Overall Strategy

Purchasing and supply chain management is key part of the overall strategy

To enable the fulfilment of its purpose, the organisation has an overall corporate strategy which encompasses supporting strategies. These usual include: marketing; HR; finance; technical; R&D; and of course, supply chain strategy.

Supply chain strategy is crucial as it affects all areas of the business. In particular purchasing and supply management strategy is essential to successful operations as it affects all inputs into the organisation.

There are three elements to the supply chain strategy:

• Purchasing and supply chain management strategy.
• Operations strategy.
• Distribution strategy.

All of these elements must dovetail with each other and above all support and influence the development of the overall strategy. Objectives within the overall strategy must feed down into the supply chain strategies in a way that is manageable and actionable.

Typical elements in a purchasing and supply management strategy

• Identification of business requirements.
• Positioning and remit of the function.
• Governance structure e.g. procurement board.
• Objectives and activities e.g. strategic sourcing strategy.
• Capacity/capability management, e.g., competences, and structure e.g. centralised/devolved, CLAN, co-ordinated.
• Management of the function’s customers/users/buyers needs including training, support, authorities and delegation.
• Policies e.g. rationalisation, standardisation, value management, supplier development and CSR.
• Key processes supporting legislative framework, e.g. standing orders and procedures.
• Technology platforms for electronic business, management information, knowledge management and systems e.g. purchase order processing systems.
• Good practice e.g. tools, templates, terms and conditions.
• Performance monitoring/benchmarking/continuous improvement.
• Management of supply market.

Elements of an operations strategy

• Management of efficient processes.
• Inventory management.
• Application of lean and agile principles as appropriate.
• Management of plant and equipment.
• Location of plant.
• Virtual operations.
• Collaborations

Elements of a distribution strategy

• Customer relationship management.
• Service levels.
• Fulfilment.
• Delivery.
• Disposal.

The supply chain strategy must also integrate with, and support, all of the other functional strategies within an organisation; supporting research and development, marketing, HR, finance and IT objectives.