In today’s business world, many companies offer similar products and services. Because of this, every organisation needs to know how to stay ahead of its competitors. This article explains the idea of competitive advantage, how supply chain management and Porter’s value chain help to create value, and why performance management is important in maintaining good results.
Competitive advantage means the special strength that makes one company better than others in the same industry. A company is competitive when it can offer products or services that are cheaper, better, or more valuable than its rivals. There are two main perspectives. From the customer perspective, a company has a competitive advantage when it can continuously give customers more value than other companies, such as better quality, lower price, stronger brand, good customer service, or a convenient location. From the business perspective, competitive advantage is the ability to earn higher profit than other companies in the same market for a long period of time. This usually comes from special resources or capabilities, such as skilled workers, strong technology, unique products, or an efficient way of working.
Competitive advantage is influenced by internal factors and external factors. Internal factors are things inside the organisation that it can control, such as finance, human resources, marketing, research collaboration, product differentiation, and cost of production. External factors are outside influences that the company cannot control directly, such as politics, economic conditions, social trends, technology, and culture. Together, these factors shape how strong or weak a company is in the market.
To deliver products efficiently and stay competitive, companies depend on supply chain management (SCM). A supply chain is the whole system that starts from getting raw materials and ends with delivering the final product to the customer. It includes suppliers, manufacturers, warehouses, transport, retailers, and finally the end-user. Supply chain management is the process of planning, managing, and controlling all these steps so that the right product reaches the right customer, at the right time, in the right quantity, and at the right cost. For example, the flow in a supply chain starts when a company orders raw materials from suppliers.
The materials are sent to the factory, where they are processed into finished goods. Then the products are stored in warehouses, delivered to shops or online platforms, and finally bought by customers. SCM is very important because it can increase customer service by making sure customers get the products they want on time and receive good after-sales support. It helps reduce operating costs by cutting unnecessary inventory, preventing production delays, and designing a smooth logistics network. SCM also improves the financial position of a company by lowering supply chain costs, reducing the need for large fixed assets like extra warehouses or trucks, and speeding up cash flow through faster delivery and sales.
While the supply chain looks at the flow of products, Porter’s value chain looks at the flow of activities inside a company that create value for the customer. Michael Porter introduced the value chain as a way to break down a company’s work into smaller parts so managers can see where value is created and where costs occur. The value chain is divided into primary activities and secondary (support) activities. Primary activities are the main activities directly involved in making and selling the product or service. Inbound logistics covers the receiving and handling of raw materials, including relationships with suppliers and storage of goods. Operations involve the actual process of turning raw materials into finished products, such as manufacturing, assembly, or packaging.
Outbound logistics deals with distributing the finished products to customers, including warehousing and transportation. Marketing and sales involve activities that attract customers and persuade them to buy, such as advertising, promotion, and pricing strategies. Service includes all activities that maintain or improve the product after it has been sold, such as customer support, repair, warranty, and returns. These primary activities directly touch the customer and strongly influence their experience and satisfaction.
Secondary or support activities in Porter’s value chain help the primary activities to run smoothly and efficiently. Procurement is the process of obtaining inputs for the firm, such as raw materials, equipment, and services, and includes finding suppliers and negotiating prices. Human resource management involves recruiting, training, motivating, and managing employees who work in all parts of the value chain, from logistics to marketing. A strong HR function helps attract talented people and keep them performing well, which supports competitive advantage.
Infrastructure refers to the overall support systems in the organisation, such as management, planning, finance, accounting, legal, and quality control. These functions provide the structure and control needed for the company to operate effectively. Technological development includes the use of equipment, software, production techniques, and technical knowledge to improve products and processes. For example, using new manufacturing technology or shifting from physical servers to cloud storage can reduce costs and increase efficiency. Although support activities do not directly produce or sell the product, they are essential because they enable the primary activities to create higher value.
To maintain industry competitiveness, organisations must also manage how well their people and processes perform. This is where performance management becomes important. Performance is the action of carrying out tasks, duties, or functions. Performance management is the continuous process of planning, monitoring, and improving the performance of individuals, teams, and the organisation as a whole. It focuses on making sure that employees’ work is aligned with the company’s goals. Employee performance involves the quality, quantity, and effectiveness of the work done, as well as the behaviour of employees in the workplace. A performance management system is a structured method to track and evaluate this performance regularly. It helps management check whether employees understand their responsibilities, have the required skills, and receive proper feedback and support to improve.
The importance of performance management can be seen in several ways. It ensures that each employee clearly understands what is expected from them and whether they have the tools and training to meet those expectations. It creates a proper link between individual goals, department goals, and the overall organisational objectives, so everyone is moving in the same direction. Performance management also supports a pleasant and harmonious relationship between employees and their managers, based on trust, open communication, and regular feedback. Good job performance management can increase job satisfaction and loyalty because employees feel appreciated and guided.
Performance can be measured in several areas, often grouped into four types of performance management. Operational performance looks at productivity, quality, and maintenance in daily operations. Business performance focuses on overall results, including profit, productivity, and human resources. Financial performance examines assets, liabilities, revenue, and profit. Employee performance looks at attendance, time management, and individual productivity. Together, these measures help the organisation see where it is strong and where it needs improvement.
In conclusion, industry competitiveness depends on many connected elements. Competitive advantage gives a company its unique strength in the market. Supply chain management ensures that products flow smoothly from suppliers to customers, while Porter’s value chain helps managers understand how different activities create value. Primary and secondary activities must work together to deliver quality and efficiency. At the same time, performance management makes sure that employees and processes are aligned with organisational goals and continue to improve. When all these parts are managed well, an organisation is more likely to succeed, satisfy its customers, and stay ahead of its competitors in the long run.