If you're a supply chain manager, you're probably feeling the pressure of staying ahead of the competition, juggling multiple initiatives, and navigating through constant supply chain disruptions.
Don't worry, you're not alone! A recent survey of 1,000 supply chain leaders by Gartner found that 42% of them are struggling to find the right balance between profitability and other important factors like sustainability, speed, and innovation.
But don't lose hope just yet! It's time to shake things up and take a new approach to supply chain strategic planning that will drive successful on-the-ground execution. The next decade will be make-or-break for supply chains.
It's up to you to determine whether your supply chain will be a winner or a loser. So, let's dive in and find out what it takes to achieve supply chain strategic planning excellence and come out on top!
Here’s what we’re going to cover in this article:
- The Supply Chain Strategic Planning Process: Unpacking The Right Approach
- The 5 Steps of Highly Effective Supply Chain Strategic Planning
- 5 Pitfalls to Avoid During Your Supply Chain Planning Process (and How to Avoid Them)
- Upgrade Your Strategic Supply Chain Management With Cascade 🚀
The Supply Chain Strategic Planning Process: Unpacking The Right Approach
Supply chain strategic planning can be a challenging task, especially when it requires a focus on the overarching strategy rather than just day-to-day execution.
But the times are changing, and so is the approach to strategic planning. Gone are the days of a yearly, set-it-and-forget-it exercise.
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The shift from linear strategic planning to shorter strategy execution cycles. Source: Cascade
Supply chain managers must now be ready for the unexpected and be able to pivot quickly as things change.
In order to build a resilient and operationally excellent supply chain, companies must focus on strategic alignment between the overarching supply chain strategy and operational planning. In other words, strategic plans need to be connected with execution. This means providing teams with the context and tools they need to act quickly when necessary.
As a result, your organization can be more prepared for the unexpected and adapt faster to changes, improving its supply chain strategy and operations, and securing a competitive advantage.
So how do you achieve this? An effective supply chain strategic planning process can act as a missing puzzle piece if approached wisely.
The 5 Steps of Highly Effective Supply Chain Strategic Planning
In this section, we will cover the five essential steps to creating a successful supply chain strategy. From setting goals to keeping an eye on how things are going, these steps will make sure that your strategy works and is efficient. So, sit back, grab a cup of coffee, and let’s dive into each step.
Step 1: Lay the groundwork for a winning supply chain strategy
- Align with the Big Picture: Time to get on the same page as the rest of the biz! Start by aligning your supply chain strategy with the overarching business strategy and objectives. For example, if the business goal is to reduce costs, supply chain strategies should focus on optimization and cost-cutting initiatives.
- Identify your supply chain drivers: What's driving your supply chain? Think about factors like technology, regulations, customer demands, and global supply chain events. Understanding the key drivers will help you make informed decisions and steer your supply chain in the right direction. These drivers include:
1. Sourcing: The procurement of raw materials and other inputs is crucial to the success of the supply chain.
2. Inventory: Efficient inventory management is key to meeting customer demand while avoiding excessive stock levels.
3. Logistics and warehousing: Effective warehouse management processes and logistics management can reduce lead times, improve service levels, and increase efficiency.
4. Information and data: By forecasting demand, demand planning helps to align the supply chain with customer needs and minimize the risk of shortages.
For example, do you have enough inventory or safety stock to meet customer needs? Is your production concentrated in one country, or should you consider diversifying or changing your logistics and transport methods?
- Include your rockstar suppliers and stakeholders: Who's who in your supply chain? Make a list of your MVPs (most valuable players) and prioritize them. Don't forget about customers, logistics providers, regulators, and even your competitors—they all play a role in your supply chain success. Different perspectives will help you understand operational constraints, gaps to fill, and the importance of potential improvements or investments.
- Assess the current state of your supply chain: Give your supply chain a check-up! Assess your logistics, supplier reliability, and ability to bounce back from disruptions. Analyze your organizational structure and operating systems. Get input from different perspectives to identify opportunities for improvement and get buy-in from key stakeholders.
For example, does your manufacturing plant in the United States outsource some of its work to China? What contingencies have you put in place to ensure consistent quality and supply? - Conduct a SWOT analysis of your supply chain: The strengths and weaknesses of your supply chain and the resulting opportunities and threats will be critical for planning, forecasts, and strategic risk management.
Step 2: Design your supply chain strategy
With a solid foundation in place, it's time to start designing your supply chain strategy. This is where you'll put the pieces together.
Make sure to set some strategic priorities to help guide your strategic planning and decision-making process.
Strategic focus areas are the key pillars to focus on. These may include optimizing production planning, increasing profit margins, or diversifying supply and production.
Some examples of supply chain strategies include:
- Invest in technology: Use cutting-edge technology and digital tools to improve your supply chain operations and gain a competitive edge.
- Foster collaboration and build strategic relationships: Work closely with your suppliers and stakeholders to develop a supply chain that's built on trust, communication, and collaboration. For example, let’s take a look at IKEA. They have strategically placed distribution centers worldwide and trading offices near suppliers to minimize transportation costs. On top of that, the close proximity of IKEA's trading service offices to its suppliers' facilities allows the company to monitor production, negotiate prices, and check the quality of the goods and materials it purchases.
- Enhance resilience: Prepare your supply chain for unexpected disruptions by investing in end-to-end visibility, supply chain risk management, and contingency planning.
With this in mind, a strategic plan needs to be clear-cut and concise so your teams won't need a week to go through it. Remember, simple is always better.
📚Recommended reading: Strategy study: How IKEA became a household name
Step 3: Develop the strategic plan for your supply chain
Now it's time to get into the nitty-gritty and put together a detailed plan that outlines all the specific steps needed to execute your supply chain strategy.
This plan should cover focus areas, clear goals, timelines, budgets, resources, owners, and potential risks. And let's not forget about the all-important KPIs (Key Performance Indicators). KPIs are critical to measure the success of your supply chain strategy, so it's important to set them early on.
👉Here’s how Cascade can help you:
In Cascade, you can easily build your strategic plan, including all the key elements mentioned above. With our structured approach to strategic planning and user-friendly UI, building your plan and setting KPIs has never been easier. You can also monitor performance and make adjustments as needed.
👉 With Cascade’s Supply Chain Strategy Template, you can get started right away and execute your plan with confidence.
Step 4: Time to execute your plan!
It's go time, folks! You've laid the foundation, designed your strategy, and developed a solid plan—now it's time to execute and bring it all to life. Here's what you need to do:
- Get the Word Out: Communication is key when it comes to executing your supply chain strategy. Make sure everyone who needs to know is in the loop, from employees to suppliers to customers. Ensure everyone understands their role in the process and the end goal.
- Align with Operations: Your supply chain strategy is only as good as the day-to-day execution that supports it. That's why it's important to create alignment with your operations teams to ensure they have the tools and resources they need to bring the strategy to life. Integrated business planning is a good way to approach this.
- Support Cross-Collaboration: To promote cross-collaboration and ensure everyone is working towards the same goal, create joined KPIs, and track progress in real-time. And that's where Cascade comes in - our platform offers integrations and live dashboards so everyone has access to the same information and can work together towards a common goal.
Now that you know the steps, it's time to put your plan into action!
Step 5: Monitor and review progress - keep an eye on the prize!
As the old saying goes, "what gets measured gets done." And that's why step 5 is all about keeping your eye on the prize and making sure you're on track to hit your goals.
Set up regular progress reviews: Regularly monitor and review progress against the plan, and make adjustments as needed. According to Cascade’s Strategy Report, only 18% of team members review progress on a weekly basis. This is crucial for employee engagement, accountability, and fast adaptability.
Rethink Your Tools: Remember the days of manual reporting? Let's ditch that and move into the modern age of automation and data-driven decision-making.
With the right tools in place, you'll be able to make faster, more informed decisions, and track your progress in real-time. And that's where Cascade can help you—with its powerful reporting capabilities, you'll have all the data you need at your fingertips.
👉If you’re a Cascade user: Use the Report feature to get real-time insights from multiple data sources across various departments in your organization. With it, you'll be able to make and update progress reports quickly, so your team and management board will always have the most up-to-date information.
Here’s an example of the supply chain management report in Cascade that will help you demonstrate the ROI of your initiatives and progress against set targets.
🔥Want to see how Cascade helps team leaders save hours on making useful reports for meetings in real life? Learn how Kreg Tools uses Cascade to execute its strategy. Click here to watch the video.
5 Pitfalls to Avoid During Your Supply Chain Planning Process (and How to Avoid Them)
There are several challenges that organizations may face when it comes to effective supply chain management and supply chain strategic planning:
Navigating complexity
⛔Problem: Supply chains are multi-faceted, with several stages and stakeholders. In a McKinsey survey of senior supply chain managers, more than half of them stated they didn’t understand where their Tier 1 suppliers were located or what their key risks were. Because of this, it can be hard to come up with a strategy that takes into account all the important factors and can adapt to changes.
💡Solution: Maintain regular communication with suppliers and other stakeholders to have a clear understanding of the supply chain and all the different elements involved.
Managing uncertainty and disruptions
⛔Problem: The business environment is continually evolving, making it hard to predict future consumer demand, price fluctuations, and other uncertainties like material shortages that may impact the supply chain.
💡Solution: To mitigate the impact of uncertainty, it's important to have a flexible and adaptable supply chain strategy that can quickly respond to changes. Focus on execution over planning, and adapt the plan as you go. With Cascade, you can easily update the supply chain strategic plan and notify your teams with just one click.
Breaking down silos
⛔Problem: Organizations that work in silos are more likely to be disrupted, waste resources, and change too slowly. Supply chain, manufacturing operations, and sales teams need to share information in real-time to work effectively and create a coordinated response to changes.
💡Solution: With Cascade, you can create a single source of truth with shared KPIs. This makes it easy to track progress and ensure alignment across cross-functional teams.
Managing limited resources
⛔Problem: Organizations often have limited resources, such as time, money, and personnel. This can make planning and executing a supply chain strategy challenging.
💡Solution: Support cost optimization by allocating resources in alignment with strategic priorities and avoid initiatives that increase supply chain costs. With Cascade, you can quickly identify underperforming areas and kill misaligned initiatives. It’s like having a personal advisor; you can see where your resources are being spent, analyze what’s working and what’s not, and make adjustments to maximize efficiency.
Improving visibility
⛔Problem: Outdated operating processes and tools can make it hard and time-consuming to track strategy progress and supply chain KPIs. This problem can compound if your teams rely on multiple disconnected tools, including your company’s ERP, spreadsheets, and other planning tools.
💡Solution: You should have one place where you can connect all the necessary data, track the progress of your strategy, and assess its impact on business and supply chain KPIs. With features like Dashboards and Reports, Cascade makes monitoring and reporting simple.
Upgrade Your Strategic Supply Chain Management With Cascade 🚀
It's important to remember that supply chain strategic planning is a continuous process, not a one-time event. Regular monitoring and reviewing progress against the plan can help you make necessary adjustments and fine-tune your strategy for optimal results.
Whether you're starting from scratch or revamping an existing plan, Cascade offers a comprehensive solution to help you every step of the way. With our structured approach to strategic planning and powerful features like integrations, live dashboards, and reports, you'll be well on your way to a successful and thriving supply chain in no time.
Don't wait, sign up today for free and start executing your plan with confidence!
