, the focus on the other drivers
such as sourcing, pricing, information
are gaining in importance in overall
context of Supply Chain Management

Supply Chain Decisions:

Structuring Drivers
Strategic - Design of distribution
networks / Facilities
Tactical - Planning of transportation or
inventory policies
Operational routine transportation or inventory control

Case Illustration: Wal-mart

Competitive strategy: to be a reliable ,

low cost retailer for a wide variety of
mass consumption goods. This leads
to,
Supply Chain Strategy: ideally a very
efficient supply chain with adequate
level of responsiveness
Wal-mart uses the logistics and cross
functional drivers effectively to achieve
this

Case Illustration: Wal-mart

Facilities: centrally located DCs within a

network of stores leading to aggregation
benefits; retail stores only at locations that
have a steady and large demand to justify a
limited no. of retail stores fed by a single
centrally located DC
Information: comparatively very high
investments and pioneering moves in RFID
technology to share point of sale data and
demand data with its supply chain partners,
reducing Bull Whip Effect and increasing
responsiveness and efficiency

Case Illustration: Wal-mart

Inventory: low level, preferably only in

stores rather than warehouses or DCs
by using cross docking Efficiency over
responsiveness is favoured
Transportation: using own fleet ensures
responsiveness; the increase in cost is
offset by reduction of transit inventory
and low inventory at stores as well as
benefit from high product availability

Case Illustration: Wal-Mart

Sourcing: identifies efficient and low cost
sources and feeds them with large orders
Pricing: EDLP ensures steady high
demands with very little fluctuations
normally created by price variations and
promotions
Thus, Wal-Mart uses all the supply chain
drivers to create a right balance between
efficiency and responsiveness targeted by
its cometitive strategy