Real-Life Supply Chain Strategy Examples

Key Takeaways:

• Integrate a proper strategy, and navigate market changes
• Learn the five main supply chain strategies
• Discover six real-world supply chain strategies
• Make your supply chain resilient against the unforeseen
• Implement warehouse automation for efficiency, adaptability, and productivity

In today’s global marketplace, supply chain management is critical for business success. A resilient supply chain enables companies to adapt swiftly to market changes, cut costs, and enhance customer satisfaction. However, only 21% of supply chain leaders currently believe they have a highly resilient process in place. Crafting an effective supply chain strategy is essential, but choosing the right approach can be more challenging than it seems.

What is supply chain strategy, and why is it important?

What it is

A supply chain strategy outlines a company's approach to managing the flow of goods, information, and finances from the procurement of raw materials to the delivery of products to consumers. It encompasses various aspects of the supply chain, including sourcing, manufacturing, warehousing, and transportation, aiming to ensure efficiency and effectiveness in meeting customer demands.

Why it's important

This strategy is crucial because it influences a company's ability to reduce costs, satisfy customers, achieve competitive advantage, manage risks, and foster innovation and sustainable growth. Effective supply chain management enhances operational efficiency, improves product delivery, and aligns supply chain activities with the company's broader goals. It enables businesses to navigate market changes, maintain customer loyalty, and support long-term success with an emphasis on efficiency, sustainability, and responsiveness to market and environmental changes.

Types of supply chain strategies  

Different types of supply chain strategies are pivotal in determining the efficiency and effectiveness of the supply chain operations. Usually, we speak of five main types of strategies:

1. Lean supply chain strategy: Focuses on minimizing waste within the manufacturing process — materials, time, and effort — which leads to increased efficiency and reduced costs
2. Agile supply chain strategy: Emphasizes flexibility and the ability to respond quickly to market changes and customer demands, often through the use of technology and data analytics‍
3. Customization strategy: Involves creating personalized products or services to meet specific customer needs, requiring a highly flexible and responsive supply chain‍
4. Green supply chain strategy: Prioritizes environmental sustainability by minimizing the ecological footprint of supply chain operations, from sourcing raw materials to delivery of the final product
5. ‍Global supply chain strategy: Focuses on operating on an international scale, managing suppliers, production, and distribution across different countries to optimize costs and reach wider markets

How to choose your supply chain strategy

Selecting the right supply chain strategy involves several considerations:

• Business objectives: The chosen strategy must support the company's long-term goals and objectives, whether it's market expansion, cost leadership, or sustainability.

• Market demand: Understanding customer needs and market trends is crucial in selecting a strategy that aligns with demand patterns and expectations.

• Product nature: The type of product or service offered significantly influences the choice of supply chain strategy. For example, perishable goods might require a more agile approach to minimize waste.

• Risk management: Companies also consider risks such as supply chain disruptions, market volatility, and regulatory changes in their strategy selection process.

• Technology and innovation: The ability to integrate new technologies and innovations can also dictate the choice of strategy, especially for companies looking to enhance agility and efficiency through digital transformation

It's not uncommon for companies to implement multiple supply chain strategies simultaneously. For instance, a company might adopt a lean approach for its mature products while using an agile strategy for new and innovative offerings. This hybrid approach allows companies to be more resilient and responsive to changing market dynamics and customer needs.

Six supply chain strategy examples from the real world

1. Amazon’s agile supply chain: Amazon exemplifies an agile supply chain, leveraging its vast distribution network and advanced technology to offer rapid delivery services, such as same-day or two-day shipping for Prime members. This strategy has significantly enhanced customer satisfaction and loyalty.
2. Walmart’s lean supply chain: Walmart employs a lean supply chain strategy, focusing on efficiency and cost reduction. By implementing cross-docking techniques in its warehousing strategy, Walmart minimizes inventory holding costs and ensures products are quickly transferred from suppliers to store shelves.
3. Zara’s fast fashion model: Zara’s supply chain is designed for speed and flexibility, allowing it to bring new trends from the catwalk to the store in just weeks. This responsiveness to market demands is a key factor behind Zara’s success in the fast-fashion industry.
4. Apple’s global supply chain: Apple’s supply chain strategy emphasizes global sourcing and maintaining high-quality standards. By closely managing its supplier relationships and production processes, Apple ensures product quality and timely delivery to meet the high demand for its products. Often times this is done by shipping straight from suppliers, resulting in a short, efficient, cash-to cash-cycle.
5. Tesla’s vertical integration: Tesla adopts a vertically integrated supply chain strategy to control much of its production process, from manufacturing batteries to assembling vehicles. This approach allows Tesla to innovate faster and reduce dependencies on external suppliers.
6. Unilever’s sustainable supply chain: Unilever focuses on sustainability within its supply chain, aiming to reduce environmental impact and ensure ethical practices. This includes sourcing raw materials sustainably and reducing greenhouse gas emissions, which not only benefits the environment but also resonates with consumers' growing preference for eco-friendly products.

These examples are brilliant at highlighting how different successful companies implement tailored supply chain strategies to enhance efficiency, customer satisfaction, and competitive advantage, demonstrating the critical role of supply chain management in achieving business success.

Three benefits of a resilient supply chain strategy

There’s a reason why the industry of warehouse automation keeps highlighting the importance of a well-planned supply chain strategy. Here are three of those core benefits of a resilient supply chain strategy:

Benefit 1: Enhanced adaptability

It empowers businesses to swiftly navigate through disruptions, guaranteeing continuous operations and service delivery to customers, which is crucial for maintaining trust and satisfaction.

Benefit 2: Improved risk management

Identifying potential risks and weaknesses within the supply chain allows companies to devise effective mitigation strategies, minimizing the impact of disruptions and safeguarding against significant operational setbacks.

Benefit 3: Competitive advantage

A resilient supply chain ensures that a business can maintain, or even improve, delivery times and product availability during challenges, offering a significant edge over competitors who might be struggling to cope with similar issues.

Conclusively, investing in a resilient supply chain strategy not only secures a business against unforeseen challenges but also positions it strongly in a competitive market, ensuring long-term sustainability and success.

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Automation: The secret behind an effective supply chain

Incorporating warehouse automation into your supply chain strategy can significantly enhance operational efficiency and adaptability. Advanced automation technology such as AutoStore optimizes various aspects of supply chain management, from improving employee productivity across roles to minimizing the physical footprint of inventory storage. Let's explore how AutoStore facilitates a more efficient supply chain:

1. Streamlining warehouse operations

Warehouses serve as critical nodes in the supply chain, holding projected demand and safety stock for various channels. Effective warehouse management is crucial for balancing inventory levels to avoid sales losses due to shortages or wasting resources on excess stock.

During unforeseen circumstances, business continuity is essential. In response to Covid-19, some companies had technology to swiftly reallocate in-store inventory to e-commerce. Adidas, among other retailers, adopted this strategy when brick-and-mortar stores shuttered globally. According to the company's 2020 Annual Report, the crisis accelerated a shift to digital. Company CEO Kasper Rorsted said in the report, "We took decisive actions to focus on digital acceleration by moving available inventory to e-commerce, invested in an agile digital content studio, shifted marketing resources and tech budget toward digital and made sure our day-to-day decisions are data-driven with a clear focus on consumer insights and trends. As a result, our e-commerce business was up 53% on a currency-neutral basis for the full year, exceeding €4 billion for the first time in the history of our company."

AutoStore is an optimal solution for making emergency adjustments. It allows warehouses to increase their throughput, free up space, operate more flexibly, and bring inventory closer to customers to reduce delivery times. Businesses using AutoStore can quickly move inventory planned for physical storefronts to online channels, showcasing the system's role in maintaining sales and inventory utility in response to crises.

2. Distribution center optimization

For companies prioritizing proximity to their customer base, AutoStore’s space efficiency facilitates the establishment of centralized or localized distribution centers, also referred to as micro-fulfillment centers. This strategy minimizes the last-mile delivery challenge, offering faster and more creative fulfillment options. The AutoStore adaptability shines here, allowing for the redistribution of Robots across the network to sites needing increased capacity, ensuring a responsive and efficient supply chain regardless of the operational model.

The AutoStore Impact

The AutoStore contribution to an efficient supply chain is multifaceted: ‍

• Brownfield adaptation: AutoStore’s high storage density and modular design enable companies to automate existing spaces rather than expanding or constructing new facilities, offering a sustainable and cost-effective approach to scaling operations.
• Operator efficiency: AutoStore amplifies the capabilities of individual operators, making their roles less strenuous and more ergonomic, thereby enhancing productivity and job satisfaction.
• ‍Inventory security The system's design provides a secure environment for inventory, akin to a vault, with controlled access to ensure the highest level of security.
• ‍Pick accuracy Through intuitive software interfaces, AutoStore guides operators precisely, reducing errors and improving the overall accuracy of inventory management.

By integrating AutoStore into their supply chain strategy, businesses can achieve remarkable improvements in efficiency, security, and adaptability. The AutoStore technology not only supports the immediate operational needs but also positions companies to better respond to future challenges and market demands, making it an invaluable asset for any forward-thinking supply chain management approach.

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FAQ

What does a supply chain strategy include?

A supply chain strategy includes plans and processes for effectively managing and coordinating the flow of goods, information, and finances from the procurement of raw materials to the delivery of products to the end customer. It encompasses aspects such as supplier selection, production planning, inventory management, logistics, and customer service to meet business goals and customer demands efficiently.

Can you give an example of a cost-effective supply chain strategy?

One cost-effective supply chain strategy is the "lean supply chain" method. It focuses on minimizing waste within the supply chain processes — such as excess inventory, overproduction, and unnecessary transportation — to reduce costs and increase efficiency.

How does technology impact supply chain strategies?

Technology plays a crucial role in enhancing supply chain strategies by providing tools for better data analysis, real-time tracking, automation, and collaboration among supply chain partners. Advanced technologies like artificial intelligence (AI), internet of things (IoT), and blockchain can significantly improve efficiency, visibility, and security across the supply chain.

Can small businesses implement advanced supply chain strategies?

Yes, small businesses can implement advanced supply chain strategies by leveraging technology, forming strategic partnerships, and focusing on core competencies. Even with limited resources, small businesses can adopt lean principles, agile methodologies, and customization strategies to enhance their competitiveness.

How often should a company review its supply chain strategy?

Companies should regularly review and adjust their supply chain strategies to respond to market changes, technological advancements, and shifts in consumer demand. An annual review is common, but ongoing monitoring and flexibility to make adjustments as needed are crucial for maintaining an effective supply chain.

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