Outsourcing competitive advantage: the use of supplier associations

Abstract

The development of sustainable competitive advantage has long been the “holy grail” of western management. Evidence presented in this paper shows that at least one of the world’s leading companies has sought to achieve advantage by leverage of knowledge and skill within its complete supply chain. The company is Toyota of Japan. A description of the benefits involved and the story of how effective “outsourcing” of competitive advantage occurred is told in full. In addition the lessons from the supplier integration process and the use of kyoryoku kai are crystallised into a working model of how this approach may be emulated in the west. What is affectively a four stage supplier association model is discussed in detail together with an illustration of each approach within a UK context. The paper seeks to provide the reader with a complete picture of how supplier associations developed and how they might be used to create and “outsource” significant competitive advantage for complete supplier networks elsewhere.