Session Summary

Market and OPSCM Strategies

This session was divided into the following segments:

● OPSCM and Supply Chain Strategy
● Competitive Dimensions
● Implementing Competitive Strategies: IKEA
● Risk Assessment for Supply Chain Strategy
● The Triple-A Supply Chain Model

Session Objectives
• Analyze the four levels of a supply chain strategy
• Apply a three-step framework for risk assessment to mitigate and manage potential risks to a supply
chain
• Apply the Triple-A supply chain framework to enhance agility, adaptability, and alignment within a
supply chain

OPSCM and Supply Chain Strategy

Supply chain strategy plays a crucial role in ensuring smooth operations and avoiding disruptions in
businesses with multiple suppliers. A good supply chain strategy involves four key stages.

• The first stage is strategic business planning, where different stakeholders come together to
streamline a plan that focuses on value creation.
• The second stage involves finalizing the product and process design to enable value creation.
• The third stage is operating strategy, which involves aligning people, processes, and technology to
achieve planned goals.
• The final stage is process execution management, which involves managing the entire value stream
in order fulfilment, starting from acquiring or supply management to committing or order
fulfillment.

Competitive Dimensions

The following are the main competitive factors that define a firm's competitive position and ultimately affect
its supply chain strategy:
Cost: To attract cost-conscious customers, companies need to be low-cost producers. These customers often
choose products solely based on price, creating a market for commodity-like products that are difficult to
differentiate. Walmart is an example of a company that has succeeded in this niche by offering its Every Day
Low Price guarantee.

Quality: Companies can set themselves apart from their competitors by offering higher quality products or
services that meet or exceed customer expectations, which can be achieved through the use of better raw
materials, strict quality control processes, and a focus on customer requirements, as exemplified by BMW's
emphasis on delivering high performance, appearance, and features at a higher price point.

Delivery Speed and Reliability: In markets where speed is crucial, companies that offer faster delivery times
have a significant advantage. Reliability is also important in ensuring that products or services are delivered
on time, as exemplified by FedEx's reputation for dependable delivery.

Flexibility in Product Innovation: Innovation flexibility, which involves developing and adapting processes
to offer new products quickly, is exemplified by Tesla's innovative culture that has helped the company
become a leader in multiple industries.

Agility: A company's ability to respond to fluctuations in demand is crucial to its competitiveness, requiring
effective management of resources and difficult decisions regarding layoffs and asset reductions during
times of decreased demand.

Product-Specific Criteria: In addition to the common competitive dimensions, service-in-nature factors like
technical liaison, supplier after-sale support, and environmental impact can influence a company's supply
chain strategy. Other product-specific dimensions may include customization options, fabrication site
location, and product mix options.
The notion of trade-offs, is central to the concept of operations and supply chain strategy. The underlying
assumption is that an organization cannot succeed in all areas of competition at once. Consider a scenario
in which a business wants to emphasize delivery speed. In that circumstance, it is unable to be extremely
adaptable in its product offering. A low-cost approach is also incompatible with flexibility or speed of
delivery. Good quality is also thought to be a compromise for low price.

Implementing Competitive Strategies: IKEA

To achieve successful supply chain strategy, IKEA focuses on several key factors.

Cost Efficiency: Firstly, the company prioritizes cost efficiency by sourcing materials and manufacturing
products in low-cost countries, optimizing transportation and logistics, and minimizing waste to keep its
products affordable and high-quality.

Sustainable Sourcing: Secondly, IKEA follows its IWAY standard to ensure sustainable sourcing and
manufacturing practices, which minimize waste and promote sustainability throughout its supply chain. The
company also strives for a circular supply chain by using recycled materials and offering warranties on
replacement parts.

Inventory Management: Additionally, IKEA implements effective inventory management by setting

minimum and maximum inventory levels, combined with the popular do-it-yourself concept and a self-serve
warehouse to reduce waste, lower shipping costs, and streamline restocking.

Logistics: Finally, IKEA provides a seamless shopping experience for customers, particularly young families
on a budget, through in-store logistics staff, self-serve displays, and a range of extra services, such as home
delivery and assembly.

Risk Assessment for Supply Chain Strategy

Below is a straightforward risk management framework consisting of three steps that can be used to handle
potential disruptions. Let us take a look at each step individually.

• To begin, the first step is to identify the sources of possible disruptions. The focus should be on
identifying events that would significantly impact business operations. For instance, supplier failure,
equipment failure, capacity and infrastructure failure, natural disasters, disease, and wars are
examples of such events.
• The second step is to assess the impact that the event could have on supply chain operations and
determine whether it would have financial or environmental implications, or if it would pose a
potential threat to the organization's brand image. In some cases, human lives may also be at risk.
• The third step is to develop a plan to mitigate the risk. Executing this step depends on the nature of
the identified risk. Additionally, it would make sense for companies to create and implement a
business continuity plan.
 The Triple-A Supply Chain Model

The two elements that supply chain managers have historically prioritized are speed and cost-effectiveness.
Industry leaders have long emphasized efficiency and cost-cutting as the trademarks of a successful supply
chain. To improve these two factors, they have invested billions of dollars in cutting-edge technology,
infrastructure, and talent acquisition. However, it eventually became clear that a singular focus on
effectiveness and cost-efficiency was insufficient to guarantee supply chain success. The factors that are
truly critical to supply chain success are:

Agility: A supply chain that is agile can quickly respond to changes in demand or disruptions in the flow of
materials or products. This allows the organization to maintain customer satisfaction and avoid costly delays
or lost revenue. By being able to pivot quickly and efficiently, an agile supply chain can also take advantage
of new opportunities in the marketplace.

Adaptability: In today's rapidly changing business environment, supply chains must be able to adapt to new
technologies, regulations, and market trends. By being adaptable, a supply chain can remain competitive
and meet the evolving needs of customers. An adaptable supply chain is also better equipped to handle
unexpected events, such as natural disasters or pandemics, which can disrupt the flow of goods and services.

Alignment: A well-aligned supply chain ensures that all stakeholders are working together towards the same
goals. This includes internal teams as well as external partners, such as suppliers and distributors. By aligning
the various parts of the supply chain, organizations can improve communication, reduce waste, and increase
efficiency. This can ultimately lead to higher levels of customer satisfaction and profitability.

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