Strategic, Tactical, and Operational Levels of Strategic Supply Chain Management - Essay Example

Strategic Supply Chain Management Name: Institution: Introduction For many organisations or firms, the use of supply chains as a competitive weapon has become a central building block of the tactical management process over the past few and present years. This research study seeks to scrutinize the sway/ effects and influences of a custom of competitiveness and familiarity development on supply chain performance in diverse market confusion/ turbulencecircumstances. The research had findings that there exist synergies between a tradition of competitiveness and knowledge development. The interaction between these elements is positively associated with performance. In a more diverse research, findings had it that changes in market conditions helped moderate their relationships. Market turbulence has a positive influence on the knowledge development due to experience but on performance link, the turbulence in the market has a negative influence on the culture of strongly competing/ performing (Cordon, 2012). If a manager is aware of the kind of turbulence he is likely to experience in the market, then he is able to know where to lay emphasis between developing either a culture of competitiveness or knowledge/ experience development in their supply chains (Cohen & Rousell 2004). For a manager who is not able to determine precisely what kind of challenge he or she is likely to experience in the market, it is advisable to employ both cultures of competitiveness and knowledge development in order to ensure success. In a more simple and detailed explanation, it has been found that the quest to determine the determinants of firm performance has long been central to the strategic management field. Building knowledge about why some firms outperform others is the critical point to be taken into consideration in identifying these determinants.In the recent past, competition has shifted toward supply chain versus supply chain struggles. Supply chains are value-adding dealings of incompletelyseparate, yet mutually dependent, units that jointlyconvert raw resources into refinedcommodities through sequential, similar, and/or linked structures. Whenever any two businesses clash, it is not their individual abilities but somewhat the shared capabilities of their individual supply chains, which determine the outcome/ end result. Since the 1990s, the terms supply chain and supply chain management have become very persistent, in fact, that they have nearly displaced the forerunner term, “business logistics,” in the trade literature. It is applied in commerce as analysed below. Analysis and Theories Supply chain basically makes reference to a company’s/ corporate buying practises. These buying practises can impact supplier’s ability to improve their business conduct. Downward pressure on cost and efficiency can force suppliers to contravene some of their own interests and standards to meet their buyer’s commercial requirements. As such, supply chain managers should look beyond short term financial benefits and considerations to building a more mutually beneficial relationship that can help deliver lasting value along the whole supply chain (Cordon, 2012). Supply chain management is looked at in three basic scopes; environmental, social and governance considerations. This helps deliver a wide range of benefits. The three scopes lead to three main operation levels of a supply chain. These include; Strategic, Tactical and Operational levels. Strategic Level involves the decisions made by the company’s management. These are high ranktactical supply chain decisions that are significant to the entireofficialdom/ organisation. The decisions made with reference to supply chain management should represent an overall strategy followed by the company. The planned supply string processes that the organization has to make a decision upon will wrap the extent of the supply chain. Critical decisions are to be made at this level on productdevelopment, vendors, customers, manufacturing and logistics. ProductDevelopment In this, the executive management has to describe a tactical path when bearing in mind the produce that the corporation should make and tender to their clients. As produce cycles go down, executive has to compose strategic decisions to increase and bring in new forms of existing commodities into the marketplace place, reduce the current manufactured goodsoffer or decide whether to build up a new variety of goods and services. These planned decisions may comprise the call forone more company or sell the present/ existing businesses. However, when building these calculated product advance decisions, in general, thegoals of the firm ought to be the determining factors. Suppliers The executives have to make a decision on the calculated supply chain policies taking into consideration the suppliers. Decreasing the buying expenditures for anorganisation can unswervingly/ directlyresult to an increase in returns and deliberately, there are numeral decisions that can be prepared to achieve that outcome. Leveraging the whole company’s buying over several businesses can permit company running to decide onconsideredworldwide suppliers who propose the best discounts. Other than these, the decisions have to match up with the overall business objectives. If a corporation has embraced policies on value and worth (quality), then premeditated decisions on suppliers will be included in the overall organisational objectives. Customers At this level, strategic level, a corporation has to spot the consumers for its merchandise and services. When company administration makes intentional decisions on the goods to produce, they need to then name the key buyer segments where businessselling and advertisings will be targeted. Logistics As well as premeditated decisions on production locations, the logistics role is important to the victory of the supply chain. Order execution is a significant part of the supply chain and organizational management needs to put togethercalculated decisions on the logistics set of connections. The plan and process/ operation of the network have a significant control on the performance/ success of the supply chain. Calculated decisions are necessary in warehouses, allotment/ distribution centres on which transportation methods should be used. If the general company objectives and goals identify the employment of additional third parties subcontracting, the corporation may purposefullymake a decision to use third party logistics organizations in the supply chain. Manufacturing At this level, strategic level, production decisions delineate the manufacturing facilities and machinery that is essential. Based on high rank predictions and sales approximations, the corporationmanagement has to make calculated decisions on how goods will be produced. The decisions can necessitate new mechanized production facilities to be put up or to boost manufacturing at existing business premises (Hubner 2007). However, if the general company goals encompass moving production overseas, then the deliberations may be inclined towards using subcontracting and third party logistics (Gattorna 1998). As ecological/ environmental issues influence organisational policy to a larger extent, this may take control ofstrategic supply chain decisions and findings making reference to manufacturing. Tactical Levelmajors on embracing measures and procedures that will generate cost reimbursement for an organisation. Planned deliberations are prepared within the limits constraints of the initially determined strategic supply chain decisions made by company executives. It takes the strategic findings and counsel then focuses on creating valid gains for the business. These can include critical and tactical decisions in manufacturing, logistics, suppliers and product development (Cohen & Rousell 2004). Manufacturing Strategic supply management make decisions on where and how many manufacturing sites should be operated but tactical level of operation determines on how products can be produced at low costs (Hubner 2007). The decision can be made to choose the use of a technology that does not waste raw materials. Logistics Strategic company decisions are limited to in house/ within one manufacturing plant operations when it comes to logistics. Tactical decision making makes reference to the use of a third party within a large region. This may be a country or any other region. Transportation costs incurred when handling regions are relatively high and the cost benefits can only be achieved through outsourcing (Hubner 2007). For instance, tactical decision may come in handy when a decision is made to use a public warehouse despite a directive by the strategic decision to construct a warehouse in a country where land costs are high. Suppliers Many companies agree to the fact that use of global suppliers in order to enjoy discounts and take advantage of strategic supply policies are beneficial (Hult, Ketchen& Arrfelt 2007). Tactical management works within the strategic level decision directives to identify and negotiate with the best suppliers/ bidders in order to enjoy maximum benefits on discounting. Product Development Strategic decisions focus on what product is supposed to be produced while tactical decisions identifies what specific product is supposed to be developed or improved. A strategic decision may be made to produce a new model or version of a camera in a country, say Australia, but the tactical decision defines the specifications of that camera, where to sell them (country), and which market segment/ group should have it depending on where the profits would be high. Most decisions made by tactical supply take into consideration the strategic decisions (are not made in isolation). The main difference is that they are made in a global perspective. Operational Level from the word “operation” defines the day to day activities taking place at the business location. They are decisions that outline in detail how products are developed, distributed/ moved, manufactured and sold. With the awareness of tactical and strategic decisions adopted in a company, operational decisions are made at a higher level to ensure maximum cost benefits and the day to day operations and products efficiently move along the supply chain. Such decisions are still made within the frameworks of manufacturing, logistics and supplier relationships (Gattorna 1998). Supplier relationships Use of global suppliers and negotiated agreements and contracts made at an organisational level in order to enjoy and take advantage of the company’s power to purchase is of utmost significance. However, this only takes into consideration just some bit of the cost savings. As such, local sites/ business branches will need to make day to day operational decisions together with suppliers to enable/ facilitate an effective and efficient supply chain. Local negotiations with worldwide suppliers may be necessary to ensure value and quality of the products (Cordon, 2012). The quality of a product produced by a supplier may vary from country to country therefore local arrangements are done to enable production of standardised goods and services. This gives an end product of high quality. Logistics In line with the tactical and strategic decisions, most companies have adopted and opt to use third party logistic companies. They have identified and integrated the advantages and cost benefits of using these companies into their supply chain management systems (Anthonelli 2012). However, these third party logistic companies do not operate in all regions where the company is situated and requires logistics therefore local management, in such instances, have to make operational decisions on how to lease/ hire local warehouses and negotiate with the regional logistics companies. Although the tactical and strategic supply decisions are developed to ensure great efficiencies at the lowest costs ever, the day to day operations and daily operations of supply chain outline it that the local administration/ management should make several running/ operational decisions. The decisions made are in line with the directives of tactical and strategic supply chain decisions (Gattorna 1998). Conclusion In line with the above mentioned sentiments, it can be opined that business sustainability has more than just the financial base to be used as a measure of the performance of the business. It is many a time defined as a triple bottom line because it includes the management of financial, social, and environmental risks, obligations and opportunities. The improvement of the supply chain management majorly points fingers to sustainable business opportunities. It creates value to economics, healthy environments and strong communities. Businesses that perform therefore survive because they create intimate/ passionate and healthy relationships with the economies, societies and the environmental systems thus the name “triple bottom line”. For businesses that have adopted and incorporated environmental, governance and social arrangements into their supply chain management they benefit a lot because risks are spread out to different players therefore losses are not easily incurred, supplies are not easily disrupted because the organisation and suppliers are in a working relationship, costs are reduced and efficiency is ensured, turnover rates are low (employees are comfortable, and thus they do not leave) due to improved working conditions, environmental responsibilities leads to efficiency and profitability and finally the loyalty of customers are protected and enhanced because they have confidence in the corporate brand and values. Therefore, strategic supply management and sustainability is the management of environmental, social and economic impacts, and the encouragement of good governance practises, throughout the lifecycles of goods and services. References Anthonelli, W. J 2012, The Relationship between Key Supply Chain Management Process Implementation, Competitive Advantage and Organisational Performance, Wright Patterson, United States. Barney, JB 2012, ‘ Purchasing, Supply Chain Management and Sustained Competitive Advantage: The Relevance of Resource-based Theory’, Journal of Supply Chain Management, vol. 48, no. 2, pp. 3-6, viewed 4th November, 2012, http://onlinelibrary.wiley.com/doi/10.1111/j.0000 0000.2012.01048.x/abstract?deniedAccessCustomisedMessage=&userIsAuthenticat d=false Cohen, S. & Rousell, J 2004, Strategic Supply Chain Management: The 5 Disciplines for Top Perfomance, New York City, United States. Cordon, C et al 2012, Strategic Supply Chain Management, London, United Kingdom. Gattorna, J 1998, Strategic Supply Chain Alignment: Best Practise in Supply Chain Management, Hampshire, England. Hubner, R 2007, Strategic Supply Chain Management in Process Industries, New York, United States. Hult, G. T. M., Ketchen, D. J. & Arrfelt, M 2007, Strategic Supply Chain Management: Improving Performance Through a Culture of Competitiveness and Knowledge Development, Retrieved on 7th November, 2012, from, http://global.broad.msu.edu/hult/publications/SMJ07c.pdf Read More