- Define supply chain management, how does it relate to?
- The value chain concept;
- Value networks?
Supply chain management (SCM)
The coordination of all supply activities of an organization from its suppliers and partners to its customers.
Logistics is the time-related positioning of resource, or the strategic management of the total supply chain. The supply-chain is a sequence of events intended to satisfy a customer. It can include procurement, manufacture, distribution, and waste disposal, together with associated transport, storage and information technology.
Value chain concept – has similar components such as inbound and outbound logistics, production and sales and marketing. Different orientation which is how to deliver customer value. Plus separate identification of secondary activities such as HR and IS.
Value networks – interactions between different value chains of a range of organizations.
2. What is the difference between a push orientation to the value chain and pull orientation?
The difference between the push orientation and the pull orientation in the value chain has to do with the way that materials are being processed or delivered within the chain and its focus. A push oriented supply chain focuses the distribution of a product to receptive customers. This allows for a production that caters to the receptive customers.
A pull oriented supply chain deals with the sector in a chain that are actively involved in product and service specification. This makes the flow of production faster.
Push orientation is when the distribution of a product to a passive customer is emphasized. Pull orientation is when it is emphasized on using the supply chain to deliver value to customers who are actively involved in product and service specification. The value chain is a model that considers how supply chain activities can add value to products and services delivered to customers. So when a company focuses on a push orientation to their value chain, then they want to focus on the sales and marketing. They are trying to get customers to buy their products and want to make it as appealing as possible. On the other hand, when a company focuses on a pull orientation to their value chain, they want to focus on activities like production and costs. Customers have decided to order from that company and want their item to be flawless, quick, and not as pricey.
3. How can information systems support the supply chain?
Information systems are used to increase the efficiency of information flow by:
- Delivering more information (e.g. sales data in Tesco TIE system)
- Analysing information (e.g. alerting a large order)
- Delivering it more rapidly (e.g. reduced lead times in e-procurement).
4. What are the key strategic options in supply chain management?
- How to restructure supply chain (vertical integration/disintegration/virtual integration)
- How to restructure (disintermediation, reintermediation, countermediation)
- How to restructure relationships in a value network
- New procurement models e.g. auctions and B2B exchanges.
1. How does electronic communication enable restructuring of the value chain network?
Digital communications has a significant role to play in building intermediary relationships. Value chain networks also called external value chain-the link between an organization and its strategic and non-strategic partners that form its external value chain. As more and more organizations realize the full potential of this electronic environment in cost-cutting and reshaping the very dynamics of space and time, the Internet becomes the preferred means of conducting business.
Moving all parts of the business value chain on-line entails some organizational restructuring and relearning. This may be unsettling to some initially, but when all business functions can be channelled through a single source such as the Internet, keeping track of the numerous strands of organizational dealings becomes a lot easier. Thus, organizations that have embraced this technology are reporting operating and cost efficiencies as well as a reduction in errors in data entry and order tracking.
The coming together of the parallel sets of buyer-and-seller functions indicates the streamlining of the supply chain management and sales automation, with quicker response time and greater efficiency. This has a positive impact on the company’s bottom line. The tightening of the value chain also results in the elimination of redundancy and reduced errors. Reduced inventory obviates the need for expensive warehousing, and shorter purchase cycles lead to faster turnover.
2. The concept of a linear value chain is no longer tenable with the advent of electronic commerce. Discuss.
The concept of a linear value chain is no longer tenable with the advent of electronic commerce because of three concepts.
The first one is that ecommerce heavily focuses on services. The traditional value chain is most applicable to the manufacturing of physical products. Thus, it is not as applicable to ecommerce. The second concept is that it is a one-way chain involving with pushing products out to the customers. Ecommerce is not so much focused on pushing products but more so of understanding what the customer wants and needs are. There needs to be more market research as well as responsiveness through innovation and new product development, things that the traditional value chain does not really focus on. The last concept is that there is no emphasis on the importance of value networks. Ecommerce is heavily focused on network relationships to stay strong.
Electronic commerce and the internet itself are changing the business platform where it is now becoming easier and easier to create something from nothing. Competition is now becoming something that anyone can do and undertake. Because of this, a linear value chain is no longer tenable which means that there are third tier and fourth tier platforms that need to be taken into consideration when making a decision that can affect the functionality of the company. Electronic commerce facilitates the process at which the customer communicates with the manufacturer. Also, need not to mention that now, through the existance of the internet, commerce now facilitates who companies make business with; this variety in options allows the company to easily outsource products and what not. Also, the internet and electronic commerce facilitates the constant interaction between diverse companies, manufacturers, and products. This ability to make business with anyone is what makes it harder for a linear value chain to partake.
3. Select the retailer of your choice and analyse their strategy for management of the upstream and downstream supply chain?
Tesco introduced lean management solutions into its supply chain successfully. It adopted path breaking techniques and systems like point of sales data, primary distribution, continuous replenishment and adopted RFID technology to make its supply chain more efficient.
Material flow stream which starts from the upstream supplier to final consumer takes a responsibility of conveying finished goods from raw materials to finished goods. They compete advantageously on field of fresh vegetables sector through providing convenient, safety and low price goods. Traditional farm markets and vegetable stores which can be found everywhere in past time now have nearly been replaced by various supermarkets.
At the end of the 1990s Tesco developed the Tesco Information Exchange system (TIE), which enables Tesco’s suppliers to monitor sales and stock levels of their products at Tesco branches. Therefore, suppliers are more aware of when deliveries are needed as they can perform their own specialist forecasts of demand and more closely integrate their production of goods, dispatch and delivery to supermarkets. This process can be extended so that instead of a supermarket placing an order, suppliers know when they need to deliver to supermarkets. Suppliers monitor their own stocks at the supermarket branches and this enables even closer integration with their customers.