Innovation through Supply Chain Reconfiguration

Abstract

The Internet has enabled companies to integrate and synchronize their inter- and intra-corporate processes. Seamless integration and tight synchronization have in turn allowed companies to configure their industry structure and value chain to their advantage by providing unique and customized products and services. Because it is more difficult to replicate integrated and synchronous processes than individual ones, tightly-coupled, customer-centric value chains are likely to yield sustainable competitive advantage. This paper examines how a no-name Hong Kong-based apparel manufacturer, TAL Apparel Limited, has used IT strategically to gain competitive advantage in the cut-throat global apparel industry. We show how the company has developed a sophisticated information management system to manage the supply chain of its major retailer customers while at the same time providing backward integration into its own production and material sourcing networks. The initiative carries significant strategic implications for industry practitioners, highlighting the way a traditionally weak member in a global industry can use IT to step up the value chain. Lessons are drawn to show how companies can achieve sustainable competitive advantage through process integration and synchronization.