Supply chain strategies, capabilities, and performance

Abstract

The choice of a supply chain strategy and value focus should be supported by specific enterprise capabilities and ultimately result in intended logistical performance. For excellent firms, a demand focus on customer service and proactive quality is more apparent at both the capability and performance levels than a supply focus on cost, productivity, distribution, and speed. Reasons are offered. Strategic intent and normative value congruency for competitive advantage also mean that customer closeness strategies such as customized logistics and agility tend to be supported particularly by demand-side capabilities, while operational excellence strategies such as time-based strategies (e.g., JIT) or lean networks tend to be supported more by supply-side capabilities. While on-time performance and absence of loss-and-damage are minimum order qualifiers, other logistical performance outcomes are order winners depending on the chosen value discipline. Doing it right the first time is more important than problem recovery, yet service failures do provide valuable information for problem diagnosis, organizational learning, and future improvements. Similarly, advanced notification of problems to customers and total performance measurement like overall customer satisfaction are also characteristic of best-in-class firms.