Corporate and operational managers strive to create more value by optimizing the supply-chain activities. Optimization of supply chain activities means competition from other firms, primarily on cost-efficiency. However, optimization of supply chain activities alone cannot always yield a source of competitive advantage. This is for the simple reason that value chain not only seeks to do away with the activities that do not add value, but establishes the importance of other support activities, including infrastructure, technology, and so on, that play a vital role in providing the foundation for competitive advantage. Value chain's primary activities are similar to the primary functions of the supply chain. Where supply chain focuses on
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The changing market dynamics and the demanding customers have made it a necessity for these managers to build shorter lead times, more customization, higher productivity and lower costs, into their offering. Effective allocation of time and cost has been the major cost center for most business operations, and having an efficient supply chain ensures a cost advantage for businesses. Creating an efficient supply chain has been the primary focal point for firms, who see the supply chain as the networked constituent of suppliers, distributors and customers. For the benefits of customers as compared to competitors, firms place a premium on operational efficiency. Bloomberg et al. (2002) reiterates in their book Logistics, "A chain reach extend only as far as its links stay connected. Its strength depends on the strength of each link; no chain is stronger than its weakest link. Similarly, suppliers, manufacturers, retailers and customers rely on one another as they supply and consume goods and services. As the core analogy…we are linked to one another in a chain."
While it is important to be efficient in logistics to provide value to the customer, modern managers have realized two important aspects of supply chain. First, it is not enough to be efficient in supply chain and effectiveness has to be achieved for competitive advantage. Second, value that needs to be provided to the