Identifying Interfirm Total Cost Advantages for Supply Chain Competitivenes

Supply chains, partnerships, and strategic alliances are popular interfirm linkages designed to attain joint cost savings, product enhancements, and competitive services. Much research exists showing the operating advantages and the nature of these links between firms. Though cost and productivity differences between firms provide opportunities for these relationships, this article shows that key financial factors also support the rationale for them. These factors can be used effectively as extensions of current purchasing analyses of suppliers when considering potential partner relationships, or when simply conducting homework prior to negotiations.