© 2023 University of Cape Town

All Rights Reserved

MODULE 8 UNIT 2

Designing the supply

chain for competitive
advantage
Table of contents
1. Introduction 3
2. Supply chain analysis 3
2.1 Customers 3
2.2 Internal capabilities 3
2.3 Supply chain trends 4
2.4 Competitive analysis 4
2.5 Supply chain technology 5
2.6 Supply chain risks 5
2.7 New supply chain capabilities 6
2.8 Supply chain organisation, people, and indicators 7
2.9 Business case and buy-in 7
3. Conclusion 7
4. References 7

© 2023 University of Cape Town

All Rights Reserved

Tel: +27 21 447 7565 | Fax: +27 21 447 8344

Website: www.getsmarter.com | Email: [email protected]
Page 2 of 8
 Learning outcomes:

LO3: Analyse the supply chain structure from a competitive perspective.

LO4: Investigate the processes for improving a supply chain’s competitive advantage.

1. Introduction
An important aspect of supply chain management (SCM) is improving a supply chain’s
competitiveness through planning. Being aware of the ins and outs of basic SCM is not enough.
The supply chain manager also needs to interrogate those processes and improve them to
outperform competitors. This set of notes explains how to analyse the supply chain
competitively, as well as how to improve a competitive advantage based on the findings.

2. Supply chain analysis

Recall that many strategies can be used to create a competitive advantage in the supply chain.
To select the best strategy, and to leverage it most effectively, consider certain aspects of the
business and how they can be optimised.

2.1 Customers
One of the key business areas that need to be considered when optimising the supply chain
for a competitive advantage is the customer base. Assessing the current and future supply
chain needs from the customers’ perspective is imperative to understanding what drives
customer demand and what will be of value to them from the business. All processes – from
product fulfilment to reverse logistics – should be customer-centric to ensure that value is
added for customers at every step (Dittmann, 2013).

2.2 Internal capabilities

An assessment of the current internal performance, as well as the performance required for
current and future customer needs, highlights challenges. Organisations should be better
equipped to understand the changes needed and the supply chain capabilities that can be
adapted.

Various gaps in an organisation’s internal capabilities can include:

• Too many product lines;

• Poor inventory management, such as slow-moving or obsolete goods taking up space;

© 2023 University of Cape Town

All Rights Reserved

Tel: +27 21 447 7565 | Fax: +27 21 447 8344

Website: www.getsmarter.com | Email: [email protected]
Page 3 of 8
 • Product development that does not consider the supply chain requirements during
the design stages;

• Ineffective balance between supply and demand resulting in over or undersupply;

• Poor optimisation of the demand–supply network; and

• Globalisation issues, such as outsourcing or legal challenges.

(Kerber & Dreckshage, 2017)

Using best practices and developing strategies around these gaps are good strategies
themselves (Kerber & Dreckshage, 2017).

2.3 Supply chain trends

Constant change is the norm in SCM, so adapting to trends and implementing change
effectively is essential. Incorporating new trends in technology and management strategies is
a useful way to keep a supply chain competitive. Some ways to entrench the capability to
adapt to trends and technologies are the following:

• Lean Six Sigma: This is a team-focused approach to remove any use of resources that
do not add value, with the aim to improve not only employee performance but also
organisation-wide performance. Implementing the Lean Six Sigma approach in an
organisation makes processes more streamlined. Employee input is also valued more
highly in this approach.

• Complexity management: Changes to technology and globalisation have increased

the complexity of effective SCM. Focus can be placed on streamlining and
interconnecting processes to meet customer expectations, such as faster lead times
and expert customer service.

• Network optimisation: This solution focuses on seeing the complete overview of the
organisation and proactively implementing changes. Network optimisation improves
customer satisfaction and revenues while eliminating supply chain risks.

(Operational Excellence Consulting, n.d.)

2.4 Competitive analysis

Understanding the organisation’s competition and being proactive instead of reactive to
changes, disruptions, and opportunities in the market can make all the difference. The
comparative analysis process can be as simple as considering how competitors scan and track
their products or as complex as looking at other companies’ sustainability missions. To resist

© 2023 University of Cape Town

All Rights Reserved

Tel: +27 21 447 7565 | Fax: +27 21 447 8344

Website: www.getsmarter.com | Email: [email protected]
Page 4 of 8
falling behind on trends, an effort should be made to understand competitors’ current
operations.

2.5 Supply chain technology

Technologies assist organisations to sustain new processes and easily implement them.
Organisations should consider researching and evaluating various supply chain technologies
that can be used in their competitive advantage development, including:

• Forecasting systems;

• Warehouse-management systems;

• Network-optimisation software;

• Early-warning and visibility systems;

• Automated shipping notices;

• Satellite tracking;

• Automated picking; and

• Carbon-footprint management.

Additionally, when considering these and other technologies, it is as important to retain and
train talent who know how to use the various technologies in the most effective way (Grant,
Wong & Trautrims, 2017).

2.6 Supply chain risks

There are multiple factors to consider when looking at the risk that an organisation’s supply
chain can face. Managing risk should be part of the strategic planning process of the
organisation. Processes should be in place for identifying, prioritising, managing, and
mitigating risks (Manuj & Mentzer, 2008). Common risk factors for supply chains, particularly
on a global scale, include the following.

Supply risks:

• Supplier opportunism through, for example, taking advantage of inflation or

shortages by raising prices beyond what would normally be justified

• Poor quality of inbound goods and materials

• Transit-time variability

© 2023 University of Cape Town

All Rights Reserved

Tel: +27 21 447 7565 | Fax: +27 21 447 8344

Website: www.getsmarter.com | Email: [email protected]
Page 5 of 8
 • Risks affecting suppliers, such as supply or labour shortages and embargoes

Demand risks:

• Demand variability

• Forecast errors

• Competitor moves, where competitor decisions result in more effective supply-and-

demand processes

• Risk affecting customers. For example, if a customer orders products with long lead
times, any external factors take effect during the wait, such as changed tax or duties
and new product releases, can affect customer satisfaction and the final price of the
product.

Operational risks:

• Inventory ownership

• Asset and tools ownership

• Product quality and safety

(Manuj & Mentzer, 2008)

2.7 New supply chain capabilities

This course has placed great emphasis on the ever changing social, political, and business
environments in which supply chain managers organise their operations. For this reason,
supply chain strategies should be future-focused, looking toward what emerging
requirements might impact your operations. When planning your future-proof supply chain
strategy, you should also take pains to be aware of inputs and capabilities of your internal
teams, such as sales teams, marketing, and even finance teams:

• Are there any inefficiencies or wasted or repeated work in the processes?

• Are there high performers with ideas to improve the work?

(Operational Excellence Consulting, n.d.)

Project plans should be designed and implemented to ensure that new requirements are met
and the organisation’s operational goals are achieved.

© 2023 University of Cape Town

All Rights Reserved

Tel: +27 21 447 7565 | Fax: +27 21 447 8344

Website: www.getsmarter.com | Email: [email protected]
Page 6 of 8
2.8 Supply chain organisation, people, and indicators
Implementing a new supply chain strategy requires a change for the people in an organisation.
At times, entire departments need to be restructured or combined. Part of a new strategy
requires a closer look at the operational workings of each department and how they add to
the final plan of action. Competence testing, as well as ongoing learning and development,
ensures strategies can be executed, making the best use of employees (Kerber & Dreckshage,
2017).

2.9 Business case and buy-in

To ensure that a strategy is implemented correctly, the entire organisation needs to be on
board. Buy-in across all departments and all stakeholders can be achieved by including
everyone in the development and implementation of new supply chain strategy plans from
the start.

3. Conclusion
Customer satisfaction should be the driving reason behind every strategic decision for the
supply chain. To ensure that an organisation has buy-in from all stakeholders, so that it can
fully implement new supply chain strategies, a more inclusive process for strategy
development can be used. A cohesive, strategic supply chain wherein every part works
together at maximum effectiveness, aimed at customer satisfaction, helps the organisation
stay far ahead of its competitors.

Reflect on your learning:

What are your biggest takeaways from this unit? Record your reflections in your journal.
Remember that the course-wide journal can be downloaded in Module 1.

4. References
Dittmann, P.J. 2013. Supply chain transformation: building and executing an integrated
supply chain strategy. New York: McGraw-Hill.

Grant, D.B, Tautrims, A. & Wong, C.Y. 2017. Sustainable logistics and supply chain. 2nd ed.
London: Kogan Page.

Kerber, B. & Dreckshage, B. 2017. Lean supply chain management essentials. Milton Park,
UK: Taylor and Francis.

© 2023 University of Cape Town

All Rights Reserved

Tel: +27 21 447 7565 | Fax: +27 21 447 8344

Website: www.getsmarter.com | Email: [email protected]
Page 7 of 8
Manuj, I. & Mentzer, J.T. 2008. Global risk management strategies. International Journal of
Physical Distribution and Logistics Management. 38(3):192-223. DOI:
10.1108/09600030810866986.

Operational Excellence Consulting. n.d. How to develop a supply chain strategy. Available:
https://www.operational-excellence-consulting.com/opex-articles/how-to-develop-
a-supply-chain-strategy [2022, October 25].

© 2023 University of Cape Town

All Rights Reserved

Tel: +27 21 447 7565 | Fax: +27 21 447 8344

Website: www.getsmarter.com | Email: [email protected]
Page 8 of 8