Management of Competitive Advantage and Performance Essay

Supplier Relationship Management

Supplier Relationship Management (SRM) is the most significant approach within the framework of strategic planning, which is concerned with all the interactions with supplier companies, which provide goods and services to an enterprise. Its primary objective is to increase the value of all the interactions to the maximum. As a result, closer relationships based on mutual trust and collaboration are established and the risk management capability is enhanced (Lamming 2005).

The thee aspects of the Supplier Relationship Management

SRM admits that the suppliers are different, which means that they have to be approached using different strategies. While the main emphasis is put on the role of the customer and supplier, the way companies communicate with one another is largely dependent on the products and services that are involved in the supply chain (Schuh et al. 2014). Only understanding of all the three aspects can ensure appropriate regulation. The comprehensive nature of SRM requires the commitment of the whole enterprise (Mithas, Krishnan & Fornell 2005).

The organization structure of the supply chain: Components and their roles

A group of Supplier Relationship Managers

They are responsible for the functioning of the supply chain at the organizational level. The main objective of this team is to provide collaboration of various company units using their communicative, leadership, and business skills to ensure constant progress in building strong relationships (Lambert & Schwieterman 2012).

A group of Supplier Account Managers

They are engaged in interaction with suppliers. Their task is to identify the goals that the supplier has and see the whole picture from the perspective of the partner. They must find a compromise that would satisfy both the supplier and their own company (Lambert & Schwieterman 2012).

An executive sponsor or a multifunctional committee

Their role is to integrate the strategies used in SRM into the policy of the company so that they would not contradict the ultimate goals (Lambert & Schwieterman 2012).

What Supplier Relationship Management is not

As it is evident from the structure, SRM is not a software tool – it is a real-world practice aimed at receiving competitive advantages. Neither is this approach limited to the development of the sides involved in the direction of unification of the supply process. All enterprises pose different requirements and thus, have different supply chains that require the implementation of unique strategies and unprecedented solutions (Buttle 2009). Supplier relationship management is not a plan that is possible to materialize within a short period.

Relationships that are based on reliance, mutual help, risk management, and continuous interactions proving to be stable, beneficial, and promising take time to establish and considerable changes in procurement. Enthusiastic and loyal engagement is indispensable for this purpose. Each side should strive to satisfy the needs of the target consumer and be as flexible as possible. The process of SRM is not discrete and should be managed at all levels starting from the manufacturer and ending with the customer (Lambert & Schwieterman 2012).

Manufacturing Flow Management

Manufacturing flow management is the process of a supply chain control that encompasses all the activities that are required for moving the goods through the factories. Its goal is to obtain, apply, and ensure the manufacturing flexibility of the whole network, which consists of the ability to produce a required quantity of goods in proper time with minimum expenses. The process is complex and includes risk and uncertainty management. Thus, achieving manufacturing flexibility goes far beyond the factory walls (Stratton et al. 2010).

Flow orientation vs. process orientation

Process orientation is one of the most crucial policies in manufacturing and management. By incorporating various business processes and ensuring they all pursue the same ultimate goal significant improvement of the company’s performance and the increase of efficiency can be achieved (Chung 2011). However, in practice processes often contradict and interrupt one another hindering the flow of material and information. Thus, reorganization of processes seems essential if the company wants to remove the obstacles for successful flow management (Míková 2013).

The significance of material and information flows

Material and information flows are the processes of paramount importance for any manufacturing enterprise as their main purpose is to produce physical goods, which is impossible without managing the flow of raw materials. Management failures are to be avoided since they result in huge financial losses for the company caused by high costs of the materials.

However, the control of material flow is impossible without the parallel control of data flow and presupposes the use of modern information technologies. Information flow connects the customer with the supplier, thus, its disruptions lead to material insufficiency and as a result – to the dissatisfaction of the consumer (Haq et al. 2016).

Principles of flow management

Flow management is aimed at the integration of material and information flows. All the processes running within one company are scheduled, launched, controlled, and influence by its employees. Thus, it means that if the reorganization of the flow management is required, personnel development or restructuring must inevitably follow. There exist certain principles that include change of perception, an adaptation of viewpoints, intrinsic restructuring, removal of problem causes, teamwork encouragement, long-term changes, active participation of the personnel, etc. (Qiu, Tang & Xu 2006).

Flow management is a highly important process indispensable from supply chain management. It necessitates the control of both material and information flows. If the management is performed correctly, it can considerably increase the productivity and competitiveness of the company.

Competitive Advantage

A competitive advantage is a property that a company strives to achieve over its market competitors showing superior performance in the same industry. Practically all indicators of superiority can be considered a competitive advantage. They include higher profit margin, quality materials, unique services, greater return on assets, reputation, etc. (Markley & Davis 2007). To stay afloat, a company should have at least several advantages that other companies in the same business do not possess. Otherwise, it runs a risk of being forced out of the market (Lavie 2006).

The basic types of competitive advantages

Cost advantage

The most widely spread way to achieve a competitive advantage for an enterprise is to produce the same products of the same quality but with minimum expenses. The company can sell its goods at the same market price but get a higher profit as long as it spends less on production. Moreover, if it reduces the price, it can attract more potential customers (Newbert 2008).

Differentiation advantage

This type of superiority is obtained by offering unique goods and services and asking a higher price for them. It implies that the company is branding-oriented. In this case, differentiation strategies should be implemented to create an image. However, customers are ready to pay more only for the best possible quality (Newbert 2008).

Resources and capabilities

Unless a company has resources and capabilities that are unsurpassed by competitors, its activity can simply be replicated by other firms and the advantage will be lost. Resources may include patents, trademarks, technologies, unique materials, etc. Capabilities refer to the effective use of existing resources. Moreover, it includes the ability to bring the product to the market faster than other companies. Taken together, resources and capabilities create distinctive competences (Li et al. 2006).

Ways to achieve a competitive advantage

• Making use of external changes. Provided that PEST factors change, there can be a lot of chances for a company to gain a competitive advantage. An organization must be capable of responding to external factors quicker than its competitors (Ireland & Webb 2007).
• Introducing intrinsic changes. Cost differentiation advantage can be achieved if a company makes an emphasis on innovation (Ireland & Webb 2007).
• To obtain a competitive advantage, a company must be engaged in value-creating activities. Superiority can be achieved by careful management of a supply chain and manufacturing flow that will ensure abundant stock and timely satisfied demand.

Organizational Performance

Organizational Performance is a measure of success of a company’s performance implying the comparison of the objectives with the output. Specialists who deal with organizational performance issue come from various fields including finance and legal regulation, strategic planning, operations control, organizational development, etc. (Larcker, Richardson & Tuna 2007).

The constituents of organizational performance

Strategic goals

They are aimed to provide in which direction every employee must move and which goals he/she should pursue (Sun, Aryee & Law 2007).

Organizational structure

It provides the form for delivering goods and services. It should align with the strategy and their influence must be reciprocal (Sun et al. 2007).

Business performance measurement

This part encompasses all the measures by which every unit of a company is assessed. Unification of measures is impossible in this case as they differ across firms. To stay relevant, they must be regularly reassessed and certain changes must be introduced into strategic planning. Careful management of information systems is also highly important as the data should be collected in time (Sun et al. 2007).

Allocation of resources

It is concerned with decision making, i.e. the way a company decides how to distribute its resources to get higher profit (Sun et al. 2007).

Values, principles, and corporate culture

This part deals with the way a firm uses its unique priorities and people to put its strategies into practice (Sun et al. 2007).

Reward system

It is connected with encouragement an organization provides for achieving its goals. A firm can award its employees with money, promotion, additional days off, celebration, etc. (Sun et al. 2007).

The role of supply chain management in organizational performance

Successful supply chain management is one of the most reliable ways to ensure competitive superiority. Besides, it significantly improves organizational performance as it shifts the focus from competition between organizations to competition among supply networks (Hubbard 2009). The relationships among Supplier Relationship Management, competitive advantage, and organizational performance are complex and multi-faceted, however, it is evident that the improved practice of supply chain management has a direct positive influence on the success of a company (Zack, McKeen & Singh, 2009).

Organizational performance must show how the objectives are transformed into the results. It is concentrated not only on the personnel performance but on a company as a whole including all the processes it is engaged in (Andrews, Boyne & Walker 2006).

Reference List

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