Supply Chain Management Competition
When it comes to supply chain management, competitiveness refers to the degree to which demand and supply are able to be matched within a competitive environment. When there is a decrease in demand or an excess supply in the market place, companies will need to offer dropping prices or improving quality to their consumers in order to earn their orders. This is because customers are more price sensitive during these market conditions.
Supply Chain Management Competition Overview
A supply chain is a collection of networks that allow for the transmission of commodities from the wholesalers to the retailers in a market system. These wholesalers operate between the suppliers and the retailers. Actually, the wholesale prices are set by the suppliers and the retailers themselves, not the wholesalers. This is because it has an impact on the price that the sellers are willing to pay the dealers. However, according to the most recent models of competition in the supply chain, retailers and suppliers do not have a significant amount of influence over the prices at the wholesale level. This means that the buyer’s power doesn’t change based on things like the amount of output or units delivered or the number of merchants.
The Supply Chain Management Competition is a model that was developed to find a solution to the problem that was previously stated. According to this pricing model, the wholesalers’ prices are determined not only by the suppliers but also by the retailers. In this context, the buying power of the merchants is taken into consideration. It goes down when there are more retailers competing for customers in the market. In this scenario, every retailer pays extra for their purchase, which ultimately results in a rise in the prices charged by wholesalers. Therefore, the expansion of the supply chain to include a greater number of retailers is shown to be more favourable in terms of the overall efficiency of the supply chain. It contributes to the earnings of the retailers, which are then transferred to the suppliers, resulting in an increase in the profitability of the organisation.
Advantages of Supply Chain Management Competition
The following are the advantages of supply chain management competition:
Cost reduction and quality enhancement: The competition’s goal is to increase the efficiency and quality of supply chain management.
Reduced market risks: By encouraging innovation, developing new business models, enhancing consumer satisfaction, and strengthening loyalty, competition can help decrease market risks.
Supply chain optimisation: The competition will enhance supply chain management by identifying bottlenecks in the manufacturing process that cause delivery delays and cost increases.
Increased company competitiveness: Competition will assist firms in increasing their competitiveness by fostering new ideas and innovations through collaboration with competitors.
Disadvantages of Supply Chain Management Competition
The disadvantages of supply chain management competition are as follows:
Competition leads to a decrease in the quality of goods and services.
There is no guarantee that your products will rank in the markets as there are other factors to consider as well.
May require trained and qualified manpower for effective execution within the company.
Supply chain management competition is a complicated task that involves numerous complexities within the company.