Individual firms no longer compete. It is the sum of the firm’s networked and global supply chain that represent the competitive force of today. This global supply chain includes the sourcing of components and assembly in the far east, to physical shipment into Europe or the US and then onward distribution to retailers and resale outlets. These are highly interconnected and mutually dependent networks of independent organizations working together and which can represent the new source of a firm’s competitive advantage and customer satisfaction.
The management of these global supply chains has been greatly enabled by real time data availability and communication improvements brought about by today’s technology. But these are also autonomous firms with overlapping and sometimes conflicting agendas and objectives. These are firms that are in different time zones, speak different languages and have a different approach to work and problem solving. The supply chain might be joined up by technology but there is a risk that we remain geographically, socially and culturally disjointed and separated.
And so our Operations VP sitting in headquarters offices is reaching out across a supply chain that (s)he is accountable for but lacks the authority and autonomy that (s)he previously had to direct and control. Implementing a coherent Build to Order program, increasing agility and responsiveness while maintaining a control of costs, and orchestrating any form of change becomes that much more problematic as a result of dealing with a global operation which is also an outsourced one.
Get it wrong and you fall into an Apple – Foxconn debacle where quality and cost efficiencies are brought about at unacceptable costs and the moral and ethical reputation of a brand is impaired. Conversely, get it right and the benefits that an integrated supply chain can bring are enormous.
Supply chain management is increasingly about managing a global operation comprised of independent organizations. Arms length relationships where the focus is on service levels, metrics and contractual terms and conditions will not offer up an effective competitive supply chain. To bring about a global integrated network of coordinated partners that offer significant competitive advantage means that firms needs to take on board the lessons and best practices of enterprise relationship management.
About the Author
Richard Gibbs is a recognised expert in marketing channels and alliance management. His career spans senior sales and marketing positions in multinational companies such as Xerox and Novell Inc. His current research focuses on cross-cultural inter-organisational collaboration in global supply chains. Richard teaches at the University of Winchester.
Enterprise Relationship Management is the latest publication from Richard and co-writer Andrew Humphries. This title recognises that, increasingly, competition is no longer between individual organizations but between alliances of companies and networks of supply chains.
Enterprise Relationship Management is available from Gower Publishing priced at £70.00.