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Competition Is the Key to Supply Chain Success

  • Gary A. Smith
September/October 2017
Competition is the soul of capitalism. Without competition, growth and improvement are impossible. Those organizations that are successful in the long run know how to compete in their markets. Innovation, team spirit and perseverance are direct results of that expertise.

Humans seem hardwired to compete. Who among us hasn’t wanted to be the best at one time or another (or all the time)? Many behavioral experts believe that competition is an outgrowth of our need to protect ourselves and our families. As civilization advanced, this circle expanded to include our tribes, city-states and nations.

As humans evolve, we can hope that extreme competition (violence) will become obsolete. Then, we can focus on more peaceful methods of satisfying the need for competition, such as sports, instead. In this arena, we compete as teams and individuals against others. We also compete against ourselves as part of a training regimen. Even spectators get in on the game in their own ways.

Businesspeople, of course, compete economically. Individuals, departments and entire organizations vie for promotions, budgets and market share as we grow our careers and companies. Nowhere is this clearer than in supply chain management. But competition is good for supply chains, and here’s why:

Competition is validation. Some years ago, I visited a company whose owner said that his product was “in search of a market.” He told me he had no competitors and that his product was unique. Six months later, he was out of business. One of the amazing things about capitalism is that, if there is profit in an idea, it will become a reality. If you have competitors, it means that others see value in the same idea. Therefore, when you enter a new market, having competitors is actually good. Remember, there is no such thing as a totally new idea. If something is worthwhile, other people are working on it too.

This also is true with public-sector supply chains. When my staff realized that our dock-to-stock time was too high, we looked for benchmarks in the industry and found several ways to cut our processing time. So far, we have reduced it by 30 percent.

Competition spurs innovation. As new ideas develop and then are refined and improved, even better ideas emerge. Just look at the innovations in smartphones and computing in general. In the early 2000s, driverless cars were a fantasy; now we have Google, Uber and Tesla — three companies that didn’t even exist 25 years ago — making them a reality.

Competition develops focus. As organizations compete, they focus on the problem at hand. This drives an internal need to improve and win. People cooperate, achieve synergies and have higher rates of success when they are focused on a common task. In this way, cooperation is a byproduct of competition.

Competition fights complacency. When competition drives an organization, there simply is no time for complacency. Back in the 1980s, there were two companies that dominated computing: Wang Laboratories and Digital Equipment Corporation. Both are long gone now. Why? Because both were complacent in their markets and failed to see the big changes coming. Complacency has driven many such companies out of business.

Competition educates. In this department, I have avoided discussing the negatives of competition. (Sure, it can bring out the worst in some people.) Instead, I have focused on competition’s positive, growth-fueled side. But both types serve as great educational tools. We learn from the positive and negative lessons and advance.

As philosopher George Santayana wrote, “Those who cannot remember the past are condemned to repeat it.” When we compete, we learn; and when we learn, we grow. In my professional life, I like to take this a step further: When I hire and promote, I look for people who are competitive. These professionals have learned that, through competition, they can succeed. They want to be the best, and they want to work for the best. These are the type of people I strive to lead — and follow.  

Gary A. Smith, CFPIM, CSCP, CLTD, is vice president of the division of supply logistics for New York City Transit. He may be contacted at gary.smith@nyct.com.

This article was prepared by the author, acting in his personal capacity. The views and opinions expressed in this article are the author's own and do not constitute, nor necessarily reflect, a statement of official policy or position of the author’s employer.

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