Success in business does not come easily. A company must differentiate itself from others by developing a unique product or service. The product or service must be brought to market in a manner that will allow for an adequate return on investment. Of course, a product or service that no one knows about is fairly useless, therefore the company must spend time and money educating its target audience as to the significance of its offering. During this entire process, rivals are attempting to bring their own products to market while eliminating the competition. It is no wonder that "survival of the fittest" is an accepted fact in the business world. The firm that does not destroy its competitor may find itself on the lunch menu!
Managers in the competitive arena quickly come to the realization that it is the rare company that can do it all—develop products, manage all manufacturing and assembly from raw material to finished goods, distribute to an increasingly international customer base, and ward off competitors both large and small. Thus most managers focus their efforts on executing the company's "core competency": what it believes it can do better than the competition. However, if a manager chooses manufacturing as his/her niche, the need for the other activities—assembly, distribution, marketing—does not vanish. Consequently, the manager looks for other companies that have specialized in these functions from which to purchase services.
This brings us to a quandary. How can a company that is reared in a fiercely competitive environment suddenly combine forces with others? How can it put down the sword and cooperate with other firms in order to get its product to market? In other words, how can companies become part of a successful supply chain?
We will discuss how companies can use the principles of teamwork to become part of a supply chain success story. In addition, we will present two techniques—information sharing and vendor managed inventory (VMI)—that can be used as tools to help manage the day-to-day activities within supply chain partnerships.
TEAMWORK AMONG SUPPLY CHAIN PARTNERS
It is an accepted fact in most corporations that providing training to and encouraging teamwork among their employees gives them a competitive advantage.1 Many of the characteristics shared by successful teams inside a company are also key ingredients towards determining the success of supply chain partners. These characteristics include
• Open communication within the team
• Trust that fellow team members will not undercut
• Confidence in the competence and reliability of fel
low team members.
Let's take a look at how each of these characteristics applies to supply chain partners.
In order for a supply chain partnership to succeed, it is critical that its members be able to communicate openly with each other. As we shall discuss later in this article, supply chain partners have to provide critical and sensitive information to each other. Information such as production schedules, engineering and design specifications, and cost and inventory data are commonly shared between partners in a successful supply chain. If this information is not provided in a timely manner, or is not given accurately because of a fear that it may fall into the wrong hands, it will severely compromise the competitiveness of the entire supply chain.
To be effective, open communication must not be limited to the purchasing and sales departments of the supply chain partners. When developing new products the various engineering units in each company must come together as a team in order to ensure maximum efficiency. When attempting to streamline the invoice and payment cycle, the accounting departments of both companies must work together as one for maximum effectiveness. The most effective supply chain partners keep all of their resources engaged in reducing costs and time to market.
To Be Continued
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