The 3 Levels Of Supply Chain Management And How They Effect Your Business

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Supply chain management is the process of planning, organizing, and coordinating the flow of materials and information among the various stages of a business to meet customer demand. It is a critical element of any company that wants to grow and maintain its competitive edge.

KEY Takeaways

  • Strategic planning looks at the big-picture and focuses on long-terms decisions. It sets broad goals and provides direction for the entire operation.
  • Tactical planning sets goals and objectives within the scope of that strategy.
  • Operational execution ensures that the plans are implemented properly.

Supply chain management is the process of managing the flow of materials and products through an organization from their source to their final destination. Supply chain management aims to ensure that products are delivered on time, cost-effectively, and in the proper condition.

The 3 Levels of Supply Chain Management: Strategic, tactical and operational

The three levels of supply chain management are strategic, tactical and operational.

1. Strategic Planning

This level of supply chain management is responsible for developing long-term plans that outline the company's overall objectives and goals. It includes identifying and assessing the company's strengths and weaknesses, making strategic decisions about where to focus resources, and creating a vision for the future.

This level of planning looks at the big picture and focuses on long-term decisions. This includes decisions such as:

- Single sources vs multiple suppliers

- Technology sharing

- Location decisions

2. Tactical Planning

Tactical planning involves developing specific plans to achieve specific objectives within the scope of the strategic plan. These plans may include setting targets, establishing priorities, and designing strategies to achieve those targets.

Tactical planning is focused on specific goals and objectives. This includes:

- Purchasing strategies

- Transportation

- Warehouse locations and distribution centers

- Distribution channels

3. Operational Execution

Operational execution is responsible for implementing the tactical plans into action to achieve them. This includes coordinating with various departments within the company, setting up systems and procedures to support execution, and ensuring that all stakeholders are kept informed of progress throughout the process.

Operational planning is focused on day-to-day tasks and details how these tasks should be carried out to achieve the company's objectives. This includes:

- Setting schedules

- Maintaining inventory levels

- Coordinating resources

- Ensuring quality, on-time delivery and cost

 

Effective supply chain management is essential for any business. By understanding the three levels and how to implement them, you can ensure your company's success. Each level has its own set of challenges and priorities, which must be balanced to achieve success. Failure to do so can lead to wasted resources and lost profits.

Summary:

Characteristics Strategic Tactical Operational
Time Horizon Long-term (3-5 years or more) Medium-term (1-2 years) Short-term (daily to 1 year)
Focus Direction and vision Implementation of strategy Execution of tactical plans
Scope End-to-end supply chain, network design Procurement, inventory optimization, capacity planning Order processing, transportation, warehousing, quality control
Examples Sourcing strategy, supplier selection, supplier relationship management Demand forecasting, production planning, transportation route optimization Inventory management, warehouse layout, shipment tracking, order picking
Frequency of Review Periodic (annually or bi-annually) Ongoing (quarterly or semi-annually) Frequent (daily or weekly)
Level of Detail High-level, broad goals that align with overall business strategy Specific objectives that support supply chain goals and initiatives Granular details of day-to-day supply chain processes and procedures
Involvement of Leadership Top-level leadership, including C-suite executives and board members Middle management, including supply chain directors and managers Lower-level management and employees who execute supply chain tasks and activities
Level of Risk High, strategic decisions with long-term implications for supply chain performance and business success Moderate, tactical decisions with shorter-term implications for supply chain performance and business success Low, operational decisions with immediate impact on supply chain performance and customer satisfaction
Degree of Flexibility Low, as strategic decisions may require long-term commitments and significant resources Moderate, as tactical decisions can be adjusted as needed based on changing business needs and supply chain performance High, as operational decisions may require immediate adjustments to ensure supply chain performance and customer satisfaction
Level of Coordination High, as decisions impact the entire supply chain and require collaboration among multiple stakeholders Moderate, as decisions impact specific supply chain functions and require coordination among various teams and departments Low, as decisions impact specific supply chain tasks and activities and require coordination among individual employees and teams.

Posted on April 17, 2022 by  Quality Gurus


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