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| Thought Paper |
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Getting the Best out of Supply Chain Optimization |
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| Abstract |
A highly competitive business environment has compelled companies to examine and
reinvent their supply chain strategies. In the new economy, companies not only have to
design and implement an effective supply chain, but also have to achieve greater
coordination and collaboration among supply chain partners.
For example, a few years ago, multinational corporations could compete successfully by
exploiting scale and scope economies or by taking advantage of imperfections in the
world's goods, labor and capital markets. But these ways of competing are no longer as
profitable as they once were. In most industries, multinationals no longer compete
primarily with companies whose boundaries are confined to a single nation. Rather, they
compete head-on with a handful of similar giants. Against such global competitors, it is
hard to sustain an advantage based on traditional economies of scale.
While multinationals in the past realized economies of scale principally by utilizing physical
assets and exploiting a company's brand, the new economies of scale are based on the
ability of business units, subsidiaries and functional departments within the company to
collaborate successfully by sharing knowledge and jointly developing new products and
services.
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