Deloitte published an interesting survey study (2019) which proves that organization with superior supply chain capabilities performs significantly better on both revenue growth and EBIT measures when compared to the industry average.
The results are outstanding:
- 79 % of organisations with superior supply chain capabilities achieve revenue growth that is significantly higher than average
- Only 8 % of the organisations with lower-performing supply chains have above-average revenue growth
- 69 % of supply chain leaders have an EBIT margin that is significantly above average compared to only 9 % of supply chain followers
The survey was comparing supply chain leaders and followers in the following themes:
- Recognizing the importance of innovation
- Adopting the disruptive technologies
- Using analytics extensively
- Empowering executive-level leadership
- Connect the whole organization with SCM practices
- Develop talent strategies
Focus has transferred into the business relationship
However, the business relationship and activities in the business ecosystems have become an important research topic in organizational research during the latest decade. A well-performing business relationship has become a crucial part of the competitive advantage of a manufacturing company.
Today, the topic of relational performance should be a crucial part of measuring supply chain leaders and followers.
Complex supply chains, global business environment, market uncertainty, and information asymmetry have set a new demand on business relationship interaction between companies – customer and supplier. The Professors Jukka Vesalainen from the University of Vaasa and Henri Hakala from Lappeenranta University of Technology LUT state that better coordination, adaptation, and increased learning capabilities are needed in such business relationships. It’s more effective to act jointly than to try to force or coerce exchange partners by using the market exchange process.
In other words, in organizational research, the focus has moved into business relationship performance many years ago. Supply chain leaders need different capabilities today than before. Therefore, the internal management activities such as the ones mentioned in Deloitte’s survey (product development, demand planning, supply chain planning, manufacturing) are not enough anymore to achieve a well-performing supply chain.
The Professors argue that a well-performing relationship needs a platform for interaction between customer and supplier. The social capital knowledge sharing and cooperative behavior based on the platform cause improved relationship performance. The positive direct link between relational capital and improved relationship performance is a result of the increased knowledge creation and sharing.
A vertical and holistic platform for inter-organisational interaction and knowledge sharing is obviously needed.
I encourage all supply chain professionals to concentrate more on relational activities – how to achieve joint learning, transparent information, transaction automatization, on-going interaction, symmetric and real-time data and mutual trust in a customer-supplier relationship. In the future, the supply chain leaders are measured with these metrics.
Jarl Matti Anttila
CMO & Co-founder of Jakamo
Further reading:
Enabling relationship structures and relationship performance improvement: The moderating role of relational capital (2011). Industrial Marketing Management. Marko Kohtamäki, Jukka Vesalainen, Stephan Henneberg, Peter Naudé, Marc J. Ventresca.
Non-linear relationship between industrial service offering and sales growth: The moderating role of network capabilities (2013). Industrial Marketing Management. Marko Kohtamäki, Jukka Partanen, Vinit Parida, Joakim Wincent.
Strategic capability architecture: The role of network capability (2014). Industrial Marketing Management. Jukka Vesalainen and Henri Hakala.
Co-creating value from knowledge-intensive business services in manufacturing firms: The moderating role of relationship learning in supplier-customer interactions (2016). Journal of Business Research. Marko Kohtamäki and Jukka Partanen.
