Strategic fit:

Consistency between customer priorities of competitive strategy and supply chain capabilities specified by the supply chain strategy

• Competitive and supply chain strategies have the same goals
• A company may fail because of a lack of strategic fit or because its processes and resources do not provide the capabilities to execute the desired strategy.

a) Understanding the Customer and Supply Chain Uncertainty.

• Identify the needs of the customer segment being served
• Quantity of product needed in each lot
• Response time customers will tolerate
• Variety of products needed
• Service level required
• Price of the product
• Desired rate of innovation in the product.
• Overall attribute of customer demand
• Demand uncertainty: uncertainty of customer demand for a product
• Implied demand uncertainty: resulting uncertainty for the supply chain given the portion of the demand the supply chain must handle and attributes the customer desires.
• Implied demand uncertainty also related to customer needs and product attributes
• First step to strategic fit is to understand customers by mapping their demand on the implied uncertainty spectrum.

b) Understanding the Supply Chain.

• How does the firm best meet demand?
• Dimension describing the supply chain is supply chain responsiveness
• Supply chain responsiveness -- ability to
  • respond to wide ranges of quantities demanded
  • meet short lead times
  • handle a large variety of products
  • build highly innovative products
  • meet a very high service level
• There is a cost to achieving responsiveness
• Supply chain efficiency: cost of making and delivering the product to the customer
• Increasing responsiveness results in higher costs that lower efficiency.

c) Achieving Strategic Fit.

• Step is to ensure that what the supply chain does well is consistent with target customer’s needs.