Logistics and Supply Chain Management, 4th Edition

LOGISTIC S & SUPPLY CHAIN MANAGEMENT

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7 From stand-alone competition to network rivalry

The conventional business model has always been that companies succeed or fail

on the basis of their own resources and competencies. However, as the trend to out-

sourcing has increased, there has come a realisation that the competitive vehicle is no

longer the individual firm but rather the supply chain of which that firm is a member.

Whereas once a single firm might encompass almost the whole supply chain, today

that is no longer the case. Instead, today the company finds itself a member of an

‘extended enterprise’. This extended enterprise is in reality a complex network of spe-

cialist providers of resources and competencies. The companies that will be the most

successful in this era of network competition will be those that are best able to utilise

the resources and competencies of other partners across the network.

The implications for tomorrow’s logistics managers

Transformations of the type outlined above have significant implications for the

type of skills profile that will characterise successful logistics and supply chain

managers.

Table 11.1 suggests some of the elements of the necessary skills profile that

flow from the seven business transformations.

This is only indicative, but what it does suggest is that there is a real need for

formal education and training in areas as diverse as information systems and

change management. The skills that are indicated cannot be acquired solely

through osmosis and experience; the foundation for mastery of these skills must

be gained through appropriate management education programmes.

The following quotation from an article in the Harvard Business Review neatly

summarises the issue:

Despite years of process breakthroughs and elegant technology solutions, an

agile, adaptive supply chain remains an elusive goal. Maybe it’s the people

who are getting in the way ... Supply chains it seems are really about talent, not

technology, especially as the marketplace grows ever more complex.

SOURCE: J. KIRBY

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This is the challenge for today’s logistics educators: how to establish programmes

that have the breadth as well as the depth to create ‘T-shaped’ managers.

‘T-shaped’ managers are so called because of their skills profile. Even though

they have a specific specialism (the down-bar of the T) with in-depth knowledge

and capability, they also have a significant understanding of the other key busi-

ness functions (see Figure 11.3). This breadth of understanding is critical for the

supply chain manager of the future, given the need to think and manage ‘horizon-

tally’, i.e. across functions and between businesses.

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

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Table 11.1 The key business transformations and the implications for

management skills

Business transformation Leading to Skills required

From supplier-centric to

customer-centric

The design of customer-

driven supply chains

Market understanding;

customer insight

From push to pull Higher levels of agility and

flexibility

Management of complexity

and change

From inventory to

information

Capturing and sharing

information on real

demand

Information systems and

information technology

expertise

From transactions to

relationships

Focus on service and

responsiveness as

the basis for customer

retention

Ability to define, measure

and manage service

requirements by market

segment

From ‘trucks and sheds’

to ‘end-to-end’ pipeline

management

A wider definition of supply

chain cost

Understanding of the

‘cost-to-serve’ and time-

based performance

indicators

From functions to

processes

The creation of cross-

functional teams focused

on value creation

Specific functional

excellence with cross-

functional understanding;

team working capabilities

From stand-alone

competition to network

rivalry

More collaborative working

with supply chain partners

Relationship management

and ‘win-win’ orientation

Managers have in-depth

expertise on one discipline

combined with enough

breadth to see the

connections with others

Effective process management requires

significant cross-functional skills

Figure 11.3 Creating a T-shaped skills profile