Gaining Competitive Advantages Through Supply Chain Management

If you were asked to generate a list of the world’s best companies – companies that would enjoy sustainable growth and healthy margins – which would you include? Would companies like the ones listed below come to mind?

  • Wal-Mart

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  • Toyota
  • Starbucks
  • Dell

How do companies like these somehow manage to stay ahead of the curve, to lead where others must follow? What is it that makes companies like these stand out from the crowd? Is it that their assortment and quality of products clearly outshine those competitors? Possibly. Is it that they communicate the inherent value of their products better than their competitors? Maybe. Is it that they enjoy considerable channel power and negotiate favorable terms with suppliers? Perhaps. Is it that their supply chains and integrated logistics operations provide distinctive competitive advantage? Definitely. While these pillars of modern-day business achievement provide desired products at a good value to customers, all four have their supply chain management to credit for much of their success.

This Thing Called Supply Chain Management

Beyond the management of physical inventories and information in the domain of logistics is the way that products are developed, marketed, and sold. Add in the relationships formed with suppliers and customers and you have supply chain management. When viewed in this light, supply chain management is clearly much more than logistics. This integration of a company’s planning and execution functions represents not just a way to achieve efficiencies, but a holistic strategy for doing business.

While much task has surrounded the concept of supply chain management, very few companies are seizing the potential found in broad-scale adoption. Why? First, the concept of supply chain management is not well understood. Much debate has surrounded the very meaning of the term, with a lack of consensus existing even today. Even the functions that belong in supply chain management have been debated. Another reason supply chain management is not widely practiced is that it is not easy to accomplish. As noted, it involves coordination of planning and operational activities throughout the company as well as coordination of activities with suppliers and customers.

Interestingly, it is often easier to achieve the coordination with outside members of the supply chain than within the company. For that reason, companies are often inclined to start with suppliers because they can always tell them what to do! They might even have great success in bringing customers around to their way of thinking, but achieving collaboration among a multitude of functional areas within a firm – well, that is another animal entirely! However, to enjoy any big, sustainable gains from supply chain management, a company must first get its own house in order.

A Cohesive Unit

Supply chain management is about working the levers of a company and getting them in sync with the levers of trading partners in the supply chain. Manipulating the levers of the outside parties will only get you so far, and the gains may not be sustainable if you are unwilling or unable to work the levers within your own four walls. That is why the change must come from within the company first and then transcend to the up and downstream parties. It is no coincidence that the leaders in supply chain management tend to be companies that have strong cultures that emphasize cohesive, coordinated action. They also tend to be companies that others, including their own suppliers and customers, look toward for leadership, making it viable for integration to occur at the cross-enterprise level.

 

 

 

 

 

Posted by LeanCor Supply Chain Group

LeanCor Supply Chain Group is a trusted supply chain partner that specializes in lean principles to deliver operational improvement. LeanCor’s three integrated divisions – LeanCor Training and Education, LeanCor Consulting, and LeanCor Logistics – help organizations eliminate waste, drive down costs, and build a culture of continuous improvement.

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