Value Advantage

TermiKnowledge - Supply Chain, Procurement and Inventory Terminologies
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If you are a manufacturing concern or a distribution concern, it is only through the value added activities of the enterprise that it is able to stay ahead of its competitors. The value advantage of any company depends upon how well it can maximize its inputs (or the resources that it has at its disposal), in comparison with its competitors. For any enterprise to be able to do this, it needs to have a well defined strategic vision and a clear understanding of its market position vis-a-vis its competitors. Then, in addition to this, the enterprise also needs to utilize its existing resources, manpower, technology and other means of production, to come up with the right value proposition. To this effect, the strategies adopted by the company to achieve its strategic goals need to be based upon sound calculation of these factors.

Basically, the approaches adopted by different enterprises to measure their competitive advantage, share similarities and dissimilarities. Firstly, Supply Chain Management method is characterized by its emphasis on cost per unit through productivity advantage. It also takes into consideration the relationship between the prices of its goods and the price of its substitutes. Thus, if a company wishes to increase its competitive advantage, then it has to reduce its cost per units of production. This would lead to increase in the volume of the goods produced, which, in turn, would translate into higher levels of productivity.

Secondly, in the case of supply chain management and inventory management, the goods being distributed or stored are usually separated from the production of them. In fact, production is done at a factory and the finished goods are then trucked to the warehouse. From the warehouse, the goods are either packed into storage containers or are put into trucks for distribution. However, in supply chain management and inventory management, the goods are usually packaged together, either on the same trucks or on different trucks, with the aim of transferring the entire production of the enterprise to the point of sale. From here, the inventory is drawn.

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