Creating Entrepreneurial Supply Chains

This is an excerpt of the original article. It was written for the May-June 2012 edition of Supply Chain Management Review. The full article is available to current subscribers.

May-June 2012

Supply management can be a powerful competitive weapon—if the strategy driving that activity is closely aligned with the business strategy. Yet new research suggests that the necessary alignment is often lacking. CAPS Research experts offer a process for identifying and implementing the supply management strategies that hold maximum potential for competitive advantage.

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The notion that the elements of supply chains—from suppliers’ suppliers to customers’ customers—can be used in an entrepreneurial manner is a powerful one. We call this emerging concept entrepreneurial supply chains, and we believe that companies should aggressively implement and practice it. But because it is a new concept, perhaps we need to set the stage to explain just
what we mean.

What is an entrepreneur? An entrepreneur begins a business with fresh ideas that hold opportunity for profit and growth. The entrepreneur obtains resources, begins the venture, bears the risks, and reaps the payoff or suffers the loss. The business can be a start-up or a unit of an established venture. Further, entrepreneurial activities can be “replicative” or “innovative” in nature. The vast majority are in the replicative category because they reproduce or closely follow past successes. But even replicative entrepreneurial initiatives originated with innovative ideas. McDonald’s and Starbucks are classic examples of replicative entrepreneurship, though they both began with innovative ideas.

Innovative entrepreneurial activities — and the leaders behind them — represent truly new ideas and leadership models. Steve Jobs is a perfect example. Jobs’ brand of innovative entrepreneurship has not yet moved into the replicative arena. With his untimely death, only time will tell when or if that happens. For the purposes of our discussion, we include both the innovative and replicative types of entrepreneurial supply chains.

What are entrepreneurial supply chains? Entrepreneurial supply chains go beyond the traditional focus on cost, quality, and delivery to also embrace innovation and growth. Entrepreneurial supply chains connect customers’ customers with suppliers’ suppliers. They are designed to achieve growth in the enterprise by recognizing and responding to needs and opportunities that call for growth-focused responses. Note upfront, though, that moving from a traditional to an entrepreneurial supply chain is not always easy. It demands major shifts in mindsets.

Entrepreneurial supply chains typically follow one of three “paths” that can be described as follows:

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