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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.


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
the team

      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.

Open Communication

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

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 13


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