Effective and collaborative supply chain management is increasingly becoming an important source of competitive advantage. Research studies have examined the motivations for collective action via collaborative strategies and alliance structures among firms. Research publications on interorganizational cooperation and the influence of network resources on firm capabilities suggest that a narrow resource-based view of the firm misses the importance and value of resources that constitute part of a firm’s network. These research studies point towards integrating the traditional operational competence orientation typically encountered in operations strategy literature with the notion of collaboration competence. It can be argued that competitive advantage can be achieved if the individual members in the supply chain can move towards an efficient internal and external integration in the supply chain as well as a good relationship with other supply chain partners.
It has been argued that the process of creating value in the marketplace involves four types of players – customers, suppliers, competitors and complementors. Brandenburger and Nalebuff (1997) represented this conceptualization by means of a “value- net”. When companies join forces often the tendency is to emphasize the legal or financial aspects of the relationship. However, most strategic alliances targeted towards supply chain competitive advantage involve much more. Companies that know how to tap those possibilities, and manage alliances effectively, have a key corporate asset called "collaborative advantage."
The following figure presents a conceptualization of competitive advantage through collaborative supply chain management by means of integrating operational and collaborative competencies:
The notion of operational competence is well ingrained in the existing operations management literature. It has been defined as a ‘patch’ around the point where the product and process structures intersect on the product-process matrix. It has also been defined as the preparedness , skill, or capability that enables manufacturers to prosecute and product-market specific business strategy. It can be observed that an internal orientation is prevalent in almost all of the conceptualizations of competence and the aspect of collaboration is notably absent.
Many factors have converged over the past few years to provide a new emphasis on partnerships and alliances in manufacturing industries. While economic drivers (such as global competition and downsizing) are the principal forcing factors, advances in computing and communications suggest new and attractive opportunities.
It has been recognized that by embracing lean production techniques, many companies have become more flexible and responsive to customer demands. However, applying lean techniques to discrete activities is not the end of the road. If individual breakthroughs can be linked up and down the value chain to form a continuous value stream that creates, sells, and services a family of products, the performance on the whole can be raised to a dramatically higher level. The notion of the value stream defines the lean enterprise – a group of individuals, functions, and legally separate but operational synchronized companies. The companies joined together in a lean enterprise must target the best opportunities for exploiting their collective competitive advantage. The information revolution is changing the nature of business and can create competitive advantage for those value-chains who can leverage from it. New information technology is transforming companies' value chains by expanding their capabilities and is improving companies' abilities to exploit linkages between activities in the value chain. It is important for an organization that instead of focusing on individual elements of corporate strategy: resources, businesses or organization, it develops an insight that turns these elements into an integrated whole. That insight is the essence of competitive advantage – the way a company creates value through the configuration and coordination of its supply chain activities.
Collaboration in business is no longer confined to conventional 2-company alliances, such as joint venture or marketing accords. Today groups of companies are linking together for a common purpose. The collaboration in operations could be argued to be one of the common purpose that could bind firms. Under pressure to improve productivity, quality, and speed, organizations have embraced tools such as TQM, benchmarking, and reengineering. Dramatic operational improvements have resulted, but rarely have these gains translated into sustainable profits. And gradually, the tools have taken the place of strategy. As managers push to improve on all fronts, they move further away from viable competitive positions. It is argued that operational effectiveness, although necessary to superior performance, is not sufficient, because its techniques are easy to imitate. In contrast, the essence of strategy is choosing a unique and valuable position rooted in systems of activities that are much more difficult to match. The economic basis of competitive advantage requires one to give due cognizance to the other important constituents of competitive strategy, especially the ones that are not easy to imitate.In a supply chain scenario one of the inimitable characteristic is a synergistic collaborative supply chain management among supply chain partners.
Source: Nair, A. 2002. "Competitive Advantage in Collaborative Supply Chains: Some Propositions and Research Directions,” Proceedings of 2002 National Decision Sciences Institute Conference, San Diego, CA
Reference:
Brandenburger, A; Nalebuff, B.J, 1997, “Co-opetition,” Doubleday, New York.