Strategy Thinking - The Five Elements: 1. System Perspective 5. Intent Focus

Slide 2.
1
Strategy and Strategic Procurement
5. Intent 1. System
Focus Perspective
Strategy Thinking –
4. Thinking The Five Elements 2. Intelligent
in Time Opportunism
3. Hypothesis
Driven
Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, © Pearson Education Limited 2005
Slide 2.2
Definitions of Strategy
As a plan, strategy is some sort of consciously intended course of action, a

guideline (or set of guidelines) to deal with a situation.
As a ploy, strategy is a special maneuver intended to outwit an

opponent or competitor.
As a pattern, strategy is a stream of actions (demonstrating)

consistency in behavior whenever intended or not intended.
(See Chapter 2 – 2.2.1 – for more definitions)
Slide 2.3
Eight Characteristics of Strategy
Concerned with long-term direction
Trying to achieve some advantage over competitors
Concerned with scope of an organisation’s activities
Matching of resources and activities of an organisation to
the environment in which it operates
Building on or stretching resources and competencies
May require major resource changes
Likely to affect operational decisions
Strategies also affected by values and expectations of
those who have power
Slide 2.4
Strategy Development – Schools Headings
- How strategies should

Prescriptive Schools be formulated
- Representing how
Descriptive Schools strategies are formulated
- Configurations and
Configuration School transformation
Slide 2.5
Strategy Development – The 10 Schools Classification
Design
Prescriptive Schools Planning
Positioning
Entrepreneurial
Cognitive
Descriptive Schools Learning
Power
Configurations
Configuration School
Transformation
Slide 2.6
Levels of Organizational Strategy
Corporate Strategy • What business should we be in?
Top Tier • Deciding grand strategies
• Determining values
• Coordinating and managing major resources
• Deciding business locations and structures
Business Strategy • Coordinating and integrating unit strategies

Middle Tier • Developing distinctive competencies
• Identifying product market niches
• Monitoring products and markets
Functional/Operational Strategies
Lower Tier • Ensuring skills and competencies are utilised effectively
• Integrating activities e.g., purchasing/marketing
• Providing information and expertise
Slide 2.7
Slide 2.8
Strategic Analysis and Tools of Scientific Analysis
Definition of Strategic Analysis

Developing a theoretically informed understanding of the environment in
which an organization is operating together with an understanding of
the organization's interaction with its environment in order to improve
organizational efficiency and effectiveness by increasing the
organization's capacity to deploy and re-deploy its resources intelligently.
Tools of Scientific Analysis

• Environmental scanning
• Porter analysis
• Scenario analysis
• Organisational appraisal
• Critical success analysis
• Gap and SWOT analysis
Slide 2.9
Organisational Strategy – Impact of Environmental Factors
• Private
Sector Impact • Public
• Voluntary
• Entry barriers
• Determinants of supplier power
• New entrants
Industry Impact • Rivalry
• Substitution threat
• Buying power
• Legal restrictions
Refer to changes in:
• Political
• Economic
Macro – Environmental • Social
• Technological
• Environmental
• Legal environments
Slide 2.10
Internal Scrutiny
Essential to Scan:
Resources • Money
• Physical facilities
• Human resources
• IT resources
Culture (see Figure 2.7)
Value chains and structure (refer Chapters 3 and 4)
Critical success factors
Slide 2.11
Strategy Formulation
Articulates a realistic, credible and positive projection of the
Vision Statement future state of an organisation or functions or operations
within that operation.
Mission Statement Answers the questions “What is our business?”
Explicit statement of the results the organisation wishes to

Objectives
achieve
Application of
Strengths, weaknesses, opportunities and threats analysis
SWOT Analysis
Slide 2.12
Evaluation of Alternative Strategies

“Four Principles”
Consistency The strategy must not present mutually inconsistent policies.
The strategy must represent an adaptive response to the

Consonance
external environment and critical changes therein.
The strategy must provide for the creation and/or

Advantage
maintenance of a competitive advantage.
The strategy must neither overtax available resources nor

Feasibility
create insoluble problems.
Slide 2.13
Krajlic Portfolio Management

• First introduced in 1983.
• Aims to guide managers to recognise
the weakness of their organisation and
formulate strategies for guarding
against supplies disruption.
• Profit impact defined in terms of:
• Volume purchased
• Percentage of total cost
• Impact on product quality or business
growth
• Supply risk assessed in terms of:
• Availability
• Number of suppliers
• Competitive demand
• Make or buy opportunities
• Storage risks
• Substitution opportunities
Slide 2.14
The Main Stages of Strategy Implementation

Communicate strategic plans to everyone in the organisation
Obtain commitment from those concerned
Framing polices and procedures
Setting operational targets and objectives
Assigning responsibilities and commensurate authority
Changing, where necessary, organisational structures
Allocation of resources and agreeing budgets
Providing training for employees
Slide 2.15
Post-implementation Evaluation, Control and Review

• Internal consistency
• Environmental fit
Evaluation Criteria • Resource fit
• Communication and implementation
• Establish performance standards

• Measure performance
Control Process • Compare actual with planned
• Take appropriate corrective action
• General strategy
Review • Alternative strategy
• Alternative methods
Slide 2.16
Strategic Purchasing and Supply Chain Process
CIPS Model Key Points
Organization's vision, mission and values
Organization's overall strategy
Strategic sourcing analysis
Proactive demand management
Acquisition pre-contract
Acquisition post-contract
Review contract and/or relationship or end contract and/or relationship

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Slide 2.

As a plan, strategy is some sort of consciously intended course of action, a

As a ploy, strategy is a special maneuver intended to outwit an

As a pattern, strategy is a stream of actions (demonstrating)

(See Chapter 2 – 2.2.1 – for more definitions)

Strategy Development – Schools Headings

- How strategies should

Strategy Development – The 10 Schools Classification

Business Strategy • Coordinating and integrating unit strategies

Strategic Analysis and Tools of Scientific Analysis

Definition of Strategic Analysis

Tools of Scientific Analysis

Culture (see Figure 2.7)

Value chains and structure (refer Chapters 3 and 4)

Critical success factors

Mission Statement Answers the questions “What is our business?”

Explicit statement of the results the organisation wishes to

Evaluation of Alternative Strategies

Consistency The strategy must not present mutually inconsistent policies.

The strategy must represent an adaptive response to the

The strategy must provide for the creation and/or

The strategy must neither overtax available resources nor

Krajlic Portfolio Management

The Main Stages of Strategy Implementation

Obtain commitment from those concerned

Framing polices and procedures

Setting operational targets and objectives

Assigning responsibilities and commensurate authority

Changing, where necessary, organisational structures

Allocation of resources and agreeing budgets

Providing training for employees

Post-implementation Evaluation, Control and Review

• Establish performance standards

Organization's overall strategy

Strategic sourcing analysis

Proactive demand management

Review contract and/or relationship or end contract and/or relationship

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