BUS808: Supply Chains, Demand Chains - The Value Chain

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BUS808 Supply Chains, Demand Chains - The Value
Chain
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Lecture One Outline

• The Supply Chain
• Advantages of Supply Chain Management
• Disadvantages of Supply Chain Management
• Trends in Supply Chain Management
• Demand and Supply Chain Processes The Value
  Chain
• The Evolution of the Supply Chain and Marketing
  Channels

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The Supply Chain

• Supply chain management is the integration of
  business processes from end-user through original
  suppliers that provide products, services and
  information and add value for customers (The
  International Centre for Competitive Excellence,
  1994).

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The Supply Chain (contd)

• SCM is a technique for linking a manufacturers
  operations with those of it strategic suppliers
  and its key intermediaries and customers. It
  seeks to integrate the relationships and
  operations of both immediate, first-tier
  suppliers and those several tiers back in the
  supply chainThe goal of SCM is to improve timing
  and costs in manufacturing through strong vendor
  relationships (Hutt and Spett, 1998).

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The Supply Chain (contd)

• Initially the scope of the supply chain was
  across firms but now includes internal
  integration within organisations before expansion
  to other firms

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The Supply Chain (contd)

• Keith and Webber (1982) cited in Walters (2002)
  offer the view that supply chain management
  covered the flow of goods from supplier through
  manufacturing and distribution to the end user

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The Supply Chain (contd)

• Stevens (1989) cited in Walters (2002) expanded
  this scope both upstream and downstream to
  include sources of supply and points of
  consumption.

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Advantages of Supply Chain Management

• Corbett, Blackburn and Van Wassenhove (1999) show
  that successful business partnerships yield a
  number of major benefits.

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Advantages of Supply Chain Management (contd)

• Increased market share

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Advantages of Supply Chain Management (contd)

• Inventory reductions throughout the supply chain

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Advantages of Supply Chain Management (contd)

• Improved delivery service

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Advantages of Supply Chain Management (contd)

• Improved quality

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Advantages of Supply Chain Management (contd)

• Shorter product development cycles

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Advantages of Supply Chain Management (contd)

• Leverick and Cooper (1998) argue that greater
  competitive advantage can be gained through
  effective supply chain management

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Advantages of Supply Chain Management (contd)

• Walters (2002) indicates that supply chain
  management can lead to

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Advantages of Supply Chain Management (contd)

• Complementary goals/ objectives between supply
  chain members

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Advantages of Supply Chain Management (contd)

• Greater coordination between supply chain
  members, enabling such management philosophies as
  JIT to have a more beneficial affect

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Advantages of Supply Chain Management (contd)

• Greater cost management effectiveness through
  negotiating prices more closely between supply
  chain partners as well as arranging more
  effective purchasing arrangements

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Advantages of Supply Chain Management (contd)

• Leverick et al (1998) argue that effective supply
  chain management reduces risk

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Disadvantages of Supply Chain Management

• Fuller et al (1993) argue that supply chain
  management is too internally focussed

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Disadvantages of Supply Chain Management (contd)

• Rigidity of direction and organisation

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Disadvantages of Supply Chain Management (contd)

• Ignorance of other stakeholders needs

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Disadvantages of Supply Chain Management (contd)

• A last year plus 10 percent mentality

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Disadvantages of Supply Chain Management (contd)

• Kumar (1996) shows trust to be an essential
  aspect of operating within a supply chain
  framework

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Disadvantages of Supply Chain Management (contd)

• Kumar (1996) also shows that power relationships
  within supply chains lead to the supply chain
  becoming ineffective

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Trends in Supply Chain Management

• Longer term and closer relationships with fewer
  suppliers

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Trends in Supply Chain Management (contd)

• Closer interactions among multiple functions -
  manufacturing, engineering, and logistics as well
  as sales and purchasing - on both the buying and
  selling sides

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Trends in Supply Chain Management (contd)

• Supplier proximity to allow just-in-time delivery
  and to facilitate closer working relationships
  targeted at improving product and service quality
  along the supply chain

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Trends in Supply Chain Management (contd)

• The increasing influence of Information
  Technology has led to increasing ability to
  manage relationships and knowledge in real-time

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Demand and Supply Chain Processes The Value Chain

• Beech demonstrates that the integration of both
  supply and demand chains is a value chain.

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The Evolution of the Supply Chain and Marketing
Channels

• The production era and distributive practices

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The Evolution of the Supply Chain and Marketing
Channels (contd)

• The Institutional Period and Selling Orientation

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The Evolution of the Supply Chain and Marketing
Channels (contd)

• The marketing concept

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The Evolution of the Supply Chain and Marketing
Channels (contd)

• The Evolution of the Supply Chain and Marketing
  Channels (contd)

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The Evolution of the Supply Chain and Marketing
Channels (contd)

• The relationship marketing era

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The Evolution of the Supply Chain and Marketing
Channels (contd)

• During the late 1990s and early twenty first
  century, the new era is the value chain era.

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Discussion Questions

• The supply chain and the value chain provide
  managers with an opportunity to organise their
  companies to achieve great advantages. In your
  opinion, what are the greatest advantages of
  using a supply chain approach to organisational
  design. Justify your choices by citing examples.

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Discussion Questions (contd)

• In your opinion, which is more effective (given
  situational conditions), the value chain or the
  supply chain? Cite examples in your answer.

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Discussion Questions (contd)

• If you were to advise a company on developing an
  inter-organisational framework for managing
  logistics, what would you suggest be the most
  important factors to get right in designing the
  framework?