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Tactical Supply Chain Management

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Introduction

Tactical supply chain decisions focus on adopting measures that will produce cost benefits for a company. Tactical decisions are made within the constraints of the overarching strategic supply chain decisions made by company management.

The strategic supply chain decisions cover the breadth of the supply chain for the entire company. Tactical supply chain decisions take the strategic message and focus on creating real benefits for the company. These can include tactical decisions in manufacturing, logistics, suppliers and product development.

Manufacturing

Strategic decisions may be made by company executives about the number and location of manufacturing sites to be operated. However, it is at a tactical level that decisions are made on how to produce the products are the lowest cost. Tactical decisions may be made as to the adoption of manufacturing methodologies such as kanban or just-in-time. Tactical decisions may be required at a regional level by using technology that is available that reduces material wastage, but cannot be exported to other manufacturing plants.

Logistics

Although strategic company decisions may require an in-house logistics function to be operational, a tactical decision may be required to use a third party logistics company in a region or country where transportation costs are high and cost benefits can be achieved by outsourcing. Similarly in countries where land costs are high, construction of warehousing facilities may be cost prohibitive and despite not following the strategic vision, a tactical decision is made to use public warehousing.

Suppliers

Many companies recognize the cost benefits of using global suppliers and adopt strategic supply chain policies to take advantage. At a tactical level, management has to work within strategic guidelines to identify and negotiate the terms that will realize the greatest cost benefit across the company.

Product Development

Companies make strategic decisions on the product lines they are committed to producing. Tactical decisions have to be made as to the particular products that should be developed. If a company makes a strategic decision to introduce a new line of MP3 players in Europe, the company has to make tactical decisions regarding the specifications of the players, what countries they will be sold in and the market segment they will targeted at where the most profit can be achieved.

The tactical supply chain decisions that a company makes are not made in isolation but within the framework of the strategic supply chain decisions made at a global level, which in turn are based on the global objectives of the company.

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