Supply chains are basically networks. They are networks of facilities, people and distribution options whose primary purpose is procurement and transformation of goods so that can then be delivered and distributed to potential customers. Supply chains can be pictured as arteries that supply business or organizations its industrial life. Disrupt a supply chain and you will find business or organizations gasping for breath and clinging to dear life.
Strategic Planning improves Efficiency
Networks are interconnected and interdependent. One is connected to the other in a peculiar relationship and one is dependent on the other in a peculiar kind of relationship. Strategic planning then is important in the supply chains. Elaborate plans have to be made in such a manner as to let the peculiar relationships in the supply chain network flourish and be in constant harmony.
Supply chain networks are basically three-network things: the supplier, the manufacturer and the distributor. While planners may call the supplier, the supply manufacturer or distributor, it still refers to the same thing. This three-network relationship forms part of the supply chain. All supply chains follow the same three-network design or a variation of the three-network design.
Strategic planning is important to supply chains, first of all, because it improves efficiency. The key word is Speedier. Planning how to get the raw materials or supply, planning where to get it, planning when to get it, planning an efficient procurement system all contributes to the goal of efficiency. If you cannot get your supply faster, the manufacturing aspect of the network might grind to a halt, waiting for the raw materials. This will be a costly episode in business or organizations.
The strategic planner then ought to design a speed equation. How to make the supply faster, where to get the supply faster, when to get the supply so that it will arrive faster are key questions for the planner. Strategic planning must improve efficiency; it must make the supply chain Speedier.
Strategic Planning improves Economy
The need for speed is just part of the supply chain equation. A speedier delivery will not produce a strategic advantage for business or organizations if it cannot get the supply cheaper. The key word is Cheaper. It would be totally absurd to have the supply delivered fast if in return it becomes more expensive. This would be a disaster to business or organizations.
Collectively, speed and price should go hand in hand in the supply chain to create a strategic advantage. The question of how, where and when to procure supply in the fastest way, now has to be tempered with how, where and when can we get it the cheapest. The strategic planner must be able to incorporate such into the plan. A supplier might be able to get if fast but will the cost still justify it? A supplier might be able to get supplies cheap but will the speed justify it? These are basic questions that can affect the strategic plan.
The supply chain should be designed then in a manner where the price would be a consideration, aside of course from the speed. Business or organizations then have to source out suppliers who can provide it cheapest in relation to fast delivery. It is always wise do business with suppliers in various localities and even in various countries.
Utter dependence on a few suppliers located in the same location is never an intelligent option. An armed conflict can just erupt in the locality, as what usually happens to suppliers in the African continent and it can just wipe out your entire year’s supply of raw materials, as proven time and time again.
Strategic Planning Improves Expectation
Another factor that improves the supply chain network and creates a strategic advantage is the identification of and the transacting with manufacturers or outsource manufacturer who are able to transform the goods that have been delivered fast and cheap into finished products or partially finished goods. The key is Better.
If business or organization can transform the supply, that has been delivered fast and cheap, into finished products, then the strategic plan should involve in-house manufacturing. However, if an outfit out there can do the job better and probably cheaper, then it is always the rational way to do business. Strategic planning improves the expectation of business or organizations. They can now decide who will do the process better, and not regret in some future date.
Most of the toys, consumer electronics and even household goods are made in China. The strategic consideration of course is expectation. These guys can do it better. Not only can they do it faster and cheaper, they also can do it better. This is the primary reason why many manufacturers have partially done the manufacturing process or fully given the manufacturing process to outsource manufacturers commonly known as sub-contractors.
In the event a new entrant happens to do the manufacturing process better, the strategic planner has to seize the opportunity but then as he still needs the previous manufacturer, he then needs to incorporate the new relationships, anticipating complexities that may eventually arise in the future. The search for the better should form part of the strategic plan. In a world that is constantly changing, the business or organizations that can do its process better might be the only ones left standing.
Strategic Planning Improves Evolution
People do evolve, so does the product. Evolution and change is another key factor that must be incorporated in strategic planning. Lifestyle changes and patterns affect product evolution and product delivery. The key is Better and better.
The strategic planner has to visualize how lifestyle changes and patterns affect product delivery. Years ago, a large segment of the working class worked regular 40 hour weeks Monday to Friday. That is not so true today. Many still work 40 hour weeks or more but on different shifts and in different locations. The 24/7 establishments evolved to cater to these lifestyle change and pattern. From the initial grocery stores that started to open 24 hours a day, 7 days a week, now comes the high-end stores, gyms, entertainment arcades and a host of other industries.
Supply chain strategy calls for an evolution in the delivery and distribution to ensure everyone gets everything they need in the exact time. If there has to be delivery and distribution at 1:00 in the morning, business or organizations must evolve to answer this end-user need. Neglect it and others will do the evolution for you and you might be on the verge of extinction.
Doing things better and better must be a passion that the strategic planner must not forget to consider. This passion must be present not only in product design, in product manufacturing but in product delivery as well. The supply chain has to constantly evolve to cater to the needs of the constantly evolving end-user and their world. The business world has actually become a world without any clear boundaries. Where it used to be that office hours was 9 to 5, now the definition of office hours is so loose it can be any time in the twenty-four hour clock.
Strategic planning is extremely important in supply chains. It may spell the difference between healthy business or organizations, or business or organizations that have contracted a life threatening disease. Supply chains are lifelines; strategy must be able to keep them alive and well.