Competitive Advantages in the Supply Chain
Several years ago, I needed a pharmaceutical industry client reference for my sales team and we had a very happy client that I thought would be a great reference. So, I called her and asked her if she would be a reference for us. The first response from her was, “Who would I be talking to?” I responded that it would be someone in her industry, a similar pharmaceutical company, that would be interested in hearing what we had done to help make her and her company successful. There was a pause on the line, and then she responded, “Your supply chain software is our competitive advantage…Why would I want to talk to another pharmaceutical company about it?”
At first, I was thinking there was nothing competitive between the two companies, as they handle completely different types of items. But then I realized: She wanted to keep us as her secret so that no other company in her industry could compete with her company if either one of them added similar products.
I mulled our client’s words over again: your supply chain software is our competitive advantage. Hmm…It was then that I realized what she had actually said to me; We were not just a solution to them, we were their competitive advantage!
Steps to Gaining a Competitive Advantage
So how does one gain a competitive advantage in their supply chain? And why does it matter? After speaking to this client, it was suddenly clear to me that a competitive advantage matters very much. She did not want her competitors to have that same advantage over her company that her company had managed to capture in the same market space. Some of her products could be the same exact products at the other company in the future. I thought about it more and how their success had grown exponentially fast after they had implemented our solution.
To help others create that same success in their industries, we have listed the following recipe for success to help achieve a competitive advantage in the supply chain:
Step 1: Look for ways to improve processes and cut costs and then pass on the benefits to your customers.
If you look for it, you will be able to find ways to improve your processes and save money by many different means—reducing supplier costs and handling, reducing inbound freight costs, optimizing internal handling and movements of all inventory, lean manufacturing methods, and proper scheduling to reduce delays and get goods to the customer on time without expedite costs. Everything you do should be focused on the total cost of goods sold (COGS.) Sometimes, these simple things do not cost very much to implement, and it could be an eye-opening event for you.
Step 2: Look for ways to improve deliveries to your customers.
Whether you are a manufacturer or a distributor, you must look for the same things. However, as a distributor, you will need to optimize your supply chain to deliver the goods as promised and deliver them on time to your customer. Further, if you have cooler goods (such as berries) or frozen goods (such as medical supplies), these must be delivered in perfect condition or they are not usable; that could require customer demand planning, lead time accuracy and planning, best freight rates and quality checks for on-time delivery, accurate inventory to allow quantity-available-to-promise (QATP) to be exactly correct (every time), and a truly synchronized supply-execution system that follows the goods to the customer or the next distribution point to ensure every promise is kept to the customer.
Step 3: Look for ways for your connected supply chain to have empowerment.
In this step, every person in your connected supply chain is empowered to make a difference. It matters because each touch point is a decision process. Think about the production scheduler with run-time constraints, the finished goods customer-order scheduler with promised delivery schedules, and the optimized picker with the need for accurate warehouse inventory and customer requirements to be validated—each one can and will make a difference in the supply chain. In today’s world with the “always on” supply chain, each touch point is empowerment. So think about it: Are you really empowering your work force? Do you really have good data for instant decisions? Does your workforce? This is a huge competitive advantage.
Happier customers are repeat customers – so getting your supply chain on the road to being a competitive advantage means that you can meet or exceed your promises and commitments to your customers. Real growth can only be achieved in this way—especially when most goods today are becoming more commoditized. The true business leader knows how to create and use their competitive advantage.
Author: Pete Gilstrap. President ASC Software