One way to define competitive advantage is that the successful companies will generally e those that deliver more customer value than their competitors. In other words, their ration of benefits to cost is superior to other players in market or segment. Supply chain management is unique in its ability to impact both the numerator and denominator of the customer value ratio. The point is made clearer when we expand the ratio as:
Customer value = (Quality x Service) / (Cost x Time)
Quality is defined as the functionality, performance and technical specification of the offer.
Service is the availability, support and commitment provided to the customer.
Cost is the customer’s transaction cost including price and life cycle costs.
Time is the time taken to respond to customer requirements. E.g. delivery lead times.
Each of the four components of customer value requires continuous improvements, innovation and investments to ensure continued competitive advantage. (M. Christopher, 2011).
A company that has managed to achieve this competitive advantage, thereby becoming a global leader in its markets is Caterpillar. Caterpillar has
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Zara has achieved its leadership position through creating a value proposition around the idea of “Fast Fashion”. Almost uniquely, they have developed supply chain processes that enable them to capture ideas and trends in the apparel market and to translate those ideas and trends into products in incredibly short lead times. Zara’s target time to take an idea from the design to store is between three and four weeks. Zara has achieved this quick response capability by developing an agile network of closely integrated company-owned and independent manufacturing facilities that have the flexibility to produce in small batches at short notice. Even though this is not the cheapest way to make a garment, it ensures that they achieve their value