Align Supply Chain Strategy to Business Strategy in 2020
October 15, 2020
The purpose of business has always been to create goods and services for everyday people, and despite how much we are seeing the business landscape evolve, 2020 corporations are no different. All corners of an enterprise serve the customer. With the advent of better data, newer technology, and an elevated way of thinking about problems, the challenge has quickly become a game of achieving this more efficiently than ever before.
One crucial aspect of this need for efficiency stems from the supply chain’s growing importance.
Corporate Strategy is Chasing Consumer Preferences
At the heart of every long-term and short-term business trend is the consumer. Consumer preferences are always changing, but the heightened level of disruption to both business and personal life is accelerating that trends.
According to a 2020 report by Ernst & Young, less than 10 percent of food sales were executed online before the COVID-19 pandemic hit. That number has since skyrocketed to 45 percent. That same report indicates 43 percent of American consumers admit they expect to shop online for items they previously preferred purchasing in-store. ECommerce prevalence has grown steadily for at least a decade, and jumped by 37 percent from Q1 2020 to Q2 2020, as reported by the U.S. Department of Commerce.
In addition to how they buy finished goods, consumers are changing what they spend their money on in a pretty significant way. As of August 8, 2020, Deloitte shows that U.S. consumers are saving an average of 15 percent on all spending, and that cost has shifted dramatically away from discretionary items and towards essentials.
To read more about how this shift in consumer preferences manifested in freight shipments throughout the Breakthrough network, click here.
Consumers are dramatically changing where they purchase goods which is influencing how organizations think about the physical distribution of their supply chains. This shift has long signaled the need to adapt the way we think about how we move goods to market—and more importantly directly to consumers.
Logistics Strategy and Corporate Strategy are One and the Same
As consumer preferences evolve, an equivalent level of change needs to occur in the supply chain to adapt. When marketing makes promises to customers—like next-day or timely delivery, supply chain transparency, high customer service levels, or sustainable manufacturing practices—the supply chain needs to deliver. Adding new features and facilitating new product development to meet customer satisfaction hinges on the ability to move raw material.
No matter how superior your products’ competitive advantage is over your peers, if the supply chain is not central to your organizational goals, consumers will never experience your manufactured products. The sales and operations planning process must be in sync. This makes the importance of supply chain strategy alignment with business strategy not only beneficial but necessary to success in 2020 and far beyond it.
The Importance of Aligning Supply Chain Strategy with Business Strategy
From widely sweeping sustainability initiatives to highly operational procurement practices, the supply chain’s scope of impact is vast. This makes its potential to drive change in all areas of your business even more influential, and significantly more lucrative than many initiatives.
When you elevate the value of an optimally functioning supply chain in the eyes of the wider organization, you unlock new possibilities to delight your customers. The supply chain and corporations are one and the same. One cannot function without the other, and if supply chain alignment isn’t sitting at the center of board-room conversations, no other goals can be met.
Supply chain management as a concept is over 100 years old. As the Council of Supply Chain Management Professionals outlines on their website, it has the ability to elevate the quality of healthcare, create jobs, protect us from natural disasters, and improve the way we all live. It has long been a tool to elevate other key performance indicators across businesses.
But the year 2020, full of disruptions like the world could never anticipate, has proven that it is no longer a tool; it is a key to the future success of your organization.