Is Your Supply Chain Your Competitive Advantage

In book titled. “Competing in a Flat World”, the authors Victor and William Fung and Yoram Kind say this about supply chain,

“They[retailers] are not competing against each other in isolation.  … The best supply chain will win.  … Before a customer walks into the store, often the game is over based on the superior supply chain.”

Is a firm’s supply chain its strategic competitive advantage?  In the case of  Wal Mart we can state that its superior supply chain management allowed it to be the market leader but tht alone does not provide its unique competitive advantage. What gives Walmart its strategic advantage is the seamless integration of its processes, structures, systems, culure and people and their complete alignment with its vision of “Everyday Low Prices”.  Its supply chain management is an enabler not the root cause.

In the same book the authors talk about the outsourcing of supply chain management offered by the firm owned by the two authors  Fung brothers. This means any firm can now get the bst possible supply chain management on demand, as a service and without investing in it.

If the services are available for all, like electricity, how is that competitive advantage?

Getting your suppiers to pay you to play

Home furnishings retailer Linens N Things is on the brink of filing bankruptcy. The New York Times reports that some of their suppliers are tightening contract conditions and stopping shipments. The question to ask is would the suppliers be better off by helping LnT at this crucial time or by choking it further and hastening its bankruptcy.

Gilbert W. Harrison, Financo’s chairman, said that despite its financial problems, Linens ‘n Things has several attractive assets like its real estate.

But suppliers have an incentive to keep Linens ‘n Things afloat, Mr. Harrison said. Without the chain, they will have to deal with only one major customer, Bed, Bath and Beyond.

The questions the suppliers must be grappling with are

  1. What are the chances a LnT turnaround or a potential buyer rescuing LnT?
  2. What is underneath the problems?
  3. What is the expected cost of LnT going down, both from lost account receivables and from future pricing squeeze by Bed Bath and Beyond?
  4. What is the expected cost of reviving LnT and for how long they have to keep it up?
  5. Would they be the only vendor stuck with supporting LnT? Would everyone else go with it? What is the critical mass required that improves the changes for turnaround?
  6. If they are he first, would everyone else follow? Should they wait for someone else to move first? What if everyone waits for the other to move?

“Vendors want to keep this company alive,” Mr. Harrison said. “The last thing they want to see is for it to die.”