Overview

In this chapter we will focus on the long-term, strategic planning and design of the supply chain. During the strategic planning process an organization attempts to design a supply chain, which will enable this organization to maximize its economic performance over an extended period of time. Together with product research and development and marketing, the supply chain is one of the essential tools for a company to achieve their strategic business goals and practices. During the strategic planning process, companies identify their key products, customer markets for these products, core manufacturing processes, and suppliers of raw and intermediate materials. Virtually all organizations must redesign their supply chain from time to time to respond to changing market conditions, but the recent wave of mergers and acquisitions and the globalization of the economy have made this process even more frequent and important. For example, a company may wish to expand into a new geographical area where no infrastructure is currently in place, such as the expansion by electronics manufacturing companies into Eastern Europe after those countries adopted a market economy. Another company may wish to consolidate the duplicate distribution systems created by a merger or acquisition. Finally, strategic planning is not only used for expansion but also for retraction, such as when the United States Armed Forces developed a strategic plan for the base closings associated with the withdrawal from Western Europe.

Typically, the planning horizon for strategic planning ranges from three to ten...