Mastering Supply Chain Strategy: Insights for Transforming Your Business

What if mastering supply chain strategy could transform your business from good to great? On today's episode of the Chain Reaction Podcast, we break down the complexities of supply chain strategy into easily digestible insights. Whether you're a seasoned executive or just starting out, you'll find valuable tips on gathering data, brainstorming potential pathways, and keeping your strategy straightforward for effective execution. Discover how to assess the macro environment and understand the political, economic, and social conditions that could impact your supply chain.

Join us as we dive deep into the PESTEL analysis framework, covering the key external factors influencing global business operations. Learn about different supply chain strategies such as lean and agile approaches, and their roles in boosting efficiency, reducing costs, and enhancing customer satisfaction. In our wrap-up, we highlight essential concepts and practices that can significantly improve your supply chain management. Don't forget to tune in to our weekly news roundup every Saturday at noon for the latest updates in the field. I'm Tony Hines, and I appreciate your time and attention.

Further Reading:  Supply Chain Strategies

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Chapters

• 0:01 Supply Chain Strategy Simplified
• 4:39 Global Supply Chain Strategy Analysis
• 15:36 Supply Chain Strategies Podcast Wrap-Up

Transcript

Tony Hines: 0:01

From factory floor to retail store. Goods are moving, always need more Raw materials, parts and pieces coming together. The process never ceases. Supply chains that keep the world returning. From dawn till dusk, the wheels are always churning. Logistics planning a bit of luck. Keep everything moving. Don't get stuck. Trucks and ships, planes in the sky delivering goods. Oh my, oh, my Warehouse full inventory, high managing stock. Well, we always try.

Tony Hines: 0:44

Hello everybody, and welcome to the Chain Reaction Podcast. All about supply chain advantage. Great to be here. Well, we've got a special episode for you today which is all about supply chain strategy, and this will be very useful for members of the C-suite just to refresh and think about how they go about the strategy making process. Think about how they go about the strategy making process, but it will also be useful for those new to supply chains and studying supply chains to learn what supply chain strategy is about. I've tried to keep the episode relatively straightforward and offer you pointers for how to go about the strategy making process, so I hope you enjoy it.

Tony Hines: 1:22

Well, have you ever wondered why we use the term supply chain strategy and what's different about supply chain strategy to any other kind of strategy? Well, it has more similarities than differences, so let's deal with those. A strategy is a plan. It's a plan for the future, it's a plan about where you want to be, and the addition of supply chain to the word strategy means it's a plan for the future for your supply chain and it's where your supply chain needs to be in the future. And you have purpose. You set objectives and those objectives need to be measurable, so you know how far along the plan you are at any point in time. And, of course, it needs to be relatively simple, in the sense that not simplistic, but but simple, so that people can understand it and the plan can be easily communicated to others. So it's very important to keep that in mind and not to over complicate things when you move forward with strategy.

Tony Hines: 2:19

So where to begin? Well, you need data about your current position, and it's a current position against particular objectives. So it's not current position generally, overall, although that might be a starting point. But when you hone in on the plan, it's a current position on each of the lines or each of the pathways to your future, and that's how it begins and you might begin brainstorming to your future. And that's how it begins and you might begin brainstorming. You might brainstorm some of the ideas and obviously you need to write them down or record those thoughts so that you can discuss with other team members who are involved in the strategy making process which ideas to take forward and which ideas to leave behind. So how do we begin?

Tony Hines: 3:04

Well, strategy making is a process and we begin by assessing the macro environment in which we operate and we'll take a look at the politics, the political influences or the geopolitical influences as we commonly refer to today, because it's not just politics in any single country, it's the politics of many countries around the globe that could impact your business. And especially if you trade and source goods from a number of countries around the world, then you'll want to know what the conditions are like in the countries you source, from the routes that those goods have to make or take to the markets that you operate in, that those goods have to make or take to the markets that you operate in, and, of course, what the conditions are like in the markets in which you operate in around the globe. So you'll begin by looking at the political influences, then the economic conditions exchange rates, regulations on trade in different countries that restrict or encourage economic operations. You'll look at the social conditions that apply, what people's attitudes are generally towards sourcing from a country or from trading in a country. You'll look at the technologies involved, and technology is changing all the time, as we know, we're in a rapid period of change as we move from the analogue world to the digital world in which supply chains now operate, and we've got artificial intelligence and machine learning, which is becoming, and has become, a much greater influence on how we operate supply chains, and we'll say a little bit more about that later on.

Tony Hines: 4:39

So we look at all the technologies involved and then we might look at the ethics, the environmental and ecological conditions that apply and, of course, the legal frameworks. We need to understand the rules of the different countries that we engage with and operate with, as well as the rules in our own countries, and of course, those rules are a shifting feast. We have all kinds of privacy laws which can restrict the movement of data across countries. We have all kinds of other restrictions, not just data privacy, such as the European law on general data protection or the California Act, but there are other laws and legal constraints that will impinge on our strategy making process and we need to understand them and how they'll affect us with our plans.

Tony Hines: 5:29

So the PEST or the PESTEL or PESTEEL analysis is a very informative piece and it's a useful framework under which to list all those factors that you think affect your business operations across the globe and just get them down. Some of them might be dismissed later as less important or you might have to prioritize others above some others on the list, but the important thing is to get those things out in the open and make sure you haven't missed anything. Make sure you've got everything in those lists under those headings so that you can discuss them with colleagues who are part of that strategy-making process and assign tasks to people so that they can investigate further how those things affect the organisation. So once you're happy, as a team moving forward, that you've analysed all the external factors, bringing that outside in to your organisation, looking at the political, economic, social, technological, ethical, environmental and legal factors into the mix, and you're satisfied that you have everything down, you can then move on to the next step in the process of strategy making, and that next step, of course, is to have a look at what's inside your organisation, to search for the opportunities and threats posed by those factors from the external analysis that you've just completed, and so you might look for various opportunities how you can grow the business, how you can, in the case of supply chains, improve sourcing operations, production hubs, locations of those, looking at the way in which you will transport and develop logistics and warehousing capabilities, where your data centres are going to be to handle all the data associated with your supply chains, and so on.

Tony Hines: 7:33

So you can look at every aspect of opportunity. And, of course, you can begin to think about the costs and benefits of locating operations in different parts of the globe and you can start to work out the numbers and that will give you a good idea whether it's worthwhile for further consideration in your strategy making process. And then you can look at the threats and whether disruptions are likely or whether vulnerabilities might exist across your supply chain, whether vulnerabilities might exist across your supply chain, and similarly, you can begin to put down the potential costs of disruption in different locations and assess that risk. And there are all kinds of tools to help you and I've discussed lots of these in my supply chain strategy book. So you can have a look at my book on that and I'll put that in the show notes so you can take a look if that's something you want to investigate further, along with many of the strategies that I talk about in the book, and you can see the risks and the uncertainties that are likely to emerge as a result of the opportunity and threat analysis.

Tony Hines: 8:40

And much of that these days is involved in looking at geopolitical tensions around the world, because they're having a great impact and influence on supply chains. Whether that's the Straits of Hormuz, whether it's pinch points elsewhere in the South China Sea, whether it's Panama Canal, suez Canal, those choke points around the globe might be something that you want to analyse and look at for your business. And then there's different choices about air freight shipping, road transport and, of course, the emissions that each of those choices will bring with it. The sort of embedded emissions in the goods that you're purchasing from different parts of the world, and the different restrictions and the different import duties and the different tariffs and costs all need to come in to the funnel when you're analysing the opportunities and threats. And then, of course, you take a look inside the organisation itself, to look outwards and to see what strengths or weaknesses you have as an organisation to take either an advantage from those best deal factors, the opportunities and threats that you've recognised, or whether you're vulnerable in some way and you have weaknesses that you'll need to think about and plug the gap as part of your strategy making process.

Tony Hines: 10:01

Today we're diving into the world of supply chain strategies and, whether you're a student studying supply chains or a professional looking to optimize your business operations, or a member of the C-suite looking for a refresher, the episode will provide valuable insights and practical examples discussing the process to help you understand and implement effective supply chain strategies. Let's begin with a definition. A supply chain strategy is a comprehensive plan that outlines how a business will manage its supply chain operations to achieve its goals. It's crucial because it directly impacts a company's efficiency, cost effectiveness and customer satisfaction. There are some key components of supply chain strategy, which include sourcing, production, logistics and distribution, and each of the elements plays a vital role in ensuring the smooth flow of goods and services from suppliers to customers. And we can think of different types of supply chain strategy. If you think back to Michael Porter's work when he was looking at strategy in total he talked about you could have a low-cost strategy or you could search for high value through the strategy approaches you take. But he said, don't get stuck in the middle, and we can learn some of the lessons from the general ideas in strategy to focus it down to our own supply chain strategy.

Tony Hines: 11:22

But let's continue with types of supply chain strategies that you may be familiar with. There's the lean supply chain, where a strategy focuses on eliminating waste and improving efficiency and by streamlining processes and reducing any unnecessary steps, businesses can lower cost and increase productivity, and that's a very important strategy if you're looking to minimise cost. So it's a minimisation process rather than necessarily an optimisation process. Then there's agile supply chains. An agile supply chain is designed to be flexible and responsive to market change, and this strategy allows businesses to quickly adapt to new trends and customer demands to ensure that they stay competitive. Quickly adapt to new trends and customer demands to ensure that they stay competitive and in that sense, agility becomes part of the optimization for supply chains. And you'll have heard a lot in recent times about resilient supply chains, and resilience in the supply chain means being prepared for disruption, and this strategy involves creating contingency plans and diversifying suppliers to maintain operations during unexpected events.

Tony Hines: 12:29

Sustainable supply chains when we talk about sustainability in supply chains, this is becoming increasingly important, especially with all the moves towards net zero by 2050. A sustainable supply chain strategy incorporates environmentally friendly practices such as reducing carbon footprints and using renewable resources, which can also enhance a company's reputation. And then you'll have heard me talk about customer-focused supply chain strategies, and these are strategies that prioritize customer needs and satisfaction. By focusing on delivering high quality products and services, businesses can build strong customer relationships and loyalty so that customers come back more and more and the goods don't.

Tony Hines: 13:15

Digitally enabled supply chains. We talk about digital transformations, and this has been a big push through technology, and technology has played a critical role in modern supply chains. This strategy leverages digital tools and data analytics to optimize operations, improve visibility and enhance decision-making. And here are just a few examples. If you can think about Unilever, the big food giant, unilever has successfully integrated sustainability into its supply chain by focusing on reducing environmental impact. They've not only improved their operations, but gained a competitive edge by doing so. Amazon uses technology and data analytics, and it's a prime example forgive the pun of a digitally enabled supply chain. Their advanced logistics and inventory management systems allow them to deliver products quickly and efficiently. Tesla's approach to supply chain resilience and innovation has set them apart in the automotive industry by diversifying suppliers and investing in technology, they've managed to navigate supply chain disruption effectively.

Tony Hines: 14:21

So how can you go about the process of formulating supply chains? Well, we've already learned from the strategy process that we take a look at that macro environment to see what it looks like and where the vulnerabilities in our own organization might be, through the pestile analysis, first of all, to get that macro environment picture, and then through the micro environment, looking at the strengths and weaknesses of the organization to take advantage of opportunities and threats. So the process in five steps is assess your current supply chain, identify strengths and weaknesses, set clear objectives, define specifically what it is that you want to achieve with your strategy. Then choose the right strategy based on your objectives and select the most suitable supply chain strategy. And yes, there will be a right strategy for you, but it won't be a right strategy for everybody, and that's important. Implement technology, use digital tools to enhance efficiency and visibility, and then monitor and adjust Continuously. Monitor performance and make necessary adjustments and adjust Continuously monitor performance and make necessary adjustments.

Tony Hines: 15:36

So there we have it with this short episode on supply chain strategies. I hope it's been informative, I hope you've learned something and if you want to read more. Take a look at my supply chain strategies book, where I discuss in more detail many of the things talked about in this short podcast. I'm Tony Hines. I'm signing off, but just before I do, don't forget to get the news roundup, the news edition of the podcast, every Saturday 12 noon. Bye for now, thank you.