A competitive advantage refers to one or more unique attributes that allows an organization to outperform its competitors. A competitive advantage enables a company to generate greater value for its customers, achieve higher profitability, and sustain its market position over time. The advantage must be difficult for competitors to replicate, providing the firm with a long-term edge in the market. How can IT deliver this advantage in operations?
A competitive advantage can take various forms, such as superior product quality, cost efficiency, innovation, brand reputation, customer service, or access to unique resources. “Our information technology is our competitive advantage” is seldom heard from manufacturing companies.
Basic Criteria for Leveraging IT as a Competitive Advantage
To gain a competitive edge in the manufacturing industry, the technology stack used must be modern above all else. A contemporary IT infrastructure provides essential benefits like scalability, security, and streamlined operations, which are crucial as the foundation for establishing a competitive advantage.
Since today’s information technology is typically purchased, it’s essential to evaluate the mindset of the vendor. A focus on innovation and agility is necessary. The challenge lies in the fact that there is often a degree of vendor lock-in, making it difficult to switch providers frequently. Additionally, a software company’s attitudes can evolve over time, which is unfortunately beyond control. But that still allows for an evaluation of the current status: For example, a company that doesn’t offer an API in 2024 is unlikely to be a good long-term partner.
Differentiation in the Market as Crucial Criteria
One definition of strategy is that it needs to set your company apart from the competition. The idea is closely associated with Michael Porter, a prominent professor at Harvard Business School. He articulated this concept in his book “Competitive Strategy: Techniques for Analyzing Industries and Competitors” (1980). Porter argues that the essence of strategy is choosing a unique position that differentiates a company from its competitors, allowing it to achieve a sustainable competitive advantage.
The challenge with an unambitious approach to operations software is significant. Key functions are often handled by industry giants like SAP, which is the go-to solution for many companies. As a result, there’s little room for differentiation, where differentiation is beneficial – this might not be the goods receipt booking or the invoice verification (there mainstream software definitely has its place), but the production planning, the productivity management, or the problem solving has differentiation potential for a manufacturing company. Meanwhile, other functions are managed by outdated software that fails to provide state-of-the-art value to the operations function. This approach does not create a solid foundation for achieving a sustainable competitive advantage.
It’s clearly worth exploring a different approach to stand out in the competitive landscape: opting for a best-of-breed software stack from specialized vendors rather than relying on outdated or mainstream solutions. As the saying goes, “You won’t get fired for buying SAP,” but using the same software as everyone else won’t give you a competitive edge either.
The technology to bring the different components together, is readily available with a Factory Data Hub. The concept is also called “infrastructure as code”. The architecture of an IT landscape delivering separation from the crowd is best visualized in the graphics below:
The sustainable advantage lies in forming a close partnership with a specialized software provider and collaborating on long-term innovation. This deep integration and co-innovation are essential for achieving the differentiation needed to secure a competitive edge in the market.
oee.ai is Delivering the Competitive Advantage
With a strong track record and a commitment to future innovation, the dedicated team behind oee.ai aims to be the differentiating partner for manufacturing companies. By focusing exclusively on manufacturing intelligence, oee.ai is delivering cutting-edge solutions like gamification, artificial intelligence, a mobile app, a chat interface, and anomaly detection – just a few examples of their recent innovations for customers.
If you are interested in how oee.ai can help you gain a competitive advantage in your industry, don’t hesitate and contact us at info@oee.ai.
Author: Linus Steinbeck