Creating Value Through Supply Chain Engagement: an Analysis of Three Consumer Products Companies
CREATING VALUE THROUGH SUPPLY CHAIN ENGAGEMENT: AN ANALYSIS OF THREE CONSUMER PRODUCTS COMPANIES Nancy Van Way The Leonard N. Stern School of Business Glucksman Institute for Research in Securities Markets Faculty Advisor: Lawrence White April 3, 2017 1 I. Introduction A supply-chain manager at an international consumer products company recently commented to me that ‘food and beverage companies would be nothing without their suppliers.’ This bold statement on the importance of high-quality suppliers to the success of a business is corroborated by many business scholars, including those at Accenture that authored a recent study estimating that within manufacturing companies, the supply chain accounts for between 50 to 70 percent of total costs, and manufacturers spend about half of total revenues on raw materials and packaging.1 It is therefore no surprise that manufacturing companies have long been paying close attention to their supply chains in an effort to manage these costs and gain strategic advantage over competitors. One example of the power of innovative supply chain management is the development of just-in-time manufacturing in the 1960’s, which has revolutionized industries. Within the auto industry, Toyota’s development of just-in-time supply chain management significantly cut costs and led the company to dominate the auto industry for decades, while late adopters fell behind, were acquired, or went bankrupt. Today, the approach to supply chain is shifting away from simple cost reduction. Historically, supply chain managers have kept in mind what Andrew Winston, author of Green to Gold, calls a “narrow range of demands.” He identifies these demands as those to: “stay on the right side of the law, keep operations within regulatory levels of air and water pollution, avoid child labor, and so on.”2 However, with a changing climate and increasingly larger companies doing business around the world, this narrow range has started to expand as companies increasingly look to the supply chain as a potential source of competitive advantage.
[Show full text]