Logistics and Supply Chain Management, 4th Edition

THE ERA O F NET W O R K CO M P E T ITION

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seek to achieve a situation where there are benefits to both parties. Companies

like Nissan Motors in the UK have shown that this is not a utopian dream but can

be a practical reality.

The principle of co-makership can be extended in both directions in the supply

chain – upstream to suppliers and downstream to distributors, retailers and even

end users. The prizes to be won from successful co-makership potentially include

lower costs for all parties through reduced inventories and lower set-up costs as

a result of better schedule integration. The implications for competitive strategy

are profound. The new competitive paradigm is that supply chain competes with

supply chain and the success of any one company will depend upon how well it

manages its supply chain relationships.

Managing the supply chain as a network

The new competitive paradigm that we have described places the firm at the

centre of an interdependent network – a confederation of mutually complementary

competencies and capabilities – which competes as an integrated supply chain

against other supply chains.

To manage in such a radically revised competitive structure clearly requires dif-

ferent skills and priorities to those employed in the traditional model. To achieve

market leadership in the world of network competition necessitates a focus on net-

work management as well as upon internal processes. Of the many issues and

challenges facing organisations as they make the transition to this new competitive

environment, the following are perhaps most significant.

1 Collective strategy development

Traditionally, members of a supply chain have never considered themselves to be

part of a marketing network and so have not shared with each other their strategic

thinking. For network competition to be truly effective a significantly higher level of

joint strategy development is required. This means that network members must

collectively agree strategic goals for the network and the means of attaining them.

2 Win-win thinking

Perhaps one of the biggest challenges to the successful establishment of market-

ing networks is the need to break free from the often adversarial nature of buyer/

supplier relationships that existed in the past. There is now a growing realisation

that co-operation between network partners usually leads to improved perform-

ance generally. The issue then becomes one of determining how the results of that

improved performance can be shared amongst the various players. ‘Win-win’ need

not mean 50/50, but at a minimum all partners should benefit and be better off as

a result of co-operation.