Saylor URL: http://www.saylor.org/books Saylor.org
Today, many companies still take a narrow view of their supply chains; they look at supply chains
mainly in terms of the costs they can save. Cost reduction is definitely an important part of supply
chain management. After all, if your competitors can produce their products at a lower cost, they
could put you out of business.
Keep in mind, however, that a firm can produce a product so cheaply that no one will buy it because
it’s shoddy. That’s why smart companies view their supply chains as an integral part of their
marketing plans. In other words, these companies also look at the ways their supply chains can
create value for customers so as to give their firms a competitive edge.
Today, the term value chain is sometimes used interchangeably with the term supply chain. The
idea behind the value chain is that your supply chain partners should do more for you than perform
just basic functions; each one should help you create more value for customers as the product travels
along the chain—preferably more value than your competitors’ supply chain partners can add to their
products.
Zara, a trendy but inexpensive clothing chain in Europe, is a good example of a company that has
managed to create value for its customers with smart supply chain design and execution. Originally, it
took six months for Zara to design a garment and get it delivered to stores. To get the hottest fashions in
the hands of customers as sooner, Zara began working more closely with its supply chain partners and
internal design teams. It also automated its inventory systems so it could quickly figure out what was
selling and what was not. As a result, it’s now able to deliver its customers the most cutting-edge fashion
in just two weeks. Not only that, but the company set a new standard for the clothing industry in the
process. [2]
[1] Donald J. Bowersox and David J. Closs, “Ten Mega-Trends That Will Revolutionize Supply Chain
Logistics,” Journal of Business Logistics 21, no. 2 (2000): 1.
[2] Jeremy N. Smith, “Fast Fashion,” World Trade 21, no. 12 (2008): 54.