Five drivers of competitive supply chain

Competition is not a new phenomenon. Countries, companies, and humans have always competed with each other. Some may argue that the world would not be as developed as it is today without competition. After all, competition is the primary driver of innovation. A competitive supply chain is no different; we review some of the drivers in this article.

As supply chains continue to evolve, product innovation is no longer the sole focus for competing businesses. Supply chains are also getting some of that attention.

Businesses used to compete by trying to innovate their product as much as possible. For instance, every year, Samsung releases a new Galaxy, and Coca-Cola tweaks its packaging and introduces a new product into the market. All these in a bid to get an edge over their rivals.

A business can get an edge over its competitors with an optimized supply chain, prompting massive investments and innovation of the supply chain.

 

Current drivers of a competitive supply chain

A competitive supply chain is not a single entity. It is more of a multi-dimensional and relative concept.

Assuming these drivers will change as supply chains evolve is a sensible approach. Some current drivers of the competitive supply chain were not acceptable a few years ago.

 

1. Investment in technology

Still reeling from the effects of the pandemic, businesses, more than ever, are seeking worthwhile technologies that can help their supply chain gain an edge. 

Supply chain management can get complex and quite complicated. Think of it; an average corporation’s supply chain can span different regions and partners. 

Investment in technology enables supply chain management and professionals to get the best out of their supply chain.

 

𝗪𝗵𝗮𝘁 𝗮𝗿𝗲 𝘀𝗼𝗺𝗲 𝗼𝗳 𝘁𝗵𝗲𝘀𝗲 𝘁𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝗶𝗲𝘀?

• Warehouse automation
• Big data
• Internet of things
• E-commerce
• Artificial intelligence for forecasting and procurement

 

2. Collaboration

Organizations increasingly collaborate with suppliers or partners in different supply chain segments to achieve an optimal and competitive supply chain.

Collaboration in the supply chain allows an organization or a business to focus on areas they are good at while partnering with another company to help gain efficiency in other areas. 

Example: In 2000, about 25% of major corporations in the United States outsourced their logistics. Today, that number is well over 90%. 

Organizations in the food, vehicle, fashion, and many other industries collaborate with multiple partners to get the best out of their supply chain. 

Although collaboration has merits, it is also quite complex to manage, especially when several partners or collaborators are on board.

 

 

3. Quality control/management

A product’s quality is the sum of all the parts that go into the production of that product, optimized for the best possible outcome. 

In the past, supply chains favoured mass-produced goods because they assumed the method was cheap. However, as the Japanese discovered in the 1980s, quality control and management of the supply chain is cheaper and gives the business a competitive edge. 

However, the quality of a product should be one of many concerns with one’s supply chain. The quality of the supply chain itself plays a vital role.

 

4. Cost efficiency

The cost of a supply chain is the total cost from sourcing raw materials to delivering value to customers. It is the cost of a complete supply chain cycle. 

The main idea behind cost efficiency is to keep the cost of the supply chain down while ensuring the product or service is at its best. 

In gaining cost efficiency or supply chain value, supply chain managers identify the supply chain cost drivers and analyze the impact of these drivers in the supply chain. 

When the cost of a supply chain increases, it is usually because of a problematic cost driver. In dealing with these issues, supply chain managers should always seek the root cause rather than the symptoms.

 

5. Supply chain cycle flow

The supply chain cycle involves a series of stages or processes that gets a finished product to a consumer. 

When the flow of the supply cycle is efficient, it reduces waste, keeps costs down, and improves supply chain speed and agility. An efficient supply chain cycle gives a business a competitive edge. 

Some enablers of supply chain cycle flow are communication, supply chain flexibility, segmented control or authority, and flow of capital.

 

Conclusion

As businesses become more customer-oriented, they are bound to have more competitive supply chains. As they compete, supply chain management should naturally become more innovative to give organizations an edge in the market. How the supply chain manager reacts to competition could make or break their supply chain.