MIT Professor outlines 4 Ways that Supply Chain Provides a Competitive Edge for Organizations

April 7, 2014

We’ve been closely following a series of articles from Yossi Sheffi, a professor who teaches Supply Chain Management at MIT, about the long road Supply Chain has taken from a purely transactional function to a highly valued strategic asset for organizations around the world. The first article, “How a Profession went from Zero to Hero,” described how various trends in the global business landscape boosted Supply Chain to prominence, including a move to customer-centric business models, globalization, e-commerce and other changes.

But the second article, “The State of Supply Chain Management” drills down into exactly what Supply Chain has to offer for businesses looking to gain a competitive edge. Beyond the usual, well-understood benefits of reducing inventory and improving the availability of products, Prof. Sheffi’s article outlines some unique strategic benefits that sophisticated Supply Chains confer, as well as how Supply Chain is driving changes in the broader economy.

This article makes one thing extremely clear: the opportunities for skilled Supply Chain Professionals are vast. We’ve posted about how in-demand these professionals are, and this type of information from one of Supply Chain’s top minds helps to explain why.  

Here are some of the sources of competitive advantage that Prof. Sheffi outlines:

1. The Strategic benefit that Supply Chain offers is that it’s a source of individual competitive advantage for business in an era when most products can be reverse-engineered. Some premium products have patents attached to them, but the majority of products can be copied.  In other words, if you’re a soap company, having a differentiated product (say a “special formulation”) is no longer a strategic benefit because other companies can be hot on your heels and release a very similar product. But a sophisticated, modern Supply Chain makes your brand both more flexible and more reliable, which adds up to improving your brands’ goodwill in consumers’ eyes.

One other point worth making is that Intellectual property / branding / patents / trademarking still confer a competitive advantage, but some countries (e.g. China) have huge problems enforcing these elements, so in those markets an effective Supply Chain is an even larger strategic edge.

2. SCM is redefining retail as well. Retailers (like Amazon) now provide a huge variety of products, which means that sophisticated and efficient distribution centres are extremely important. The rise of e-commerce means that customers expect efficient deliveries right to their door, which adds a new dimension of complexity that sophisticated Supply Chains can exploit.  It also means that many brick-and-mortar stores are acting as ad-hoc distribution centres for the products that customers order online.

3. Supply Chain acts as a bridge between diverse areas of a business and can help break down silos. It’s a function that provides leaders with a holistic overview of what a business does. It can provide broader metrics about how a business is performing in general than other, more siloed functions (like sales and marketing).  In Prof. Sheffi’s words: “In today’s fast-changing retail markets the silos that often separate corporate functions become speed bumps that rob the organization of the agility it needs to compete successfully.” Supply Chain helps to stamp out those bumps in the road.

4. While many people associate the rise of Supply Chain Management with the off shoring of manufacturing overseas, SCM’s rapidly-evolving nature means that it’s now actually helping to reverse that trend. SCM is a big driver of near-shoring or “on-shoring,” where businesses are bringing manufacturing back to North America because of increased costs in transportation and labour in developing countries. This is helping to bring middle-class manufacturing jobs back to North America, which also has the side-benefit of reducing carbon emissions caused by overseas transportation. These are all immense possible sources of goodwill for companies. On-shoring also somewhat mitigates some overseas risks that Supply Chains might encounter from political instability to environmental catastrophes.

As the economy changes, and as Supply Chain becomes more sophisticated, its benefits for companies become more diverse. And the job market only becomes hotter for credentialed, analytical and strategic Supply Chain professionals, which is music to our ears.

These posts by Prof. Sheffi have come via LinkedIn’s influencer program. At Argentus, we love LinkedIn as both a sourcing tool and a platform to share our content with our network. So we’re really excited to see LinkedIn’s influencer program give such a great airing to the thriving field of Supply Chain which is a vertical where we are focused on exclusively as a specialty Supply Chain Recruiter where there are huge demand needs for talent.

Over and Out for now

Bronwen

Find out why we’re a leader in the Supply Chain Recruiting niche:

Extensive reach into the passive candidate market. Industry-leading sourcing techniques. Specialized Supply Chain recruitment focus. And a tenacious, highly-disciplined team who know Supply Chain through and through.

These are the strategic advantages we bring to our clients in a diverse set of industries, from Pharmaceutical to Consumer Goods, Construction and Financial Services, to name a few. If it’s Supply Chain, Procurement, Logistics, Operations, or Planning, Argentus is the premier recruiting partner for some of Canada’s top companies. Our video succinctly and quickly explains how we help organizations fill talent gaps in this highly competitive vertical:

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