Leverage Your Supply Chain Strategy to Gain a Competitive Advantage

The essence of business can be viewed as an organization's ability to deliver more value to customers than their competitors. In a global marketplace, this often manifests itself as constant downward pressure on prices, as each business struggles to maintain and expand on market share in the face of strong competition from both foreign and domestic competitors.

While the ultimate cost of goods and services is an important component of the purchasing decision, there is more to business than just competing on price. Value can be added in other areas, and leveraging your supply chain in order to offer this additional value will drive the development of the competitive advantages needed to escape price wars. A thorough examination of your business’s supply chain will divulge multiple areas where value can be added in order to develop these advantages.

Technology Drives Change

New technologies are leading to supply chain revolutions. These developments will force growth and change for any company that wishes to stay competitive, making now an ideal time to recalibrate your entire supply chain strategy.

The advancements in robotics and automation alone will change the way that supply chains are organized, significantly driving down expenses while improving lead times considerably. Software advancements are also allowing for a more holistic approach to planning and risk management, and the ability to use data to forecast customer needs has never been greater. In the face of these developments, it's important to consider the general areas where value can be offered so that your business is prepared to utilize new tools to solve old problems more effectively.

Offering More Value

When most business managers look to increase market share and sales volume, the first thought is to work to lower prices on their goods or services. While price is a vital component to purchasing decisions, customers also look to derive value from areas other than the price-to-value ratio of the product they wish to buy. An examination of these value-add areas will position your business to more efficiently optimize your entire supply chain in a way that allows you to increase your overall value offering greatly.

Shorter Lead Times

One of the main methods by which a business can drive increased value is by decreasing lead times. Both business- and consumer-facing companies are experiencing increased demand for faster shipments. Some retailers are even experimenting with same-day deliveries.

By guaranteeing fast delivery of materials and products, your business can position itself as a default option for companies and individuals that value speed. Depending on what industry you are in, this can have a significant impact on the final price your customers are willing to spend on your product over a competitor's. A great example of this is Amazon Prime. Consumers will often pay considerably more on an item eligible for Prime shipping, which guarantees delivery within two business days (or less in certain regions).


Strategies that involve flexibility can also deliver rewarding results. Many businesses have prioritized cost-reduction over flexibility, but this isn’t necessarily the best choice. A flexible supply chain can quickly adjust to swings in supply and demand. This allows the business to limit excess inventory during periods of low demand while still avoiding lost profits when demand increases. This can prove to increase profits when compared to strictly cost-cutting strategies when other factors are held constant, so it is worth testing when structuring your future plan.

Flexibility can also manifest itself through increased purchasing possibilities for the customer. Offering large volumes or a diverse set of products is appealing to specific groups of consumers and businesses. The options for effective implementation of this type of strategy will be limited by your industry, which is why knowing and understanding your market is vitally important.

Customer Involvement

Customer experience is normally viewed as being separate from the supply chain, but connecting the two can also yield significant results. This strategy can involve aspects as simple as shipment tracking and delivery notifications. Technological advancements are also making it possible for digital dashboards and accounts that track order history, allowing for easy order modification and cancellation.

Platforms offering these services are available, and the increased control can be significant in customer decisions regarding vendor selection. Customer accounts can also help with data collection that can be used for advanced forecasting, which can be used to drive more efficient supply chain management and asset allocation.

Cost-based strategy

A cost-based strategy is not only viable, but it is also necessary to some degree if your business wishes to succeed. Companies that are successful when prioritizing low prices to the exclusion of the other areas mentioned tend to rely on a high volume to overcome the lower margins they accept to gain greater market shares. These businesses also tend to be well-established and leverage an already large customer base as a means to scale output, drive down costs and thereby unlock the ability to charge lower prices. Even if your business is not prepared to undercut all competition, avenues that allow the lowering of prices should always be considered if a company wishes to remain competitive.

Closing Remarks

Your business is your supply chain. How well you optimize your ability to deliver quality products or services to your customers is the difference between success and failure. Rapidly advancing technology is revolutionizing the planning and implementation of supply chain strategy, and as your business prepares for this revolution, it is important to reflect and analyze your value proposition to your consumers. The strategies discussed in this article do not have to exist independently; in fact, the ideal approach will likely incorporate these elements to varying degrees. Effectively planning is the key to leveraging your supply chain to gain a competitive advantage.

[For additional information on advanced analytics and the supply chain, read Predictive and Prescriptive Analytics: Why Your Supply Chain Needs Both.]

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