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The Face Of Competition

March 26, 2008

The old integrated enterprise is fast eroding, to be replaced by flexible supply networks. To maintain competitiveness, these networks are increasingly global and their oversight requires a new combination of skills and technology. At the heart of this new business model is the ability to orchestrate effective contract relationships, spanning sourcing, distribution and support.

So what happens when these skills are lacking? The answer, quite simply, is that you lose competitiveness and go out of business. At least, that should be the answer. But of course, such companies often attempt to blame others for their dilemma – and seek political support.

Such is the case with a company called Leggett & Platt – at least, according to research undertaken by Jason Busch, the editor of Spend Matters. In an article titled Anti-Dumping: A Topic Every Practitioner and Consultant Should Know About, Jason takes the management of Leggett & Platt to task and launches an appeal for each of us to consider the impacts of anti-dumping legislation when used to protect shortfalls in commercial competence.

As professionals, we should indeed care about this. Economic survival depends on each of us honing our skills and ensuring they are effectively deployed. That is the only sustainable way to build economic wealth and success. If we think we can hide behind regulatory barriers, we lose the urge and the incentive to develop our capabilities.  Staying ahead depends on being better, not on handicapping the competition.

Recent IACCM research illustrates the urgency of this point. Our 2007 ‘issues’ survey indicated the dilemma we face when we live in an economically advanced society. For sourcing and contracts professionals in the West, the number one issue was ‘work-life balance’. For those in the emerging economies, the number one issue was ‘raising my personal skills and knowledge’. The prospect of wealth and personal success is a powerful incentive – much more so than simply protecting what you already have.

To further illustrate this point, more recent research focused on the areas of skill and knowledge that those in sourcing, contracts and legal feel are important. For those in the West, the traditional fields of legal knowledge, negotiation and teamwork topped the list; understanding technology and undertaking market research languished at the bottom. Once again, this provided a stark contrast with those in emerging economies, who see technology and market understanding as their routes to success.

So perhaps the real point behind the Leggett & Platt story is a moral tale and a warning of the fate that could easily befall all of us unless we have the energy and the determination to stay ahead.

Finally, I rather liked the analogy that Dick Locke made in his response to Jason’s blog posting. He analogized Leggett & Platt’s dilemma over bed springs to that which faced the PC industry several years ago.  “I’m going to bet that if there is an antidumping duty on springs, there won’t be one on mattresses containing those springs. I remember once there was a 200% antidumping duty on laptop displays but not on laptops containing those displays. Guess what happened to the US laptop building industry?”

Dick’s observation reinforces the basic principle of physics – “For every action there is an equal and opposite reaction”. Use of instruments like anti-dumping simply masks the real problem and moves its effects elsewhere.

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