In the case of AutoCorp, a car assembly company which used refined silicon material AST, it worked great VFM through alternate and innovative contractual management with supplier. Against industry practices, it opted for a long term purchase plan since AST is known to have great demand among other electronic sectors, even as alternative goods and substitutes emerged. The company achieved commercial with the LTA agreement ensured that there was commercial interaction, technical interaction as well as logistical interaction.
OBB efficiency will allow the organization to gain good value from suppliers. It is proven that well-established Supply Chain Management (SCM) will provide the organization a competitive edge. Therefore, efficient buyer behaviour within the organization will indirectly lead to competitive edge.
Competitive Advantage is defined as the ‘defensible position’ over competitors. It requires certain capabilities which allow the organization to prove that it is different from its peers (McGinnis and Vallopra, 1999). Such advantage can be achieved only with critical management decisions.
Aspects of competitive advantage that a company can gain include quality, product innovation, and time-to-market and delivery dependability, apart from price-to-cost efficiencies (Peteraf, 1993).
Due to globalization, SCM has become an essential deployment for businesses. It is now regarded as a key factor to enhance the profitability of an organization. Council of Logistics Management (CLM) defines SCM as the systematic and strategic coordination of traditional business functions, tactics of functions in an organization to improve performance of an individual organization and the supply chain as a whole.
An efficient SCM goal should establish “information and material flows” without interruptions in the supply chain so as to achieve competitive advantage. Such studies indicate that the scope of SCM is to magnify and recognize the ‘strategic nature’ of coordination at the two levels – organization’s own performance versus that of the whole supply chain.