Strategic fit means that both the competitive and supply chain strategies have the same goal. It refers to consistency between
- The customer priorities that the competitive strategy hopes to satisfy and
- The supply chain capabilities that the supply chain strategy aims to build
Major task of chief executive officer (CEO) is aligning all of the core strategies with the overall competitive strategy to achieve strategic fit. During the supply chain design a key consideration is the strategic fit.
A company’s success or failure closely linked to the following
- The competitive strategy and all functional strategies must fit together to form a coordinated overall strategy
- Different functions in a company must appropriately structure their process and resources to be able to execute these strategies successfully
Basic steps to achieve strategic fit
- Understanding the customer, and supply chain uncertainty
- Understanding the supply chain capabilities
- Achieving strategic fit
Understanding the Customer and Supply Chain Uncertainty
To understand the customer, a company must identify the needs of the customer segment being served.
Customer demand from different segments may vary along several attributes:
- The quantity of the product needed in each lot
- The response time that customers are willing to tolerate
- The variety of products needed
- The service level required
- The price of the product
- The desired rate of innovation in the product
Strategic fit is achieved if what the supply chain does particularly well is consistent with the targeted customer’s needs and the uncertainty of the supply chain. For high level of performance, companies should move their competitive strategy (and resulting implied uncertainty) and supply chain strategy (and resulting responsiveness) towards the zone of strategic fit. To achieve complete strategic fit, a firm must consider all functional strategic within the value chain.