WORKING BOOK
Working Paper Number (16-02)
April 08, 2016
Rethinking your supply chain strategy:
a brief guide
Roberto Perez-Franco1
1 MIT Center for Transportation and Logistics
MIT Global Scale Network
MIT Global Scale Network
Working Paper Series
Rethinking your supply chain strategy: a brief guide
Roberto Perez-Franco, MIT Center for Transportation and Logistics
Abstract
Rethinking a supply chain strategy is not a trivial problem. Supply chains tend to be rather complex
entities, and the act of thinking strategically about them, what we call supply chain 'strategizing', reflects
this complexity. The absence of an established answer in the supply chain management literature
regarding how to rethink the supply chain strategy of an organization further compounds what is already
a daunting problem. Between 2006 and 2016, a team of researchers at MIT’s Center for Transportation
and Logistics (CTL) explored the problem of supply chain strategizing, as part the Supply Chain 2020
Project. After a decade of research in collaboration with world-class organizations, significant progress
was made. Many questions remain open, and will continue to be explored by an offshoot of the SC2020
Project, called the MIT Supply Chain Strategy Lab. But we feel it is time to share with the community of
supply chain managers the insights we have derived so far on how to re-think the supply chain strategy of
an organization. That is the purpose of this text.
Keywords: supply chain strategy, strategizing, capture, evaluation, reformulation
Acknowledgements:
The authors thank our students Javier Martin, Leonardo Laranjeira, Daniel Mota and Manuel Rippel for
the feedback they provided to early versions of this manuscript.
Corresponding Author:
Roberto Perez-Franco
MIT Center for Transportation and Logistics
77 Massachusetts Ave, E40-293, Cambridge, MA 02139
Email: roberto@mit.edu
MIT Global Scale Network
rethinking your
supply chain strategy
A BRIEF GUIDE
roberto perez-franco
contents
introduction
I
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Acknowledgements
CHAPTER 1
the nature of the beast
B
The basic challenges
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It’s complicated!
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Complexity: Objective vs. Subjective
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Prescriptions to tame complexity
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CHAPTER 2
our approach to the problem
H
Type-based vs Specific
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Best practices vs Tailored practices
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External and Internal Wisdom
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Fundamental tasks
Task #1: Scoping
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Task #2: Visioning
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Task #3: Specification
Task #4: Articulation
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Task #5: Evaluation
Task #6: Generation
Task #7: Selection
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CHAPTER 3
a framework for rethinking SCS
B
A definition of supply chain strategy
Strategizing in multiple dimensions
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Bridging the gap
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Adding granularity
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The conceptual elements
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The enabling elements
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The internal elements
The external elements
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The complete picture
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CHAPTER 4
capturing your SCS
B
Categorization vs Articulation
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Mapping concepts 101
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Negotiate directly with
tier-2 suppliers on behalf
of tier-1 suppliers.
Aggregate volume of
procurement orders
Leverage Dell’s
buying power
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Aggregate volume of
procurement orders
Leverage Dell’s
buying power
Negotiate directly with
tier-2 suppliers on behalf
of tier-1 suppliers.
RETHINKING YOUR SUPPLY CHAIN STRATEGY | 37
This
way to
“Why?”
Ensure continuity
of supply
Aggregate volume of
procurement orders
This
way to
“How?”
Reduce procurement
costs further
Leverage Dell’s
buying power
Negotiate directly with
tier-2 suppliers on behalf
of tier-1 suppliers.
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Vertical axis: the strategy-operations continuum
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Horizontal axis: the thematic range
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When mapping, hold judgment
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Nominal and Executed
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CHAPTER 5
a protocol for capture
W
Step 1 - Scope
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Example
Step 2 - Conduct qualitative interviews
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Level 1 (7 individuals)
Executive VP of Strategic Sourcing
Senior VP of Marketing and Retail Sales
Senior VP of Operational Excellence
Senior VP of Customer Service
Senior VP of Strategy and Business Development
Executive VP of Operations and Supply Chain
Senior VP of National Chain Accounts
Level 2 (7 individuals)
VP of Operations - West Region
VP of Operations - East Region
VP of Operations - Central Region
VP of Specialty Sales
VP of Information Technology
VP of Strategic Planning and Execution
VP of Operational Excellence
Level 3 (8 individuals)
Director of Inventory Optimization
Director of Operations (x2)
Director of Retail Sales (x2)
Director of Consumer Products
Manager of Performance Cons.
Director of Marketing & Product Development
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Open Questions
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Semi-open questions
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Example
Step 3 – Identify areas, policies and choices
Task 1: Identify tentative areas
Task 2: Identify policies and choices in each area
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Task 3: Confirm validity of policies and choices
Example
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o
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o
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Step 4 – Identify objectives & build hierarchy
Task 1: Look for the objectives
Task 2: Prepare a hierarchical summary per area
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Example
o
o
o
Step 5 – Build partial maps
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Example
Step 6 - Validate partial maps
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Example
Step 7 - Combine related partial maps
Example
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Step 8 – Map nominal strategy
─
Example
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Step 9 - Assemble the FSM
Example
Step 10 - Validate FSM
First round: Individual feedback
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Second round: Collective feedback
Example
CHAPTER 6
evaluation criteria
O
Rumelt’s Challenge
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Our Approach
Evaluation Criteria
Coverage
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Clarity
Feasibility
Internal Consistency
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External Consistency
Support
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Sufficiency
Parsimony
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Riskiness
Advantageousness
Actionability
CHAPTER 7
applying the criteria
T
Coverage
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Examples
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Clarity
Examples
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Feasibility
Examples
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Internal Consistency
Compatibility
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Example
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B2
0%
B3
0%
B4
0%
0%
0%
B5
27%
18%
18%
9%
B6
0%
0%
0%
0%
9%
B7
9%
0%
9%
0%
15%
38%
B8
0%
0%
0%
0%
9%
73%
38%
B9
0%
0%
0%
0%
23%
9%
0%
18%
B10
0%
0%
0%
0%
10%
18%
0%
0%
18%
B11
0%
0%
0%
0%
0%
0%
0%
18%
0%
B12
8%
0%
0%
0%
9%
0%
0%
15%
0%
9%
0%
B1
B2
B3
B4
B5
B6
B7
B8
B9
B10
B11
27%
8%
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Coherence and Synergy
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Examples
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Support
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Example
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A1
A2
A3
A4
A5
A1
A2
A3
A4
A5
B1
50%
60%
90%
10%
40%
B2
10%
50%
70%
0%
20%
B3
70%
60%
80%
50%
60%
B4
70%
20%
10%
10%
50%
B5
60%
90%
89%
20%
50%
B6
10%
20%
40%
0%
20%
B7
50%
40%
70%
10%
30%
B8
60%
50%
0%
30%
40%
B1
B2
B3
B4
B5
B6
B7
B8
50%
40%
10%
70%
60%
60%
40%
10%
60%
50%
20%
30%
20%
50%
30%
30%
70%
30%
80%
50%
40%
10%
0%
60%
40%
80%
70%
60%
80%
50%
50%
60%
30%
90%
60%
40%
50%
70%
70%
50%
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Sufficiency
Example
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About the remaining criteria
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CHAPTER 8
reformulating your SCS
O
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Progressive Formulation
Who is involved
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Required Inputs
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Steps
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From Specification to Elaboration
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A word on implementation
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CHAPTER 9
reformulation examples
T
Example #1: Libica
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Example #2: Convenience Stop
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o
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o
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o
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o
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CHAPTER 10
connecting the dots
L
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references
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index
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