2. Supply Chain Management
Logistics – The process of strategically managing the procurement, movement and storage of
materials, parts and finished inventory (and the related information flows) through the organization
and its marketing channels in such a way that current and future profitability are maximized through
the cost-effective fulfilment of orders
Supply Chain Management – The management of upstream and downstream relationships with
suppliers and customers in order to deliver superior customer value at less cost to the supply chain as
a whole.
3. Supply Chain Network
Supply Chain Network – A network of
connected and interdependent
organizations mutually and co-operatively
working together to control, manage and
improve the flow of materials and
information from suppliers to end users.
4. Competitive Advantage
Competitive Advantage - The ability of an
economy to produce a given good or service
in a more efficient and economically
competitive manner than its peers.
5. Competitive
Advantage
• Competitive Advantage - The ability of an
economy to produce a given good or service
in a more efficient and economically
competitive manner than its peers.
• The foundation for the success of a company’s advantage are
represented by the 3C’s methodology.
6. The 3C’s Model of Competitive Advantage
The 3C's model of competitive advantage, also known as the Strategic
Triangle, is a framework developed by business strategist Kenichi
Ohmae. The model focuses on three key factors that contribute to a
company's competitive advantage in the marketplace. The three C's
stand for:
• Customers
• Competition
• Company
7. 3C’s - Customers
Customers
This element refers to understanding and meeting the needs of
customers better than competitors. It involves analyzing customer
segments, preferences, behaviors, and demands to develop products or
services that offer superior value and address specific customer pain
points. By aligning the company's offerings with customer
requirements, a competitive advantage can be achieved.
8. 3C’s - Competitors
Competitors
This factor involves understanding the strengths and weaknesses of
competitors operating in the same market. By conducting competitor
analysis, companies can identify areas where they can outperform
rivals or find niche markets where they face less competition.
Understanding competitors' strategies, pricing, distribution channels,
and customer relationships allows a company to position itself more
effectively and differentiate its offerings.
9. 3C’s - Company
Company
This aspect focuses on internal capabilities and resources of the
company. It involves assessing the organization's strengths, unique
competencies, core capabilities, and distinctive assets that provide a
competitive edge. This could include factors such as technology,
patents, intellectual property, skilled workforce, operational efficiency,
supply chain management, or strong brand reputation. By leveraging
these internal strengths and aligning them with customer needs,
companies can create a sustainable competitive advantage.
10. 3C’s Model of Competitive Advantage
Key Takeaways:
The 3C's model emphasizes the interconnectedness of these three
factors and highlights the need for alignment among them. To achieve a
competitive advantage, companies must identify and exploit the
intersections and synergies between customers, competitors, and their
own capabilities. By focusing on these areas, companies can develop
effective strategies that differentiate them from competitors and create
value for customers.
11. Competitive Advantage
The source of competitive advantage is found firstly in the ability of the organization to differentiate itself,
in the eyes of the customer, from its competition, and secondly by operating at a lower cost and hence at
greater profit.
Seeking a sustainable and defensible competitive advantage has become the concern of every manager
who is alert to the realities of the marketplace. It is no longer acceptable to assume that good products will
sell themselves, neither is it advisable to imagine that success today will carry forward into tomorrow.
Put very simply, successful companies either have a cost advantage or they have a value advantage, or –
even better – a combination of the two. Cost advantage gives a lower cost profile and the value advantage
gives the product or offering a differential ‘plus’ over competitive offerings.
13. Cost Advantage
Cost advantage in supply chain management refers to the ability of a
company or organization to achieve lower costs in the procurement,
production, and distribution of goods or services compared to its
competitors. It is a strategic concept that focuses on reducing expenses
throughout the supply chain while maintaining or improving product
quality and customer service.
14. Cost Advantage
To gain a cost advantage, companies employ various strategies and practices in their supply
chain operations. Some common approaches include:
• Economies of Scale: By producing and purchasing in large quantities, companies can
benefit from economies of scale, which lead to lower per-unit costs. This can be achieved
through centralized procurement, bulk manufacturing, or consolidated transportation.
• Supplier Relationships: Building strong relationships with suppliers is essential to negotiate
favorable terms, such as volume discounts, long-term contracts, or joint cost reduction
initiatives. Collaboration with suppliers can help streamline processes and reduce costs.
15. Cost Advantage
• Lean Manufacturing: Implementing lean principles helps eliminate waste, improve efficiency, and reduce costs
in manufacturing operations. Techniques such as just-in-time (JIT) inventory management, value stream
mapping, and continuous improvement initiatives are commonly used.
• Efficient Logistics and Transportation: Optimizing transportation routes, utilizing efficient modes of
transportation, and minimizing lead times can significantly reduce transportation costs. Companies may also
explore strategies like outsourcing transportation or using third-party logistics (3PL) providers.
• Inventory Management: Effective inventory management is crucial for cost advantage. Balancing inventory
levels to meet demand while minimizing carrying costs, obsolescence, and stockouts can lead to significant
savings.
• Information Systems and Technology: Leveraging advanced supply chain technologies, such as enterprise
resource planning (ERP) systems, demand forecasting tools, and warehouse management systems (WMS), can
enhance visibility, accuracy, and efficiency, resulting in cost reductions.
16. Cost Advantage
• Process Improvement and Automation: Implementing process
improvement methodologies, such as Six Sigma or Kaizen, and
adopting automation solutions can enhance operational efficiency,
reduce errors, and lower costs.
By focusing on cost advantage in supply chain management, companies
strive to offer competitive pricing, increase profitability, and improve
their overall position in the market.
17. The Experience Curve
and Why it Matters
• The Experience Curve argues that the
more experience a business has in
manufacturing a product, the more it can
lower costs. As a company gains know-how,
it also gains in terms of labor efficiency,
technology-driven learning, product
efficiency, and shared experience to reduce
the cost per unit as the cumulative volume
of production increases.
18. Value Advantage
• Value advantage, also known as
value proposition or value
differentiation, refers to the unique
combination of benefits and value
that a company or product offers to
its customers compared to
competitors. It represents the
reasons why customers choose one
product or service over others in the
market. Value advantage is a key
aspect of competitive positioning and
is critical for attracting and retaining
customers.
19. Value
Advantage
To create a value advantage,
companies must understand the
needs and preferences of their
target customers and develop
offerings that fulfill those needs
better than competing alternatives.
Here are some elements that
contribute to value advantage:
20. Value Advantage
• Product or Service Features: The features and functionalities of a product or
service that provide specific benefits to customers. These features could include
quality, performance, durability, customization options, or unique capabilities
that address customer pain points.
• Price: Offering competitive pricing that provides customers with a perceived
value-for-money proposition. This could involve pricing strategies such as
competitive pricing, premium pricing for premium features, or low-cost options
for price-sensitive customers.
• Brand and Reputation: Building a strong brand and reputation that instills trust,
credibility, and confidence in customers. A positive brand image can
differentiate a company's offerings and create a perception of higher value.
• Customer Experience: Providing exceptional customer experiences throughout
the entire customer journey, including pre-sales, sales, and after-sales support.
This includes factors such as personalized service, ease of use, responsive
customer support, and hassle-free returns or warranties.
21. Value Advantage
• Innovation: Continuously innovating and introducing new products, features, or services that
address emerging customer needs or provide unique solutions. Innovation can differentiate a
company and create value by offering something new or superior to the market.
• Sustainability and Social Responsibility: Demonstrating a commitment to sustainability and
social responsibility, which resonates with customers who prioritize environmentally friendly and
socially conscious companies.
• Convenience and Accessibility: Making it easy for customers to access and use products or
services. This could involve factors such as convenient purchasing channels (online, mobile, brick-
and-mortar), fast and reliable delivery, user-friendly interfaces, or streamlined processes.
22. Value Advantage
By effectively delivering and communicating these elements, companies can
establish a value advantage that sets them apart from competitors, attracts
customers, and builds customer loyalty. It is important for companies to continually
assess and enhance their value proposition to stay relevant and competitive in the
market.
23. Value Advantage
• Gaining the value advantage over a company’s
competition requires the development of a
strategy based upon added values that normally
require a more segmented approach to the
market. When a company scrutinizes markets
closely, it frequently finds that there are distinct
‘value segments’. In other words, different groups
of customers within the total market attach
different importance to different benefits.
• The importance of such benefit segmentation
lies in the fact that often there are substantial
opportunities for creating differentiated appeals
for specific segments
24. Value Advantage
• Equally powerful as a means of adding
value is service. Increasingly it is the case that
markets are becoming more service-sensitive
and this of course poses particular challenges
for logistics management.
• Service in this context relates to the process
of developing relationships with customers
through the provision of an augmented offer.
This augmentation can take many forms
including delivery service, after-sales services,
financial packages, technical support and so
forth.
