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Competitive advantage: the rules are changing.

Competitive Advantage: the Rules Are Changing. Are You Ready?

Posted by Coreen Merryweather on 09 April 2015

   "A smart man once said: ‘’It is not the strongest of the species that survives, or the most intelligent, but the one most responsive to change’’ - Charles Darwin.

The balance of power is shifting

Success in the marketplace today requires much more than innovative products and a strong brand identity. Customers are more demanding, products are often cloned or imitated and markets have become “commoditised.” To really stand out from the crowd and succeed, companies need a unique competitive advantage – one that can only be gained through the strength of the relationships forged in their key accounts.

   "70% of consumers are willing to spend an average of 13% more 
with companies providing excellent customer service’’.

The balance of power is shifting

Historically, typical supplier/customer relationships were “at arm’s length.” There was usually very limited connectivity between the two parties, other than those activities necessary to complete a transaction, e.g., the placing of orders, the generation of invoices and so on.

The commonly-held view was that information is power; and therefore information was kept within the business and certainly not shared with suppliers or customers. Brand owners held the power. They were the ones who decided what processes their customers had to follow. As such, power in the distribution channel was often held by the supplier, rather than the customer base. In many markets, where the client base was fragmented, the purchasing power of any one single customer was generally very low.

Today, however, that power has shifted down the channel to the retailer, and increasingly even beyond, to the end shopper/consumer.

So, why the change?

This fundamental shift is partly a result of a general decline in brand loyalty and the commoditisation of markets. This, in turn, is leading to a growing recognition that in order to remain competitive, companies have to evolve to embrace a much more customer-centric approach. Ideally this approach should be considered at every stage: from designing the supply chain, all the way though to delivery, invoicing and repeat business.

The implication is that companies have to move away from the ‘one-size-fits-all’ mind-set when it comes to supply chain design and, instead, recognise that valuable accounts will require customised solutions that meet their specific needs.

Redesigning your supply chain with customers in mind

One significant outcome of this tailored approach to supply chain design is that stronger customer relationships can be forged – precisely because by redesigning the customer supply chain with your customers in mind, value can be added and enhanced at every stage of the process. This approach also allows both parties to reduce transaction costs* through the adoption of modern B2B solutions such as Customer Automation Management

Today’s technology has made it possible to connect supply chains end-to-end. The availability of Software-as-a-Service (SaaS) over the web also means that the costs of communication across networks are relatively low.

The true barriers to change

Be warned though, the barriers to improving supply chain collaboration and reducing transaction costs are not actually to do with technology itself – but rather to do with the “mindsets” of people who are opposed to change…

   "Overcoming resistance to change is another challenge in and of itself". 

*Transaction costs, such as the costs of placing orders, and all the myriad of activities that are involved when companies do business with each other, are often hidden and not easily quantifiable.

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