By Andrea Payaro, International Programs Faculty Member
Supply Chain Management has become an integral part of strategy for all organisations irrespective of their size and sector in the present globalised and networked economy. The vast bulk of literature in supply chain management focuses, implicitly, on the vertical flow of products from source to the final consumer.
The flow of products through the supply chain is a natural and important focus as it satisfies the customer requirements. However, the horizontal dimension of the supply chain is in some cases neglected, despite the potential for valuable contributions from coordination along this dimension. Co-opetition combines the advantages of both competition and cooperation into a new dynamic which can be used to not only generate more profits but also to change the nature of the business environment in the company’s favour.
Companies cooperate with each other to reach a higher value creation if compared to the value created without interaction, and struggle to achieve competitive advantage. Good examples can be found in the grocery and automotive industries, where, at the moment, three models of co-opetition can be found:
- Centralized purchasing
- Private labels
All forms are characterized by:
- Agreement among partners.
- Application of win-win strategy.
- Products sold by partner are equal or with minimal changes (brand in case on rebadging and label in case of private label).
- Companies compete for market-share of their products. Products reach the same market, so products are competitors in front of consumers.
- Information technology is not a priority in the co-opetition.
Analysed co-opetition models contribute to develop the horizontal integration in the supply chain and probably new dynamics will appear in the next years.