Supply chain works like a relay race, where every component needs to be in sync with the next one to ensure steady workability.

Challenges like erratic customer demand behavior, complexity of operations, increasing delivery costs, and lack of end to end visibility often hinder a supply chain’s performance. This eventually affects an organization’s productivity.

Managers need to anticipate these challenges and minimize their effects through robust planning and a strong supply chain strategy.

Why Having A Supply Chain Strategy Is Important?

According to Deloitte, 79% of businesses with superior supply chain capabilities gain a competitive edge over their competitors.

One of the best examples of a successful supply chain performance comes from Toyota. The company recorded a $5.5 billion profit for the July-September period despite global supply chain constraints related to the COVID-19 pandemic. The company’s success can be attributed to a robust supply chain strategy based on the concept of Kaizen, or continuous improvement.

Supply chain strategy not only improves operational efficiencies but also streamlines your collaboration with distributors, vendors, and other stakeholders.

Here’s why it’s pivotal for your business:

  • Optimizes delivery process: A supply chain strategy defines the logistics of how and when your product will be delivered. It involves making strategic trade-offs between the cost to your company and the level of service to the final customer without compensating for quality.
  • Efficient inventory management: An effective supply chain strategy promotes end-to-end visibility into inventory management, preventing overproduction and resource wastage.
  • Increases profitability: A supply chain strategy ensures profitability by simplifying your procurement processes and reducing costs associated with delivery and inventory management.

What Should Be The Core Of Your Supply Chain Strategy?

An efficient supply chain strategy will give your business a range of benefits including support for your business strategy, improved customer retention, increased productivity, and an active response rate.

Here are the three core components of every successful supply chain strategy:

  • Demand-driven responsiveness: An efficient supply chain can sense and react to real-time demand across the network. Demand-driven responsiveness leverages data from different channels to sense, recognize and convert demand requirements into actionable responses.
  • Agility and efficiency: It refers to how swiftly and efficiently your supply chain can react to changes in the market and customer demand. It also includes the capability to anticipate, resist, and recover from disruptive events quickly.
  • Sustainability: It applies to managing environmental, economic, and social impacts across your supply chain. The sustainability goal is to minimize energy and resource consumption while having a positive impact on society in and around your operations.

How Can One Improve Their Supply Chain Strategy?

Supply chain managers often have to revamp their strategies to improve and adjust according to the market dynamics.

To build supply chain efficiency, it’s not only about investing heavily in technology overhauls but also about increasing awareness, focusing on training, and anticipating future demands.

Here’s how to get started:

  • Review your supply chain strategy: It helps you investigate if your supply chain strategy is widely communicated and understood at all staff levels, and any adjustments you need to comply with the changing market dynamics.
  • Evaluate strengths and weaknesses: It helps you recognize what works and what does not. This information makes it easy to align your supply chain strategy with your overall business strategy.
  • Understand the market trends: Recognizing the latest market trends is pivotal to a successful supply chain strategy. Factors like new technology implementation, volatile fuel prices, and changing customer expectations can impact your supply chain performance.
  • Analyze your competition: Organizing strategic insights into your competitors’ supply chains can give you an understanding of sourcing, distribution, and related processes. This helps you adapt your supply chain strategy to gain a competitive advantage.
  • Identify opportunities for improvement: Intelligent digital supply chain solutions help you identify stocking issues before they happen and generate actionable insights to help you improve your supply chain performance.
  • Develop an action plan: Specify steps to improve your supply chain strategy, use timelines and milestones to track your progress, and make course corrections whenever required.


The primary goal of every supply chain strategy is to ensure optimal supply chain performance without incurring high costs.

To truly create value, it’s significant to focus on reviewing your current supply chain strategy, investigating your competitors, and understanding how market trends can impact your supply chain performance.

The use of new technologies like unified commerce, big data, machine learning, and artificial intelligence in supply chain management has transformed the supply chain industry.

To build a competitive edge, companies can leverage supply chain analytics software like Algo to discover endless possibilities of AI and data science in supply chain optimization and build insights that drive efficiency and ROI.