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The Supply-Based Advantage: How to Link Suppliers to Your Organization's Corpora |  |
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The Supply-Based Advantage: How to Link Suppliers to Your Organization's Corpora | |
• achieve greater profitability by using suppliers to capture value beyond price
• develop a supply management strategy that creates real, renewable benefits
• maintain flexibility in their supply chain to deal with unique business situations
• link supply execution into product marketing and fulfillment purposes
Filled with enlightening examples from companies such as Mars, Procter & Gamble, Intel, and Wal-Mart, this book shows how any organization can transform its supply function into a key driver of profit.
It’s no secret that good supplier relationships are key to your business’s success. And it’s certainly easy enough to understand that certain strategies—high volume buying for lower prices, for example—are tried and true moneysavers and “safe bets” when building and maintaining supply chains. The trouble is: everyone does them. So although there is nothing wrong with such strategies, it’s a fallacy to believe that they create any true advantage over your competition.
The challenge comes in designing relationships that leave your competitors in the dust, by leveraging the capabilities and qualities that are unique to your organization. The Supply-Based Advantage first establishes exactly what is meant by moving beyond mere cost control to capture the alluring yet elusive concept of “sustainable competitive advantage.”
Global supply dynamics spawn a new complexity. Whereas it may have been possible previously to see each supplier’s role as discrete and self-contained, now you must manage a supply landscape in which multiple technologies, regulations, schedules, and even cultures must be reconciled. Couple this new reality with the ever accelerating pace of change, and the scope of your challenge becomes clear. But you can do it—with the right information and tools.
Stephen C. Rogers, a veteran of corporate supply chain environments, has combined unparalleled experience with pointed examples from dozens of world leading companies (Toyota, Nike, Procter & Gamble, Dow Chemical, Hewlett Packard, Harley Davidson, and more) to present a clear view of how tomorrow’s market dominators will be designing and executing supply strategies that genuinely and fully integrate with marketing, finance, and overall corporate strategy. Specifically, The Supply-Based Advantage explains how your organization can capture total value, create renewable and mutual benefits, link supply elements more dependably with fulfillment objectives, and build flexibility into your supply chain so that you are ready to handle any unexpected or unique developments.
Rogers takes you through all the components of a successful supply strategy, including how to:
• Lay out your policies, principles, and responsibilities toward potential suppliers.
• Match supplier competencies with your company’s needs and strategy.
• Use supplier relationships to support competitive advantage.
• Form a supply network by connecting the efforts of your individual suppliers to one another and, ultimately, to customers.
• Successfully manage suppliers.
• Facilitate communication and management initiatives across multiple functions and partnerships.
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The book covers other important topics including the flow of information, money, and talent; the critical skill of continuous adjustment; and the multifaceted challenge of supply risk management.
Today’s supply chain and supplier management is more than an opportunity to save money and increase efficiencies. It’s an unprecedented chance to build long-standing strategic advantage, and contribute directly to your organization’s rise to sustainable market dominance.
Stephen C. Rogers is a Senior Consultant with the Cincinnati Consulting Consortium, concentrating on Purchasing and Supplier Management, and an adjunct professor at Xavier University. During his 30 years at Procter & Gamble, he had sourcing roles in every major business unit, and, as the “father” of strategic sourcing at P&G, participated in the development and expansion of Procter & Gamble’s global sourcing efforts and the redesign of the Folgers Coffee supply chain. He was named a Supply and Demand Chain magazine “Pro to Know” in 2004, and has served on the American Management Association’s Supply Chain Council for the past 10 years. Mr. Rogers lives in Cincinnati and can be reached by e-mail at armo@cinci.rr.com.
Stephen C. Rogers (Cincinnati, OH) is a Senior Consultant with the Cincinnati Consulting Consortium, concentrating on purchasing and supplier management. During his thirty years at Procter & Gamble, he was involved in purchasing, manufacturing, and marketing. He has been the Program Director of The Conference Board’s annual SRM Conference, conceiving and directing the event during its first three years.
If you perceive your suppliers as merely providers from whom you must extract optimum cost savings, they will likely view you in kind. To make the most of your relationships—and more crucially, to develop significant competitive advantage over those organizations that don’t—you must place the same care into your supplier facing activities that you do into your customer relationships. Only then will you build the shared successes that will lead to long-term partnerships based on mutual, not separate, goals.
It’s not that the notion of the supply chain as a strategic driver is new; but the ability to implement that ideal is rare. The Supply-Based Advantage takes you step by step through the planning, design, building, and implementation phases of recasting all your supply-base management approaches—without disrupting your current efforts.
Supply management expert Stephen C. Rogers offers sound strategies, proven techniques, and helpful tools that will let you:
•Maximize supplier strengths and relationships to capture not just cost savings but the total value of your product or service in the marketplace.
•Create real, repeatable benefits with a supply strategy that builds supplier loyalty and consistency.
•Seamlessly integrate supply strategy with marketing initiatives and fulfillment demands.
•Keep your supply strategies flexible enough to weather unexpected changes in even the most unpredictable business climate.
Combining recognized best practices with sound theory and crystal clear examples from “best of the best” organizations around the world, The Supply-Based Advantage shows how to design, build, maintain, and “remodel” your supply base, and integrate it into your organization’s overall corporate strategy.
Contents
Foreword: Why a Book on Supply and Competitive
Advantage? vii
Acknowledgments xiii
Chapter 1 Competitive Advantage: Building a Supply-Based Framework 1
Chapter 2 Suppliers: The Forgotten Competitive Currency 18
Chapter 3 Small Companies: Seeking Value to Offset Lack of Scale 33
Chapter 4 Blueprint for Supply-Based Advantage: Plan Before Doing 46
Chapter 5 Sourcing Strategy: Foundation of Advantage 70
Chapter 6 Supplier Relationships: Erecting Support for Advantage 87
Chapter 7 Supply Chain Management: Connecting Across and Between Companies 124
Chapter 8 Floor Plan for Supply Advantage: Organizing People, Skills, and Tasks 153
Chapter 9 Cross-Functional Collaboration: The Door to the Ultimate Differentiator 186
Chapter 10 Market Flows: Monitor and Manage the Forces That Shape Performance 214
Chapter 11 Outsourcing: Using Suppliers to Maintain and Remodel Capability 244
Chapter 12 Risk Management in the Supply Base: Insuring Against Damage, Loss, and Liability 272
Chapter 13 Building Supply Base Advantage: A Long-Term Project 300
Chapter 14 Situational Supply Base Flexibility: Achieving the Dream 321
Afterword: You Can Get Competitive Advantage from Suppliers 337
Index 343
CHAPTER 1
Competitive Advantage
Building a Supply-Based Framework
ADVANTAGE: any state, circumstance, opportunity, or means especially favorable to success, interest, or any desired end.
BUILD: to construct (something, especially, something complex) by assembling and joining parts or materials.
If you don’t have a competitive advantage, don’t compete.
—Jack Welch, former CEO of General Electric
‘‘Our strategic goal is to deliver sustainable competitive advantage through supplier selection and management.’’ The words rolled off Carlo Soave’s tongue (as they had rolled off mine many times before) as he addressed a P&G Purchases’ training class for new purchasing hires in Brussels, Belgium.
At the time, Soave was the Purchases vice president for the Fabric and Home Care global business unit and overall leader of chemical sourcing for all of P&G. (Today he is a nonfamily CEO of a family-owned Italian nonwoven fabric producer, Albis.) Five concepts come together to define the business problem posed by ‘‘sustainable competitive advantage.’’ Let’s examine them one by one.
Concept 1: Sustainable Competitive Advantage
It wasn’t until later that I questioned what the phrase ‘‘competitive advantage,’’ especially sustainable competitive advantage, really means. Several ideas come to mind including value, capabilities, and innovation, and how they relate to marketplace competition. While
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