What is Supply Chain Strategy?
A supply chain strategy is a plan that companies design to get their products out to customers as effectively as possible. To reduce costs and maximize profit, the strategy should consider every phase in the operations process, from sourcing goods to logistics and delivery.
Benefits of Designing a Supply Chain Strategy
Supply chain strategies can take time to develop but have a massive impact on how you serve customers, and ultimately do business.
Adapt to Customer Demand Faster
In modern supply chain strategies, businesses make dynamic decisions based on real-time data. This is in stark contrast to analyzing quarterly reports and pouring over end-of-month reports for insights.
Cloud-based management systems that encompass IoT sensors, fleet tracking software, and sales metrics collect and interpret live data to forecast demand and estimate future inventory needs.
Harnessing the Power of Your Data
Data is at the core of what makes modern supply chain strategies so powerful.But collecting data isn’t enough, it must be filtered, organized, and acted upon. Creating policies and procedures for data collection can simplify this process.
While staying organized keeps the strategy functional, automation makes it scalable. For example, businesses can configure their inventory management system to automatically place a new order when demand forecasts hit specific thresholds.
Pivot With Product Design Changes Faster
Metrics such as product cost, lifecycle, and raw material use are often set early in the design process. A good supply chain strategy starts early on in the product development process, accounting for these metrics.
Design changes can alter these numbers for better or for worse. By making supply chain strategy a part of the development process, businesses can create more profitable products that customers want.
Types of Supply Chain Strategies
Businesses choose from multiple supply chain frameworks depending on their product, competition, and industry. Below are the six most common models and strategies and for whom they are best suited.
The flexible model is best suited for businesses that experience huge spikes in demand, and then moderate to low demand thereafter. For example, holiday decorations spike in demand only a few times per year.
Flexible supply chain strategies require a strong understanding of current and historical sales data. This data can be used to anticipate demand, material cost, and profit.
The agile framework is best for businesses that deliver a high-touch product that requires extra attention across the supply chain. High-end pianos, for instance, might need temperature-controlled units ,continuous tuning, and specialized shipping with delivery.
The agile model typically relies less on automation and more on customer satisfaction and product quality. This level of attention can often be justified by the lower volume of sales and higher price point of the product.
Continuous flow is one of the most popular supply chain management methods, offering stability and predictability across the supply chain. The focus of this strategy is to align closely with the manufacturer and develop a relationship to improve stability as demand fluctuates.
The efficient chain strategy is ideal for competitive industries. For instance, kitchen gadgets must maintain their quality to stay competitive but can improve margins by maximizing efficiency.
Relying on efficiency alone to stay profitable can be risky, especially during labor shortages and fluctuating raw material costs.
The fast chain approach is best for businesses with a shorter product lifecycle, like a food brand or seasonal product. The fast chain model is designed around speed, pivoting with the latest market changes and current trends to stay competitive and profitable.
Lastly, the custom configured strategy is effectively a hybrid model between the agile and continuous flow methods. This strategy is best for businesses that manufacture prototypes and small batches of products that require customization at some level.
While this model requires more time and attention, businesses can charge a premium for this level of customization and detail.
Optimizing Your Supply Chain Strategy
No matter what supply chain framework you choose, there is always room for optimization. Consider these optimizations to strengthen your supply chain:
Sometimes supply chain slowdowns are beyond our control. Natural disasters, politics, and various economic factors can cripple unprepared businesses. You can mitigate these risks by multi-sourcing and building relationships with other suppliers.
Many businesses make note of what the cost of these relationships is, and how their business would be impacted if that relationship ceased. While this may seem unnecessary in a stable market, it can save a business during tough times.
Invest In Your Network
Supply chains rely on timely data, and data needs a network to reach its destination. A big mistake many businesses make is to rely heavily on an outdated network, or commercial carrier.
For example, some cellular plans throttle data if usage exceeds a certain threshold while giving organization little to no control over service levels. This can be devastating during a surge in demand such as during the holidays. Another major concern is privacy, with many businesses not knowing how their intellectual property is being shared.
Modern supply chains are increasingly making use of new private 5G networks. These private wireless networks are owned, operated and explicitly controlled by the enterprise. Instead of relying on a third party, companies have complete control over their network resources, service quality and data privacy.
Private 5G networks enable businesses to set their own service levels and maximize their uptime for new cutting-edge technologies like autonomous vehicles and mobile robotics.
Standardize Each Process
To keep operations dependable and online, each aspect of the supply chain should be standardized. This not only reduces complexity but also makes it easier to collect and transform data into actionable insights. Standardization is even more important in businesses that adhere to compliance regulations that often require routine audits.
Temples, policies, and procedures can help lay the foundation for your processes. Additionally, standardization makes supply chain automation considerably easier down the line.
Your Network is The Backbone OfYour Supply Chain
Whether you’re optimizing your supply chain strategy, or building one from scratch, Celona can help. Celona helps enterprises plan, build, and manage private mobile networks to bring their supply chain goals to top and bottom line objectives.
With a Celona 5G LAN, private 4G/5G access points can be quickly deployed and centrally via cloud-based operations to ensure service level objectives on critical applications are consistently met.
Deployment is straightforward and can be performed alongside existing wireless and IT infrastructure without interrupting business operations. Celona 5G LANs cover both indoors and outdoors, with a single access point capable of covering up to 1 million square feet.
See a Celona 5G LAN in action and learn the basics