Supply chains used to be just about day to day operations, but now they're a strategic part of how a business competes, grows and delivers value. To really succeed, you need to look beyond today and focus on what's going to keep your organisation ahead of the game.
What strategic supply chain management is all about
So, what does it take for a business to get its supply chain on the same page as its overall goals? Here are the key things that need to happen:
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Long-term thinking - planning for the future
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Keeping risks under control
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Making sure your costs are in check
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Being able to adapt and grow as demand changes
That's where strategic supply chain management and strategic planning in supply chain management come in. This is not just about making sure your day-to-day supply chain ops are running smoothly, it's about planning and optimising supply chain activities to make sure they support the business as a whole.
For big enterprises in manufacturing, warehousing, retail and distribution - especially the ones that use SAP or are thinking about migrating to S/4HANA - it means turning the supply chain into a scalable business capability. If you're reviewing or transforming your supply chain strategy, this guide will look at all the key areas - including demand planning, supplier strategy, network design, inventory strategy, risk management, cost optimisation, the importance of data and systems, SAP's place in supply chain strategy, some real-world examples, and the benefits and challenges that come with it.
What does strategic supply chain management really mean
Strategic supply chain management all about planning and optimising supply chain operations for the long-haul.
It means making sure your supply chain supports your long-term business success, and not just focusing on the day-to-day tasks.
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A supplier strategy that works for you
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A network design that's efficient and effective
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Building risk and resilience into your operations
In simple terms, it means making sure your supply chain is working for you, and not the other way round.
Strategic planning in supply chain management
Strategic planning in supply chain management is all about how organisations develop supply chain processes that line up with their business objectives and corporate strategy.
It's a process that includes:
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Forecasting long-term demand
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Designing your supply network
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Selecting suppliers that really work for you
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Planning for the future and what resources you might need
The end result is that your supply chain is ready for whatever comes next. And, it means:
Supply chains that aren't beholden to the day-to-day, but are able to grow and change with the business
How strategic supply chain planning works in real life
Let's say a company decides to expand into a new market.
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They redesign their supply chain network to make it more efficient
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They start working with new suppliers who can support their growth plans
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They reposition their distribution centres to make the most of their new market opportunities
And, the end result is:
The key is to align any network changes you make with your long-term goals - this will help keep costs in check and make it easier to manage during the transition.
The strategic supply chain process flow
A good strategic planning process will look something like this:
Business goals spelled out ↓ Demand and supply forecasts created ↓ Supply chain network designed ↓ Supplier strategy developed ↓ Processes lined up with objectives ↓ Perforance monitored and optimised with an eye to the trends and emerging technologies that will shape your supply chain for the long-term
This will help make sure your organisation is aligned, and that you have all the data you need to make informed decisions.
What makes a strong supply chain strategy
A few key elements will help define a strong supply chain strategy.
Demand planning
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Forecasting demand for the long-haul
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Getting production, supply and inventory management all aligned to meet that demand
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Using AI and machine learning to get even more accurate with demand forecasting
Supplier strategy
Network design
Inventory strategy
Risk management
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Identifying the risks in your supply chain
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Planning for alternative sourcing and logistics
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Thinking about sustainable practices in supply chain risk management - like reducing your carbon footprint and supporting ethical operations.
Getting these elements right will make sure you've got a robust and efficient supply chain.
Strategic supply chain management and SAP strategy
SAP strategy is about how SAP systems can support your strategic supply chain planning.
SAP can help you with:
SAP can also help with:
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Demand forecasting
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Supply planning
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Inventory optimisation
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Performance analytics
It all adds up to informed decision-making and connected processes across the business.
Strategic supply chain management in real-world scenarios
Let's say a company experiences a lot of supply chain disruptions.
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A strategic analysis of the risks will highlight the problems
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New sourcing strategies are put in place
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The supply chain becomes more resilient
And, the end result is:
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Reduced risk
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Improved reliability
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A stronger business
Or, let's say a company is just piling up inventory costs.
And, the end result is:
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Lower costs
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Improved efficiency
What are the benefits of strategic supply chain management
When it's done right, strategic supply chain management can deliver:
Efficiency
Cost control
Resilience
Visibility
Scalability
Supply chains are no longer just operational functions, they're strategic assets that can actually help drive a company forward
Common challenges we see in strategic supply chain planning
Organisations often find themselves up against the following obstacles:
Lack of data
Disjointed systems
Short-term mindset
Complex networks
All of these challenges can have a serious impact on a business - from how well it performs to how expensive it is to run to how competitive it is
Why your supply chain strategy will drift over time
The truth is, things change and your supply chain needs to keep up. This can be due to shifts in your business priorities, the fact that your supply chain has grown in complexity or external factors that just affect your operations
If you don't take the time to regularly review and update your strategy, things will naturally start to slide and before you know it your strategy is outdated, inefficiencies are rife and risks are growing
The importance of regular review and adaptation
Strategic planning is an ongoing thing and it requires continuous assessment and adaptation.
What we need to be looking at
In order to build a modern supply chain strategy, you're going to need the right tools for the job, including:
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ERP platforms that give you real-time data
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Supply chain planning tools that give you predictive insights
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Analytics solutions that let you do scenario modelling
How our consultancy services can help
We help businesses like yours by:
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Defining a supply chain strategy that really works
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Aligning your systems with your business goals, so everything is working together
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Optimising your processes to get more out of your operations
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Improving your overall performance
What a modern supply chain looks like
Modern supply chains are all about integration, digitalisation and real-time analysis. They're not just about dealing with the immediate issues of today, but about building a more resilient, flexible and adaptable supply chain that can keep up with the challenges of tomorrow
So, what does an effective supply chain look like?
When things are working well, your supply chain is aligned with your business strategy, your systems are all talking to each other and your data is helping you make the right decisions. You're proactively managing risks and operations are efficient, scalable and productive.
The result is a supply chain that is a real asset to your business.
Glossary
Strategic supply chain management
Long-term planning and optimisation of supply chains to meet business goals and strategy.
Supply chain strategy
A plan for managing your supply chain operations.
Demand planning
Forecasting demand to help you plan and manage stock.
Network design
Planning out your warehouse and distribution setup.
Procurement
Getting the right materials and services at the right price, at the right time.
Logistics management
Getting your goods from A to B in the most efficient way possible.
Information systems
Tools for managing data and coordinating operations across your supply chain.
Risk management
Identifying and managing risks in your supply chain.
Frequently asked questions
What is strategic supply chain management?
Managing your supply chain with a view to long-term goals.
What is strategic planning in supply chain management?
Designing your supply chain processes to meet business goals.
Why is supply chain strategy important?
It improves efficiency, reduces costs and strengthens customer satisfaction.
How does SAP support supply chain strategy?
Through tools for data, integration and planning.
What are the benefits of strategic supply chain management?
Efficiency, cost control, resilience, scalability and innovation.
Making strategy work
A good supply chain strategy isn't just about planning - it's about getting all the different parts of your business working together. Business goals, supply chain processes and data all need to be singing the same tune. When they are, your supply chain becomes a real competitive advantage - not just a means of keeping the lights on.
