Triple-A Supply Chain: 10 Strategies to Supercharge Performance

In the past, companies focus on a single strategy, either to obtain cost leadership or differentiate your company in the eyes of consumers to demand the premium price. In this article, we will discuss development of a single strategy, a segmentation strategy and a multi-dimensional strategy in details.

Theoretical Background
In previous article, we discuss how to use value chain analysis to formulate supply chain strategy. Then, let's take a look how other strategies emerge.

Supply chain professionals learn how to divide things into groups (segmentation) for a long time. For example, we use pareto analysis to segment inventory into 3 groups. We segment customers into 3 groups also so we can establish the service level according to each group. In 1983, Peter Kraljic explained how to formulate a commodity strategy based on 4 segments, it's later known as Kraljic Matrix or Purchasing Portfolio Matrix. Fourteen years later, Marshall Fisher proposed that supply chain be tailored based on 2 types of products, functional or innovative products.

Multi-dimensional view of strategy took place in 1999 in the paper "Leagility: Integrating the lean and agile manufacturing paradigms in the total supply chain" by Naylor et al. The idea is to try to excel at 2 strategies (lean/agile) at once.

Triple-A Supply Chain
Lee 2004 had a different opinion. According to his extensive experience in helping companies cut costs and improve speed, he found similar patterns, that, successful companies demonstrated the excellence in multi-dimensional area, namely, Agility, Adaptability and Alignment.

- Agility focuses on how to respond to a short term change in the demand/supply imbalance quickly
- Adaptability is a medium term strategy to cope with the changes in the market
- Alignment is a strategic long term plan to improve partnership in supply chain.

Multi-dimensional strategy is different from other type of strategy in the way that, you don't have to segment or anything but you have to excel at all areas at the same time .

In order to introduce readers to the concept of Triple-A Supply Chain, infographic is produced based on original 14 quality statement as below,




Discussion
Achieving 3 areas of supply chain excellence at once is definitely requires a long term commitment. Anyway, the good point of Triple-A Supply Chain is that it covers the broad strategies across a long time frame. Also, it doesn't require companies to make the big investment in any IT system. The most important thing is the attitude to make Triple-A Supply Chain Strategy a reality.