Making Advantage Competitive

[From iSource Business, August/September 2002] Even amidst the continued slouching of the stock market, the Enron financial debacle and the consequent overhaul of the corporate accounting industry, one good thing did happen in business during 2002: The supply chain finally muscled its way into the boardroom and started getting the attention it deserves. Today, good economy or bad, the large majority of companies no longer doubt the benefits of e-tools on supply chains. What started with a few leading-edge corporations has become a saturated expectation across many industries. Corporations have rolled up their sleeves, analyzed their business processes, invested in supply chain technology, and educated their employees and suppliers on its benefits.

With technology implementations underway, executives now are peering outside the four walls and looking to utilize their newfound capabilities with business partners. The current market emphasis is on integrated supply networks and seamless synchronization with business partners. Such collaboration can offer huge cost savings and time-to-market benefits for all parties involved, and it even has some executives skipping out of the boardroom. But don't click your heals just yet. What proponents can describe as the efficient utilization of outside business partners for supply chain optimization can just as accurately be described as the disaggregation of the enterprise supply chain.

For all its real rewards, supply chain collaboration has spread supply chain functions across multiple organizations and frustrated business partners and end customers who feel as if they are working with eight or 10 companies instead of just one. In effect, the strides that some companies have made in hopes of gaining a supply chain "advantage" have yet to mature into - or be properly leveraged as - "competitive advantage," leaving many to believe there is still some work left to be done inside the four walls.

In this issue's cover story, iSource investigates what it takes to leverage a supply chain for competitive advantage, looking to executives at four companies to find out how they have been so successful at overcoming this learning curve.

Upstream or Down

The phrase "competitive advantage" has a tendency to be tossed around somewhat carelessly in boardrooms and on conference calls, clouding its original meaning. Companies refer to gaining a competitive advantage when talking about how they can get an "edge" over their competitors, which generally comes from the ability to offer more services, faster delivery or larger savings to customers, helping to drive more business and revenue to their company. Yet, some companies drive revenue by reaping the rewards of more services, faster delivery or larger savings from their suppliers; this offers just as much of an edge over a company's competitors, though it has little to do with end customers. Either way, competitive advantage relies largely on a company's ability to manage, maintain and maximize its relationships with its customers and/or suppliers.

Traditionally, the focus for consumer product companies has been, obviously, gaining and maintaining end consumers. Recently, however, just maintaining a customer base can be a` full-time job. According to Ann Grackin, vice president of supply chain strategy at AMR Research, the consolidation of the consumer electronics industry and the slaughtering in the PC industry is creating what she calls a "competition for creating customer loyalty." Grackin points to the Home Depots, Best Buys and Targets of the world that are marketing themselves as "total service providers" in an attempt to own the whole life cycle of the customer. This includes not only designing and distributing the product but also providing services like fulfillment and customer support.