A few companies often market leaders in their industries have moved away from single-transaction interactions with suppliers. These leading corporate buyers have built what we call an advantaged supply network. An advantaged supply network does not have pricing self-interest as the only basis for the buyersupplier relationship; rather, it aims for participants in the network jointly to create competitive advantage from diverse sources for themselves and for others. Buyers strive to work closely with suppliers to attack inefficiencies and waste in the supply chain, to coordinate their business strategies, and to manage resources together for competitive advantage. Efficiency and innovation in manufacturing are gained through such cooperative buyersupplier strategies as collaborative product and process planning, integrated engineering and design, and other forms of cooperation that lower total costs, decrease time to market, and improve the quality of the entire supply bases output.
Whereas the price-driven transactional management model encourages transient relationships between buyers and suppliers, the advantaged supply network creates incentives for buyers to build deeper and longer-lasting relationships with suppliers, so that both sides can more effectively pursue, over time, many opportunities to bolster economic stability and competitive advantage. The network also encourages players to look for and eliminate waste.