Traditionally companies viewed their competitive advantage as being derived from the products they developed and sold to their customers. However, in today’s hyper-competitive marketplace even the most innovative products tend to be quickly replicated by competitors or counterfeiters overseas. As a result, many large companies have begun to view the source of their competitive advantage as not only from their products, but the way they run their business.
For large manufacturers and retailers, business operations are largely influenced by their supply chain. Retailers and manufacturers of consumer goods, automotive vehicles, high tech equipment, aerospace and defense products are increasingly seeking differentiation from the way they combine partners, processes and technologies to maximize supply chain efficiency.
Consider the following examples:
- Wal-Mart—differentiated its supply chain with the use of regional distribution centers, cross-docking, everyday low prices and most recently the use of technologies such as RFID.
- Tesco – followed a similar model to Wal-Mart with cross docking and distribution centers, but it also gained competitive edge in demand forecasting through its ClubCard loyalty program.
- Toyota—differentiated its supply chain with Just-In-Time (JIT) manufacturing and strong supplier relationship management.
- Dell—differentiated its supply chain with direct-to-consumer sales and build-to-order manufacturing models as well as its online storefront technologies.
- GE—differentiated its supply chain model with Six Sigma to improve quality as well as through early technology investments in EDI and e-marketplaces.
- Zara—differentiates its supply chain with a vertically integrated approach that allows for rapid introduction of new products and low inventory turns.