Every day we use hundreds of products, whether it is raw vegetables, vehicles, electronics, clothing, etc. Have you ever wondered what goes on in the backend to deliver all of these to you? Yes, there is a proper supply chain strategy that is used to bring in the product from the manufacturing hub to the market and finally to the customer. Let me ask you a simple question, does a builder start the construction of a building without a blueprint, or does a pilot operate the flight without a flight plan? No, Similarly, whenever a product is built, a supply chain strategy is developed to deliver the products to the market.
According to a report by Precedence Research, “The global supply chain management market size was USD 28.60 billion in 2023, calculated at USD 31.77 billion in 2024, and is expected to reach around USD 81.93 billion by 2033. The market is expanding at a solid CAGR of 11.1% over the forecast period 2024 to 2033.”
Over the next few topics, we will delve deeper into supply chain management, its characteristics, how it works, top strategies, and a lot more.
Check this video to understand more about Supply Chain Management:
What is a Supply Chain Strategy?
A Supply chain strategy is an approach to how a company seamlessly manages its network and services between the organization and the suppliers. This includes planning, designing, executing, controlling, and monitoring the different aspects of the supply chain.
These strategies mainly focus on optimizing the operations to improve efficiency and reduce operation costs, while enhancing customer satisfaction and also being flexible enough to adapt to market or industry changes. The strategy not only focuses on the operational aspects but also the business goals and objectives of the company ensuring sustainability and competitive advantage.
“Supply chain processes are integral to proper product development—just as critical as your research, design, and manufacturing strategies.”
Why is Supply Chain Strategy Important?
In today’s world, where customer demands are ever-changing, the need for a robust and flexible supply chain strategy is significant to meet the needs of the business both in the short and long term. This is required to maintain customer satisfaction along with reduced costs for operation.
A supply chain strategy helps you to handle these customer demands efficiently. Choosing the right supply chain strategy increases customer satisfaction while reducing cost and hence supporting the business goals. Also, you can track your inventory with the historical data being generated to adapt to the ever-changing demands of the customer.
Here are a few points signifying the importance of a supply chain:
- Optimized efficiency by cutting lead times
- Cost reduction by eliminating unnecessary expenses
- Better customer service by having products available
- Enhanced resilience by adapting quickly
Key Supply Chain Strategy Characteristics
A lot goes into choosing the best supply chain strategy that covers all the characteristics. The key factors that one should look into while selecting a supply chain strategy are listed below:
- Sustainable: The term ‘sustainable’ refers to the effect of the supply chain on the environment. Questions like: Is the packing environment friendly? Are the raw materials used “Sustainable” in nature? Can we reduce the emission of harmful gases like CO2 while transporting? etc.
- Agile: As the customer and the market demands are ever-changing, the supply chain strategy should be flexible enough to handle such agility in the market so that no opportunities are missed.
- Collaboration and Strong Leadership: While developing an effective supply chain strategy, important stakeholders should be involved in collaborating and creating a plan that is flexible enough to handle market agility.
- Innovation and Digitalization: In today’s digital world, every industry is using innovation and digitalization to improve their respective processes. Make use of technologies like Artificial Intelligence, Big Data Analytics, Generative AI, Internet of Things (IoT) to foster innovation and automate the process while the stakeholders can focus more on the decision-making process.
Including these characteristics will ensure excellence in your supply chain strategy.
Top Supply Chain Strategies
There are four main priorities (cost, schedule, robustness, and customer value) between which you need to make a tradeoff. With these priorities and a list of industry challenges, you will create a supply chain strategy. The positive side is that most of these strategies fall under any one of the six types listed below:
Demand-Driven Supply Chain Strategy
The Demand-Driven Supply Chain Strategy is mostly inclined towards creating a customer-centric supply chain strategy. At every stage of the supply chain, a demand signal is set up, which is later analyzed to understand the customer demand, make changes to production, and manage inventory levels accordingly.
Lean Supply Chain Strategy
The Lean Supply Chain Strategy thrives on lowering the amount of waste material generated. This, in turn, increases efficiency and reduces cost.
Agile Supply Chain Strategy
The Agile Supply Chain Strategy tends to provide more flexibility to the changing market demands. Such a strategy enables you to respond quickly using technology and supply chain data analytics.
Collaborative Supply Chain Strategy
A Collaborative Supply Chain Strategy involves the contribution of all the stakeholders—the suppliers, manufacturers, retailers, and distributors—hence sharing information between them and optimizing the overall supply chain.
Green Supply Chain Strategy:
A Green Supply Chain Strategy intends to minimize the carbon footprint emitted right from manufacturing until the delivery of the product. This can be achieved by generating less waste materials, using green technologies to deliver products, etc.
Customization Supply Chain Strategy
A Customization Supply Chain Strategy aims to create customized services based on customer demands to increase customer satisfaction. Such an approach needs to be flexible and responsive to address such customer-specific needs effectively.
Supply Chain Strategy Examples
Most companies implement supply chain strategies to smoothen the process from manufacturing to product distribution. Below are a few case studies of some immensely successful companies that will help you understand the thought process behind designing them.
Apple’s Supply Chain Strategy
According to a report by Gartner, Apple’s Supply Chain had been the best in the world for three years in a row. Apple has implemented several important measures to mitigate the geopolitical impact, tariffs, and single-source risks. For example, Apple has adapted its manufacturing network to minimize the impact of some risks and uncertainties and moved the production of the iPhone 15 to India. This balances its very high dependency on China, which is the main manufacturing location supplying iPhones locally.
Apple developed its own chip, and currently, all new Mac computers are powered by it. In terms of performance, Apple has managed to continue growing revenue and keep a very high level of gross margin, despite the industry headwinds.
Amazon Supply Chain Strategy
A leader in customer centricity, Amazon’s continuous innovation in its facilities includes expanded use of robots with “cobots” that help pick, sort, transport, and store packages. These facilities have cut the average time from picking up a customer’s item to positioning it on the outbound dock by an hour to just 11 minutes.
Amazon is expanding its same-day delivery service from 55 to more than 90 U.S. metro areas. Nearly 60% of orders placed through Prime in the top 60 U.S. metro areas during the first quarter of 2024 arrived the same day or the next day—up from roughly 50% in the second quarter of 2023.
Unilever Supply Chain Strategy
Unilever is using AI to help identify alternative ingredients that can strengthen supply chain resilience, make formulations more sustainable, and reduce costs by reducing the number of ingredients without impacting product efficacy.
Unilever’s focus on AI-driven advances also acts as a way of attracting and engaging talent and teams. Specifically, digital upskilling is integrated into employee-focused programs, including Unilever’s “Shape Your Own Adventure” initiative, in which supply chain employees help identify customized opportunities for new experiences and skills development.
Walmart Supply Chain Strategy
Walmart’s Luminate tool for suppliers offers a comprehensive report suite that provides complete visibility into commerce and performance data enriched with consumer insights.
Walmart is expanding the GenAI-powered tool “My Assistant” to its global teams. This tool frees up associated time for distinctly human tasks like generating new ideas and building relationships.
After a 16-month proof of concept, Walmart is rolling out 19 autonomous Fox Robotics-developed forklifts across four high-tech distribution centres to fully automate the warehouse loading docks, complementing its automated storage and retrieval system.
The Coca-Cola Company Supply Chain Strategy
Coca-Cola recently announced a partnership with Microsoft to support a five-year investment in cloud and AI capabilities to drive increased productivity. Technology investments are part of Coca-Cola’s transformation to “Cola 3000,” an AI capability supporting demand planning, real-time visibility, and improved logistics operations.
Coca-Cola manages a vast distributor network that allows it to be agile in supporting the delivery of high levels of customer service in many locations around the world. This strength has been leveraged in a partnership with the Last Mile Project throughout Africa, with Coca-Cola lending its expertise to deliver cold-chain vaccines across the continent.
Schneider Electric Supply Chain Strategy
According to a report by Gartner, Schneider Electric has been ranked No. 1 in Best Supply Chain Strategy in the world. Schneider recently completed its STRIVE (sustainable, trusted, resilient, intelligent, velocity, and efficiency) program, a three-year initiative aimed at transforming the supply chain to provide customers with a strong regional presence, build stronger partnerships with leading suppliers, and improve the resilience of supply chain operations.
The World Economic Forum recognizes Schneider as one of only three companies to attain its “Circular Lighthouses in the Built Environment” designation for the company’s E2 circularity solution, which has avoided sending about 513 million tons of CO2e to customers since 2018 and uses 27% green material content across products.
Software Used to Execute a Supply Chain Strategy
Numerous software are used in the process of supply chain management. Here are a few examples:
- Logiwa WMS
- NetSuite
- Netstock
- Precoro
- Magaya Supply Chain
- SAP SCM
- FreightPOP
- Shippabo
Conclusion
A robust Supply Chain Strategy is more than just a cost-saving tool, it’s a key driver of business success and customer satisfaction. By prioritizing agility, collaboration, and innovation, you can create a supply chain that delivers value to your customers while boosting your business operations.