Characteristics of an Effective Supply Chain Strategy

No business is complete without an effective supply chain, but deciding on the right supply chain strategy to govern your business processes is far easier said than done. No matter what your product or service is, running a business is a complex endeavour fraught with as many pitfalls as opportunities.

Still, while the specific criteria that would optimize your revenue may vary depending on your industry, you can count on certain characteristics to remain consistent with the design of any winning supply chain. Here are just a few of the essential elements you need to consider when crafting your supply chain strategy.

• Strong leadership: To succeed, your supply chain must have top-notch leaders in place to oversee the processes involved and maintain a sense of perspective on the company’s larger goals. While this might seem implicit in the structure of any successful supply chain, you’d be surprised how many businesses fail to install the right individuals in key positions who can ensure that experienced team members translate into a high-functioning supply chain. Communication and team-building are integral to long-term success, and that starts from the top.

• A sound design: Strategy wouldn’t exist without structure, but studies show that a disappointing 22 percent of companies put enough forethought into how their supply chain is designed. In most cases, companies should devote an entire team to maintaining effective cross-functionality throughout the various aspects of business. Oftentimes, this attention to detail is what separates those businesses that last from their counterparts that crumble over time. Don’t let your business suffer because you failed to take supply chain design into account. 

• Widespread flexibility: Thanks to modern advances, consumers’ relationship to products and services is more fluid than it’s ever been. Accordingly, your business needs to be able to adjust to the needs of your customers. This may extend to shipping and delivery options as well as alternative routes within your supply chain in the event of unforeseen obstacles involving suppliers or other partners. Be able to react at a moment’s notice and always have a backup plan to keep your level of service consistent. Otherwise, your customers will take note and may lose faith in your organization.

• Horizontal processes: Ask any company with a proven track record, and they’ll readily admit the integral role that horizontal processes play in how well their business functions within their industry. These include the cross-analysis of revenue management and the cost to serve, supplier development, sales and operations planning, and corporate social responsibility. Keeping a broad view on such aspects of running your business enables you to ensure that they remain in support of your larger corporate goals.

• A focus on customization: Customers nowadays expect a personalized experience when it comes to the products and services they choose to spend their hard-earned money on. To a certain extent, this supply chain strategy extends to the need for flexible business processes. However, customization more directly impacts customers in a way that behind-the-scenes flexibility does not. Think the difference between multiple supplier options and making a variety of product variations in your niche readily available to your customer base. The latter means that your business will ultimately be able to meet the needs of a greater pool of prospective customers, maximizing profitability.

• An eye on improvement: Even when you have a solid supply chain strategy implemented into key parts of your business, that doesn’t mean it’s time to sit back and let your business remain stagnant. Rather, industry leaders stay on top thanks to constant vigilance on industry trends and a watchful eye on ways to foster growth and simplify processes already in place. Whether it is Six Sigma methodology or some other paradigm you apply to your business, it’s imperative that your supply chain is ever-changing and your leadership is always questioning the existence of a better way of conducting business.

Chain of Tools

With the above concerns top of mind, you’ll be better equipped to build a supply chain strategy that streamlines how you run your business, resulting in lower expenses, higher profitability and a better customer experience across the board. Granted, this is simply the foundation on which you can continually fine-tune and develop your supply chain into something that serves your business in increasingly impactful ways. However, any good business strategy needs to be carefully considered every step of the way. These fundamentals will certainly send you well on your way to future success.

Moreover, for more strategy tips and invaluable insights into how your eCommerce business can make the most out of your supply chain, check out our new eBook, “The Black Belt Guide to Optimizing Your eCommerce Supply Chain.”