The fact that a number of companies (such as Wal-Mart, Zara, Dell and Toyota) have managed to record extraordinary success while doing quite ordinary things (such as running supermarkets, selling clothes or making computers or cars) has made managers more fully aware that what their organisations produce can matter a lot less than the way that they produce it. This holds true even in an age when the product life cycle is getting shorter and shorter, and more emphasis is being placed on technological product innovation as a means to add value.
Central to the way that companies produce things is the way that they manage their supply chains—the collection and distribution of all the inputs to the production process. Some companies take this to extremes. For example, Olam, a Singapore-based commodities trader, says that in practice it is “in the business of supply-chain management”. It undertakes all the processes involved in getting soft commodities such as cocoa and coffee from the grower’s farm to the factories of Olam customers such as Sara Lee. Its competitive advantage lies in the superiority of its processes, not its commodities.
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