The Building Blocks of a Supply Network Operations Strategy
An organization will consider certain aspects of its undertaking to be strategic in any supply network. These include core competencies, capabilities and processes, strategic network relationships, resources, technologies, key tactical activities to support a strategy or positioning, actors in the network, and their linkages. These are shown in Figure 4.
Core competencies and capabilities can be defined as (a) process-based (directly derived through transformation activities); in the case of Motorola, these could include the excellence and efficiency of their production facilities; or (b) system/coordination based. This applies to the entire operating system, as is the case with Wal-Mart. It has fast replenishment of goods and vendor-managed inventory. They also have the ability to quickly modify and create new products. (c) organization-based (across an entire organization) as Nordstrom or McDonald’s; and (covering the entire supply chain, as in the supply network-based (a whole of the entire supply network-based, as in the entire supply network, as in the entire network, as in the supply network, as in the entire network, as in the supply network, as in the entire network, as in the entire network, as in the entire network, as in the whole of FedEx and McDonald’s.
Strategic network relationships are key relationships, interconnections, and associations that have been established over time and are responsible for providing inputs.
Although resources are different for each industry or firm, the general idea is that they can be viewed on two levels. The individual resources (capital equipment and skills, brands, etc.) and how the resources interact to create competitive advantages. Because each resource-based strategy is unique, it’s important to consider resources (a) as tangible (physical, technological, and financial). For such producers as Sony and Lexus, it is very important.
Technology is not only a resource in the broad sense (equipment, etc.). Technology also encompasses core technological know-how that enables product and process innovation throughout the entire organization and its supply chains, such as Compaq and Microsoft.
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Individuals and companies can act as actors or groups of people operating at different levels of control within the network. Daimler-Chrysler boasts one of the most sophisticated supply networks and outsourcing operations. Their workforce and management are trained in these areas.
As important as the parts are, links are equally important. Clear links and relationships will exist between all elements of a supply network. The degree of coordination and control in each instance will greatly impact competitive performance. Usually, these links are in the form of continuous communication and shared information.
A supply network operations strategy can be thought to have distinct blocks that give each situation the appropriate emphasis. Let’s now look at how strategic customization occurs and what role supply network relationships play in this.