Importance of Strategic Planning in Supply Chains

Supply chains are basically networks. They are networks of facilities, people and distribution options whose primary purpose is procurement and transformation of goods so that can then be delivered and distributed to potential customers. Supply chains can be pictured as arteries that supply business or organizations its industrial life. Disrupt a supply chain and you will find business or organizations gasping for breath and clinging to dear life.

Strategic Planning improves Efficiency

Networks are interconnected and interdependent. One is connected to the other in a peculiar relationship and one is dependent on the other in a peculiar kind of relationship. Strategic planning then is important in the supply chains. Elaborate plans have to be made in such a manner as to let the peculiar relationships in the supply chain network flourish and be in constant harmony.

Supply chain networks are basically three-network things: the supplier, the manufacturer and the distributor. While planners may call the supplier, the supply manufacturer or distributor, it still refers to the same thing. This three-network relationship forms part of the supply chain. All supply chains follow the same three-network design or a variation of the three-network design.

Strategic planning is important to supply chains, first of all, because it improves efficiency. The key word is Speedier. Planning how to get the raw materials or supply, planning where to get it, planning when to get it, planning an efficient procurement system all contributes to the goal of efficiency. If you cannot get your supply faster, the manufacturing aspect of the network might grind to a halt, waiting for the raw materials. This will be a costly episode in business or organizations.

The strategic planner then ought to design a speed equation. How to make the supply faster, where to get the supply faster, when to get the supply so that it will arrive faster are key questions for the planner. Strategic planning must improve efficiency; it must make the supply chain Speedier.

Strategic Planning improves Economy

The need for speed is just part of the supply chain equation. A speedier delivery will not produce a strategic advantage for business or organizations if it cannot get the supply cheaper. The key word is Cheaper. It would be totally absurd to have the supply delivered fast if in return it becomes more expensive. This would be a disaster to business or organizations.

Collectively, speed and price should go hand in hand in the supply chain to create a strategic advantage. The question of how, where and when to procure supply in the fastest way, now has to be tempered with how, where and when can we get it the cheapest. The strategic planner must be able to incorporate such into the plan. A supplier might be able to get if fast but will the cost still justify it? A supplier might be able to get supplies cheap but will the speed justify it? These are basic questions that can affect the strategic plan.

The supply chain should be designed then in a manner where the price would be a consideration, aside of course from the speed. Business or organizations then have to source out suppliers who can provide it cheapest in relation to fast delivery. It is always wise do business with suppliers in various localities and even in various countries.

Utter dependence on a few suppliers located in the same location is never an intelligent option. An armed conflict can just erupt in the locality, as what usually happens to suppliers in the African continent and it can just wipe out your entire year’s supply of raw materials, as proven time and time again.