Analysis of Twelve Drivers of Supply Chain Competitive Advantages

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Twelve drivers of supply chain
competitive advantages

TABLE OF CONTENTS
Introduction................................................................................................................................1
Stage 1........................................................................................................................................2
Twelve drivers of supply chain competitive advantage.........................................................2
Stage 2........................................................................................................................................6
Other supply chain strategies.................................................................................................6
Conclusion..................................................................................................................................9
References................................................................................................................................10

Introduction
The supply chain can be defined as the system of the people, process, information, and
resources to move the products and services from the supplier to the customers. It is an
essential part of the business function to interact with the customers and meet their demands.
It connects business with the customers with desired products. The report will discuss the
drivers working on the supply chain to achieve competitive advantages. The twelve drivers as
suggested by Mentzer will be discussed in the report with their suitability for the supply
chain context. Besides it, the report will discuss other supply chain strategies and their
implementations in the organisational context. Therefore, the report will provide the
understanding with the supply chain management and factors and drivers working on the
strategic planning in the supply chain.
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Stage 1
Twelve drivers of supply chain competitive advantage
According to Mentzer, effective supply chain management can help the business to achieve
competitive advantages. However, the following are major drivers that impact the supply
chain management toward competitive advantages:
Coordinate the traditional business functions
A business has several functions to meet its strategic goals. The organisation has to
incorporate the traditional business functions such as marketing, sales, accounting, research
and development and logistics. Such functions create flows for the supply chain so that it is
essential to coordinate the traditional business functions to generate competitive advantages.
It is suitable to achieve internal strategic planning and decision making for the supply chain,
but it is not suitable for the small business where roles are not clearly defined.
Collaborate with supply chain partners on noncore competency functions
The organisation can separate the core, and noncore competencies from the business
functions and most of the noncore functions can be outsourced with the supply chain
partners. It is suitable in the production line to increase focus on the production function and
manage the customer services as an outsourced function (Fredendall and Hill, 2016).
However, the supply chain has a high risk of the data disclose during the outsourcing of
noncore competencies.
Look for supply chain synergies
The core values of the supply chain are to increase the sales, reduce the cost and increase
profitability but it cannot be achieved without the alignment of the suppliers with each other.
It is essential to determine that the whole sum of the activities outsourced to others is not
greater than the internal core functions. It is suitable for customer services and marketing to
optimise the cost whereas production cannot be used as synergy function because of concern
of quality and performance (Hugos, 2018).
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Not all customers are created equal
The supply chain is based on the customers, and each customer is not equally profitable for
the organisation. Therefore, the organisation has to determine potential customers and
strategies to reach them for competitive advantages. It is suitable in marketing and production
function, but it is not effective in customer services where the organisation has the main
focus to resolve queries in the supply chain.
Identify and manage the supply chain flow cycles
The product and services, inventor locations, transportation alternatives, customer values and
financial factors must be identified for the supply chain flows. Without a proper flow cycle, it
is difficult to achieve supply chain competitive advantages as business functions, and
processes are not connected. It is suitable to manage with retailers and all the end chain
components for service delivery (Mentzer, 2004). However, the driver is not applicable if the
organisation is working on a direct business to customer model.
Manage demand (not just the forecast) in the supply chain
Improper alignment to the demands and forecasting can lead the potential loss of the
customer market and profitability. It is suitable for the products being introduced as a new
product or has seasonal sales. However, existing products can be managed with ongoing
inventory so that forecasting is required to achieve competitive advantages on the cost
management.
Substitute information for assets
The organisation has to determine the potentials in the assets. Understanding capabilities and
constraints help to achieve competitive strengths in supply chain decisions. It is essential
during the planning of market coverage and production. However, it has less significance in
in-house operations and distributions (Mentzer et al., 2001).
Systems are templates to be laid over processes
The organisation has to ensure that the supply chain has focused on the processes to generate
the flow and profitability whereas systems are not templated to be laid over. Without a
system, it becomes complex to achieve process efficiency. The use of systems including
standards and information systems can help to obtain higher returns from the processes.
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Not all products are created equal
The product price, quality, features and usability create a difference in supply chain benefits.
It is required to understand the suitability of the supply chain strategies to incorporate the
benefits. It is suitable to consider while the business has diversified products and customers
whereas, for shrink production business, it does not influence as the supply chain has the only
goal to work with only a few and similar products.
Make you easy to do business with
The supply chain has a dependency on the customer market, suppliers, product diversity and
other external factors and the organisation has to incorporate the changes accordingly to
achieve win-win situations. The changes are required to integrate into business functions to
manage the trust of the customers and suppliers. It is suitable for customer services to
manage empathy engine and ensure proper alignment with their requirements and
expectations (Lambert and Cooper, 2000). However, the strategy of win-win can be used
with suppliers also to share adequate profitability and opportunities.
Do not let tactics overshadow strategies
It is good to be tactical in the supply chain as it helps to manage the purchasing and
distribution efficiency and can lead the business with alignment to the requirements. It also
can assure faster responses to the changes in the market but strategic plans might be blurred
with tactics, and the business might fail to achieve competitive advantages over time.
Therefore, tactics can be followed when the organisation has short term benefits and has
capabilities to make a faster move, but it is not suitable when strategic plans are in action and
capabilities are not available to respond the changes.
Align your supply chain strategies and reward structure
Supply chain strategies can be used to ensure higher profitability from the internal operations.
For example, adoption of the demand-driven planning and business model and build up of the
adaptive and agile supply chain can help to achieve competitive advantages. Also, the
internal reward system can be redesigned to meet the core benefits (Christopher, 2016). It can
engage the suppliers and customers and can improve performance.
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Besides of these twelve supply chain drivers, the organisations have to consider the internal
drivers such as capabilities in human resource skills and capabilities, market coverage and
practices for the marketing and management of the assets and their usability to achieve
competitive advantage.
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Stage 2
Other supply chain strategies
Mentzer has defined twelve supply chain strategies that are also systematic to deliver the
competitive advantages to the business. The organisation working in the manufacturing,
retailing and finance can consider the following two major strategies from the twelve
strategies of Mentzer to achieve the competitive goals:
Coordinate the traditional business functions
The strategy has focused on the proper alignment of the core business functions through
communication and data sharing also to achieve operational efficiency. The collaboration and
coordination have benefits for the organisation as the productivity and performance of the
business functions to support the decision making and serve the customer can be increased.
This strategy has a competitive advantage in the form of information available about the
business capabilities and constraints and ensures effective engagement of the business
functions in the supply chain. Also, it has values to understand the market, customers and
business for strategic decisions. The organisations can develop and establish the internal
channel of the coordination whereas business functions are interrelated to support the
individual. Also, it helps to cover the controlled environment for business operations
(Mentzer, 2004). Supply chain management has involvement of the employees and other
stakeholders, and in such cases, it is essential to achieve their alignment for the strategic
goals and objectives. For example, sales can be improved through effective integration of the
marketing with production function whereas profitability can be achieved integration of the
customer demands and expectations with the products and services and alignment of the
distribution accordingly.
Not all customers are created equal
Customers for an organisation might vary in their purchasing behaviour, demands for quality
and price and availability in particular region. The organisation has to determine potential
customers for the products and services. For example, the strategy helps the organisation to
understand that each customer is not equal to deliver the profitability in the business function.
It mainly happens in the organisation where the organisation has a diversified range of
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products and services. Some of the customers might be interested in the lower prices and
might be seeking for high quality whereas some customers might be ready to compromise the
quality but need lower price as an essential feature with products (Li et al., 2016). At another
side, the customers seeking for luxury experience might expect quality products at any cost.
Competitive advantages can be achieved if the organisation has a proper understanding of the
customer market. The organisation can empower the customer services and integrate the
results into production and marketing functions to achieve strengths in operations. The
organisation can align the business functions and processes to the customer market segment
to achieve competitive advantages.
The strategy is suitable for the businesses when the products are capable of attracting
multiple segments of the customers. It is normally used when the organisation has more than
one product with recognisable differences in features and functions.
Optimise product design and management for supply chain and accelerate innovation
Innovation is important for organisations to be one step ahead in the competition. The
organisations can optimise the production cost and can determine a suitable place and time to
serve the customers. The strategy shows that the organisation can manage the people,
process, information and decisions for the production and innovative results can achieve high
stability in the market. The supply chain has values of the innovation to optimise the cost and
reduce the barriers in the services. For example, the supply chain can be improved with
optimisation of the design and management (Stephen, 2017). Resources can be utilised
appropriately to increase sales and profitability. Innovation is required to achieve competitive
advantages and improve the reach to the customers for features and functions in the products
and services.
Managing unique value proposition
The organisation has to understand and establish a unique value proposition in the supply
chain. It is required to implement the concept of ‘order qualifier’ and ‘order winner’. A
unique value is required to generate for the customers to win the customers, suppliers and
other stakeholders. It helps to achieve competitive advantages through performance and
quality (Supply chain Quarterly, 2018). The products along with processes must be unique
but valued to achieve strategic goals and benefits.
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Therefore, the organisations can achieve competitive advantages through the uniqueness in
the supply chain as it makes the process rigid for the competitors and high benefits can be
achieved with an attraction to the stakeholders. It has values to fulfil the promises to the
customers and make the market penetration difficult for the competitors. However,
continuous improvements and move toward the uniqueness is essential to achieve.
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Conclusion
The report has discussed that supply chain management needs consideration of the cost and
time. Also, several drivers can impact the supply chain for competitive advantages. The
organisations can achieve the supply chain benefits with proper alignment of the goals and
objectives whereas strategic capabilities and constraints also essentials to determine. The
report has summarised two more strategies that can be used to achieve competitive
advantages. The report has determined the suitability of the supply chain strategies for the
various business functions.
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References
Books and Journals
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Fredendall, L.D. and Hill, E., 2016. Basics of supply chain management. CRC Press.
Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons.
Lambert, D.M. and Cooper, M.C., 2000. Issues in supply chain management. Industrial
marketing management, 29(1), pp.65-83.
Li, S., Ragu-Nathan, B., Ragu-Nathan, T.S. and Rao, S.S., 2006. The impact of supply chain
management practices on competitive advantage and organizational
performance. Omega, 34(2), pp.107-124.
Mentzer, J.T., 2004. Fundamentals of supply chain management: twelve drivers of
competitive advantage. Sage.
Mentzer, J.T., DeWitt, W., Keebler, J.S., Min, S., Nix, N.W., Smith, C.D. and Zacharia, Z.G.,
2001. Defining supply chain management. Journal of Business logistics, 22(2), pp.1-25.
Online
Stephen Slade, 2017. Strategies for Better Supply Chain Management in the Current
Economy [Online] [Accessed Through] <https://blogs.oracle.com/scm/5-strategies-for-better-
supply-chain-management-in-the-current-economy> [Accessed On: 29 March, 2019]
Supply chain Quarterly, 2018. Supply chain strategies: Which one hits the mark? [Online]
[Accessed Through] <https://www.supplychainquarterly.com/topics/Strategy/20130306-
supply-chain-strategies-which-one-hits-the-mark/> [Accessed On: 29 March, 2019]
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