Horizontal and vertical chains.

 

The usual, and correct view of a supply chain is a number of competitors at each point in the chain competing to provide the goods and services necessary to send the goods along to the next stage.  The classic is the Australian wool chain, where the agents compete to broker the wool, the scourers compete amongst themselves, as do the top-makers, weavers, and so on. This all takes a lot of time and energy, competing horizontally.

Well developed demand chains by contrast compete vertically. They are driven by demand, and each point in the chain works collaboratively with the others to best meet the customers need. Slowly, the competitive environment is altering, and competition at the point of sale is becoming a competition between competing supply chains, not just competing retailers.

The benefits of this type of activity are potentially huge.

Wool Connect, a group of wool producers has its wool in shops as socks after a couple of months, rather than a couple of years as would be the norm, and they know where the wool goes, and they get a premium for a premium product.

www.woolconnect.com

About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
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