Page 348 -

306 Chapter 11 • Supply Chain Management

for Toys “R” Us, because they made a lot of their customers angry and dissatisfied. Toys “R” Us
eventually had to discontinue its business strategy of selling toys online on its own and created a
3
partnership with Amazon.com, which never worked smoothly. For any company to be success-
ful, its supply chain strategy and competitive strategy must be aligned or work together toward a
common goal. Strategic alignment means that both the competitive and supply chain strategies
have the same objective. It refers to consistency between the customer priorities that the compet-
itive strategy hopes to satisfy and the supply chain capabilities that the supply chain strategy
aims to build.
A good SCM can assure the company agility and flexibility needed in today’s Web-enabled
competitive landscape. As corporations strive to focus on core competencies and become more
flexible, they have reduced their ownership of raw materials sources and distribution channels.
These functions are increasingly being outsourced to other corporations that can perform the
activities better or more cost effectively. The consequence is that there is an increase in the
number of companies involved in satisfying consumer demand, while there is a reduction in
management control of daily logistical operations. Less control and more supply chain partners
create the challenge for the SCM. The purpose of SCM is to improve trust and collaboration
among supply chain partners and to integrate the processes to a wholesome system, thus improving
supply chain responsiveness and efficiency, as shown in Figure 11-1.
Marketing, distribution, planning, manufacturing, and the purchasing departments tradi-
tionally operate independently in organizations. These departments have their own objectives,

Customers

Orders

Customer
Material
Service Centers

Shipment
Requests Material Vendor Managed Inventories

Distribution
Centers

Replenishment Material
Requests

Suppliers

FIGURE 11-1 Collaboration in Supply Chain Information. Source: Sanjay Jain, Supply Chain
Management Tradeoffs Analysis, in Proceedings of the 2004 Winter Simulation Conference,
R. G. Ingalls, M. D. Rossetti, J. S. Smith, and B. A. Peters, eds. Reprinted by permission of
Dr. Sanjay Jain. The George Washington University.

3 Ouchi, M. S. (March 3, 2006). Toy Story Winds Up Leaving Amazon Grim. Knight Ridder Tribune Business News.
Washington, 1.