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How to remain competitive in an era of global supply chains

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One of the most significant by-products of globalization is a worldwide pool of potential suppliers and customers. For Canadian entrepreneurs, management of global supply chains is becoming increasingly important for competitiveness.

Free trade and the Internet have allowed many businesses to use suppliers around the world. As a result, savvy supply chain management has become a key factor in improving productivity and overall competitiveness.

Move up the value chain

In addition to smart supply chain management, entrepreneurs also need a globally competitive "value proposition." Increasingly, it's not enough to have a value proposition based solely on cost.

Put simply, your value proposition is how you differentiate yourself in the market. In many cases, this value will emerge from combining things like customer service, logistical support, information systems and product branding.

In order to be able to move up the value chain, you must invest in intangible assets such as knowledge, skills and innovation.

Invest in intangible assets

A study by the Organization for Economic Co-operation and Development (OECD) found that intangible assets represent more than 10% of U.S. GDP and contribute as much to the growth of productivity as fixed assets.

Canada, by comparison, has historically under-invested in intangible assets such as technology systems, innovative technologies, management training and process re-engineering. While larger companies have been investing in these for some time, it's imperative that entrepreneurs follow suit and make the investments they need to succeed in today's marketplace.

Differentiate your company

The first thing to do to improve your competitive positioning is to view your business from four different axes—supply chain, R&D and innovation, manufacturing, and marketing and sales. A number of differentiation strategies are possible for each axis.

Here are a few practical suggestions for entrepreneurs:

  • Find out how others in your industry are innovating;
  • upgrade customer relationship systems;
  • invest in employee training and product development;
  • reduce delivery lead-time by improving your processes;
  • invest in a marketing plan; and
  • rethink your manufacturing model.

Entrepreneurs can work with a BDC expert to examine how their company can become more innovative. BDC also offers business loans to support these investments.

Strategies at-a-glance

A business can strengthen its position with differentiation strategies in four main areas: Supply chain, R&D and innovation, manufacturing, and marketing and sales.

Supply chain

  • Adopt a "just-in-time" approach to inventory
  • Improve your information systems
  • Outsource certain components
  • Develop a shipping strategy focused on speed of delivery

R&D and innovation

Manufacturing

  • Review business processes
  • Invest in productivity and continuous improvement
  • Customize production with short runs
  • Produce specialized products
  • Outsource the mass production of high-volume or low-added-value products.

Marketing and sales

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