Critically analyze the role of competitive advantage in supply chain management, and how purchasing influences strategy.
It is a known fact that supply chain management is one of the main areas of enterprise in which efficiency and competitive advantage pay off in the shape of greater revenue and financial performance. For recognizing the importance of logistics, companies, and organizations are needed to understand the fact that supply chain management can become the source of competitive advantage. It is known that companies tend to look at the need of logistics as a limiting factor. It is true that international expansion calls for strategic decision-making concerning logistics.
The global marketplace calls for increased competition among the competitors, resulting in companies trying to find the best strategy to realize their competitive advantage. The competition is no longer among the companies; rather it is between the supply chains of these companies. The organizations need to know the logistics strategies of their competitors to know the standard for the best strategies. Companies can, on the other hand, hold their substantial competitive advantage without knowing exactly the source of their competitive advantage. If the competitors and the company itself are not able to identify the source of competitive advantage, then it is possible that the advantage will be more sustainable. For corporate financial survival, companies are required to have the best relationship with their customers and suppliers. Therefore, a highly developed supply chain management framework can bring competitive advantage to a company growing fast in the global market. The purchasing helps the company strategizing for the supply chain. It is one of the many factors which influence the performance of the supply chain. Purchasing has gone through evolutionary stages to be considered as a source of competitive advantage. Traditional purchasing focused on purchasing from the supplier who offered the lowest prices. The relation of the supplier and buyer was not long-term in this respect Strategic purchasing, on the other hand, focused on joint innovation of product for the aim of joint competitive advantage (Henriksson & Nyberg, 2005). It was done by reducing cycle time, meeting the demands of the customers, and reducing costs. The more focus on purchasing leads companies to a more focused approach for gaining competitive advantage (ADR International, 2017).
Discuss how performance measurement of suppliers improves efficiency and develops competitive advantage, using examples of organizations to illustrate your answer.
Supplier performance measures are important in determining whether the supplier is doing its work as expected from it or not (Gentjan, Musabelliu, & Xhoxhi, 2016). Now, what is exactly expected from the supplier is to be described clearly to the supplier through service level agreements, KPIs, or specification of contracts. The performance measurement tools can range from paper-based checklists to the one which is digitally enabled. The measures can be measuring timeliness, completeness, productivity, quality, social responsibility, regulatory compliance, innovation, etc. Examples of such supplier performance metrics can be given by Apple Inc. whose code of conduct for Supplier includes Monitoring supplier compliance, developing socially responsible suppliers, holding them accountable and collaboration with the stakeholders (Apple Inc, 2010). Wal-Mart has developed a supply chain metrics which requires its suppliers to improve their own time in full delivery performance, and the suppliers are charged with penalties if they are not up to the mark. The difference between Wal-Mart and other retailers in that it tells exactly what is expected from its suppliers. It needs a higher level of accountability from its suppliers and never asks them to figure out the strategy on their own. From tracing the shipment to the selling of each unit, each supplier is passed through the propriety system of Wal-Mart for measuring of its performance (Walton, 2018).
References
ADR International. (2017, May 26). What are supplier performance measures? Retrieved from http://www.adr-international.com/insights/what-are-supplier-performance-measures
Apple Inc. (2010). Supplier Responsibility 2010 Report. Retrieved from https://www.apple.com/supplier-responsibility/pdf/Apple_SR_2010_Progress_Report.pdf
Gentjan, M., Musabelliu, B., & Xhoxhi, O. (2016). The Review of Factors that Influence the Supply Chain Performance. Academic Journal of Interdisciplinary Studies, 5(2), 181. Retrieved from Academic Journal of Interdisciplinary Studies.
Henriksson, T., & Nyberg, T. (2005). Supply Chain Management as a Source of Competitve Advantage. Retrieved from https://gupea.ub.gu.se/bitstream/2077/1733/1/04-05-69D.pdf
Walton. (2018). Walmart Supplier Performance Scorecard Intro. Retrieved from https://blog.8thandwalton.com/2012/10/introduction-to-the-walmart-supplier-performance-scorecard/
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