©McGraw-Hill Education. All rights reserved. Chapter 2 Supply Strategy ©McGraw-Hill Education. All rights reserved.

Key Questions Addressed in Chapter 2 How can supply and the supply chain contribute effectively to organizational objectives and strategy? AND How can the organizational objectives and strategy properly reflect the contribution and opportunities offered in the supply chain? ©McGraw-Hill Education. All rights reserved.

Supply Strategy Interpreted in Organizational Strategy Objectives Organizational Objectives Supply Strategy Organizational Strategy ©McGraw-Hill Education. All rights reserved.

©McGraw-Hill Education. All rights reserved. Supply Strategy Links Current and Future Markets to Current and Future Needs Current Needs Future Needs Current Markets Future Markets ©McGraw-Hill Education. All rights reserved.

Normal Organizational and Supply Objectives Organizational Objectives Survival Growth Financial Environmental Supply Objectives Quality Quantity Delivery Price Service ©McGraw-Hill Education. All rights reserved.

Six Major Supply Strategy Areas Assurance of supply Cost reduction Supply chain support Environmental change Competitive edge Risk management ©McGraw-Hill Education. All rights reserved.

Three Categories of Supply Risk Operational: Risk of interruption of the flow of goods or services Financial: Risk that the price of the goods or services acquired will change significantly Reputational: Risk that the organization’s reputation will be harmed by a supply decision ©McGraw-Hill Education. All rights reserved.

Strategic Purchasing Planning Process Restate organizational goals Identify and analyze alternatives Determine supply objectives to contribute to organizational goals Determine supply strategy Review implementation factors Isolate factors affecting achievement of supply objectives Gain commitment and implement Evaluate ©McGraw-Hill Education. All rights reserved.

Supply Strategy Questions What? Quality? How much? Who? When? What Price? Where? How? Why? ©McGraw-Hill Education. All rights reserved.