Optimal Strategy Selection in a Supply Chain

Optimal Strategy Selection in a Supply Chain

Ömer Faruk Gürcan (Istanbul Technical University, Turkey) and Ahmet Erdoğan (Yıldız Technical University, Turkey)
DOI: 10.4018/978-1-5225-2944-6.ch011

Abstract

Uncertainties and unpredictability in the market force companies to develop strategies which enable them to perform better than their competitors. Developing proper strategies for a supply chain is crucial. Strategies are affected by the nature of the firm's products or services, customer preferences, operations, process design of the firm, etc. Companies should form adaptive supply chain strategies which enable them to be resilient and flexible enough in the flow of materials, products, information, and money along the supply chain. There are many studies about supply chain management and supplier selection in the literature. However, the number of studies about the selection of the right supply chain strategy are very limited. This study presents the components which help to constitute a supply chain strategy and classify the supply chain strategies described in the literature. Lastly, it offers a strategy and criteria matrix which can be used as a road map for selecting the most appropriate supply chain strategy by firms.
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Components Affecting Supply Chain Strategy

Supply chains include the flow of information, product and money. These concepts are basis of organizations in terms of cost, market power, service level, competitiveness, etc. Today organizations should offer low cost, high customer service level, fast delivery and flexible solutions by using high technologies. In reality, accomplishing all of them is difficult. Thus, companies need to apply specific SCSs according to their priorities. For example, Ryanair focuses on cost and offers cheap service. One of the key decisions for supply chain managers is to choose the right strategies (Waters, 2003). Market characteristics, type of product or services, internal capabilities and available external resources are critical components in forming SCSs (Sharifi et al., 2013).

Before designing a supply chain, demand structure of the product should be considered. The first step is to determine the structure of product demand for an effective supply chain. In this process, the product life cycle, demand predictability, product variety, market and service standards for the replenishment period are considered. According to literature review, product type, industry framework, managerial focus, and internal processes are basic components that affect the selection of strategy. Each of these components are discussed in the next section.

Key Terms in this Chapter

Supply Chain: A supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer.

Response Oriented Supply Chain Strategies: Agile, custom configured and flexible supply chain strategies are response oriented.

Supply Chain Management: Supply chain management is the integration of key business processes from end user through original suppliers that provides products, services, and information that add value for customers and other stakeholders.

Logistics: It is the general management of how resources are acquired, stored and transported to their final destination.

Efficiency Oriented Supply Chain Strategies: Lean/Efficient, fast and continuous flow supply chain strategies are efficiency oriented.

Hybrid Supply Chain Strategy: Leagile supply chain strategy is hybrid strategy.

Supply Chain Selection Criteria: Competition, manufacturing, product-service, supplier and order point are supply chain selection criteria.

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