Commentary: Modeling your competitor's supply chain: The untold story

Supply chain pundits have long talked about using supply chains and logistics capabilities to gain a competitive advantage. But in order to determine that your company has an advantage, you first need to know your competitor's weaknesses.

Today's supply chain design software gives companies a tool for doing just that. The software can be used to model a rival's network of plants and distribution centers and assess its strengths and weaknesses when it comes to meeting customers' requirements. This can be an effective way to develop an in-depth understanding of how your competitor's supply chain operates. It also can help you determine what your supply chain must do to deliver products at a lower cost and with higher service levels than your competitor does.

Despite the potential advantages of this tactic, I have so far heard of only one example (mentioned to me by a software vendor) of a company using supply chain design software in this way. That doesn't mean nobody is doing it; trailblazing companies often do not want to talk about their innovative activities with journalists. Moreover, the company in question undoubtedly would not want its competitor to know what it has done. But it seems likely that few companies have adopted this tactic.

My assumption is that the company mentioned by the software vendor gathered as much information as it could from public sources and used that data to build a supply chain simulation of its competitor. The model was used to evaluate its rival's transportation network, production capacity constraints, and service lead times. The software user then looked at "what if" scenarios to determine how it could change its own operation to outperform that of its competitor.

Using software to model a competitor's supply chain may be new, but the overall approach is not. Throughout history, smart generals have tried to model their enemies' defenses and capabilities to find weaknesses to exploit. Software simply makes it easier to conduct this type of analysis. Given the tactic's long history, I'm surprised that I have not heard of more companies using this approach to gain an edge in today's competitive marketplace.