Supply Chain Management Advantages

Time Advantage

Time advantage is created when one of the business processes is faster than the other in achieving the same result. Time advantage is best exemplified with the time to market examples. Time advantage is typically created through careful analysis of all the activities supporting a process and elimination of those that don’t add any value to the process, but only add lead time.

Time advantage can create product premiums, increased revenues, longer product life cycles, and intangible differentiator levers (such as brand value or an image of being innovative or agile). It becomes a competitive advantage when the firm develops processes that will enable it to quickly introduce new products in the market and portray the company as a pioneer and when the firm’s business strategy leverages such differentiation through a premium brand image to grow market share and increase revenues.

Cost Advantage

Cost advantage is created when the superior business process is cheaper to operate than the inferior other. Cost advantage can be created through elimination of waste from the process, but also by optimizing the process within the process constraints. A lot of supply chain processes fall in this category and can provide finite cost advantages when implemented correctly. Inventory planning processes within the supply chain function is a good example in this category.

Or, in a manufacturing industry, cost advantages may arise from better manufacturing process, cheaper inputs, or higher levels of automation that increase efficiency. Reducing set-up change time, reducing the frequency of such changes, and increasing batch sizes are several commonly used methods to reduce per unit manufacturing costs. However, a superior manufacturing process will potentially have a comparable cost structure, but allow for short batch sizes to enable flexible factory schedules.

Every revised iteration of the original business process can potentially improve the existing cost...