Supply Chain Strategy and Design
Strategic fit before optimization
Supply chain strategy translates competitive strategy into structural choices: which markets to serve, where to locate plants and distribution centers, what to make versus buy, and how much capacity and inventory to hold as buffers. Candidates must be able to explain strategic fit - aligning competitive priorities (cost, delivery speed, reliability, flexibility, innovation) with supply chain design - and to place products along the efficiency-to-responsiveness continuum. Functional, predictable products suit lean, low-cost chains; innovative, volatile products suit agile, responsive chains. Many firms run both, creating a "league" supply chain with a push–pull boundary where speculative production stops and customer orders drive flow.
Know the design levers: postponement (delayed differentiation), segmentation of customers by service needs rather than product line, network optimization using total landed cost instead of purchase price, risk pooling through centralization, and outsourcing anchored in core competency analysis. The SCOR framework (Plan, Source, Make, Deliver, Return, Enable) supplies the standard vocabulary for describing these processes.
Traps: answer choices that reward the lowest unit price when total landed cost is higher; options that apply one chain design to every product; confusing postponement with vendor-managed inventory; and treating strategic fit as maximizing a single metric rather than consistency across decisions.
Worked rule: Total landed cost = unit price + freight + duty + inventory carrying + handling + quality/rework + risk cost. Offshore at 8.00 with 1.20 freight, 0.60 duty, 0.45 carrying and 0.30 rework = 10.55, losing to a domestic 9.90 despite a 1.90 lower price. Rebuild the comparison before answering.