Section 4.

1 - Value chain

Porter (1986) first addressed the term Value

Chain, and assigned key elements to a
competitive advantage within organizations.
The model subdivides the elements into
activities
Primary - essential for meeting customer
needs - and support activities, which
serve to assist in the execution of primary
activities.

Primary activities include:

Inbound Logistics: involves the process of

supplying the company from the source of
raw materials to entry into the factory.
Operations (Production): they relate to the
transformation of inputs through productive
resources and the generation of outputs in
the form of products and / or services.
Outbound Logistics: distribution of finished
products (PA) to the distribution network and
/ or customers.
Marketing and Sales: marketing of the
products and / or services that the company
has developed and produced.
After Sales Service: supports the user during
the product life cycle.

The support activities are:

Company Infrastructure: how the company

will be physically structured to support the
primary activities.
HR Management: ensures the training and
development of the people who will be
involved in the processes.
Technological Development: study and
application of technologies seeking the best
techniques for better results.
Acquisition: purchase and / or negotiation to
provide the necessary resources at the ideal
moment.

It will only have value what the customer is

willing to pay for the company offers. Some
authors describe the supply chain being the
sum or integration of several value chains.
For Christopher (2012), for the customer,
value means the difference between the
perceived benefits of a transaction and the
total costs incurred. We can represent the
value for the customer by the equation:

Customer Value = Benefit Perceptions / Total

Cost of Ownership

Competitive advantage is the cost-benefit

ratio offered by the company that is more
attractive to other companies operating in the
same segment of the market. Logistics has the
capacity to act both in the denominator and in
the numerator. We can represent the
competitive advantage by the equation:

Customer Value = (Quality vs. Service) / (Cost

vs. Time)

In order for the chains to operate in harmony

and with efficiency, they must work in
collaborative systems, in the service of CS. In
1996, the Supply Chain Council (SCC) was
created to analyze and indicate the best
practices in the supply chain for companies
associated with this non-profit entity for
profit. The model used for this practice was
named SCOR (Supply Chain Operations
Reference Model) model, or Reference Model
for Supply Chain Operations.

SCOR is a model for representing, analyzing,

and configuring supply chains through a
process approach. Its use and development
were based on five
processes of greater magnitude or importance
within the chains: to plan, to acquire, to
produce, to deliver and to return. However,
due to the recent environmental concerns,
there is already a formalized model of it that
considers the environmental issues, it is the
Green SCOR, which besides the issues of the
traditional model of SCOR brings an
environmental aspect.
Section 4.2 - Integrated Logistics in the Supply
Chain
Logistics is the set of activities that integrates,
coordinates and controls the physical flow of
materials and information. Logistics
encompasses the phases of: purchase,
storage, material handling, handling,
distribution and transportation and is
subdivided into four systems: Supply Logistics,
Production Logistics, Distribution Logistics and
Reverse Logistics.

According to Neves (2005), logistics has value

when considering the eight R's:

Right Material.
Right Quantity.
Right Quality - Fair Quality.
Right Place - Right Place.
Right Time.
Right Method.
Right Cost.
 Right Impression - Good Impression.

The importance of Logistics to organizations

can be summarized in three main aspects:

1. Obtaining a competitive advantage;

2. Reduction of costs;
3. Aggregation of value.

Integrated Logistics is the integration of

logistics subsystems, ensuring strategic
alignment, better level (quality) of service and
reduction of costs. In certain logistics chains,
agility is also a competitive factor. Then the
information flow must be set so that the
is based on data that represent the reality, in
order to obtain cost reduction and the agility
required by the markets.
 However, the large amount of information
flowing through the supply chain creates the
need to use technology for better
management. Information Technology (IT) is
the main tool of the information process and
represents all the technologies essential for
collect, process, interpret, and distribute
information quickly and adequately. In this
way, it becomes possible to create and model
information systems designed to support
decision making in supply chain management.
The software enables the planning and
execution of logistics operations.

Section 4.3 - Purchasing Management

We can see that among the chain links there

is a negotiation process that results in a
process of buying and selling. This process of
negotiation between these two links in the
chain is of vital importance for the strategy of
the whole sequence to the final consumer; it
is at this moment that enters the purchasing
function.

Until very recently, many organizations saw

the purchasing area only as an initial part of a
process. Often it was said that it was only "an
area where the company's money is spent",
reducing the importance of the area. The
competitiveness between the companies and
consequently between the internal chains
altered this vision and the managers began to
understand that if the purchase were carried
out in a coherent, strategic and efficient way,
this would be rewarded in the end.

There are a few ways or methods of

negotiation, some in which the quest is either
outright or more aggressive, choking the
other party, but there are also more
moderate ways to conduct this negotiation, a
process in which it is called "win wins it,
 "where the trading parties arrive at one in
which both win.

Within CS management the emphasis is no

longer on the individual buying of
organizations, but on the positioning to
implement the strategies of production and
marketing. For this, some factors
are considered:

• Continuous Supply - Ensure continuous

supply to ensure operations. Some IT tools
can aid in this process;
• Minimization of Inventory Investments - Just
in time (JIT) technique can be one of the
alternatives, as well as decrease lead time;
• Quality Improvement - One of the potential
techniques for this requirement is alignment
using the SCOR model;
• Supplier Development - Select and develop
supplier companies, narrowing the
relationship between the parties;
• Access to Technologies and Innovations -
the Early Supplier Involvement (ESI)
technique, whose principle is the involvement
of the supplier in the initial part of the
project;
• Lower Total Cost of Ownership - There are
techniques that can be applied to define the
best cost of acquisition, for example, the
Economic Purchase Lot (LEC).
Purchases can still be managed by weighing
the factors related to difficulty of purchase
(risk) X strategic importance, as defined by the
matrix of purchasing strategies.
Depending on the classification of the purchasing strategies matrix, it is possible to distinguish
the types of purchases and to create specific strategies: Non-critical Purchases, Bottlenecks,
Leverage Purchases and Strategic Purchases.

As in any other area, or link in the supply chain, the purchasing sector is supported by
technological tools to support the decision-making of its managers and employees.

We can cite at least the most known or relevant, such as EDI (Electronic Data Exchange), CRP
(Continuous Replacement Programs) and VMI (Vendor Managed Inventory) networks.

MRP I (Material Requiriments Planning) refers to Material Requirements Planning.

With an architecture that has evolved over the years, the operation of this tool is carried out
based on a manufacturing schedule, using a logarithm to calculate the purchase and
production needs related to a timeline, making the purchase and service orders are issued and
sent to those responsible for their production or purchase.

The LEC - Economic Purchase Lot - is also used as support for decision making in the purchasing
processes. It shows the amount that must be acquired (bought) in a

(or stock maintenance) and order (acquisition) costs, and the balance between these costs will
decide the ideal lot (quantity) to be purchased.

Its mathematical formulation is very simple and given by the equation:

LEC = √ [(2 x Demand x Request Cost) / Storage Cost]

The result of this mathematical operation is what we call Economic Purchase Lot, quantity of a
certain product that must be acquired by the company, causing it to save.

Section 4.4 - Corporate Intelligence

In the corporate world there is the concept of Business Intelligence (BI), translated as Business
Intelligence. This concept is defined as a set of applications and methods that give managers
an integrated view of the organization.
Business Intelligence extracts intelligence from data about a particular business, aiming to
convert the volume of data into business-relevant information through reports

analytical, and sequentially use this knowledge for strategic decisions.

The BI base considers the value chain and makes use of information technology. As an example
of some IT tools for data collection and information transformation, we have the ERP, CRM
and SCM systems. This information is forwarded to a Data Warehouse, "Data Warehouse" that
consolidates information about the activities of the organization on a consolidated basis. The

BI software generates information for decision making.

There is no doubt that the power of Business Intelligence (BI) can greatly increase the value of
supply chain management (SCM). But, traditionally, the integration between SCM and

BI is not so easy to achieve. Analytical tools are generally not able to "plug and play" with SCM,
making integration complex.

For supply chains, agility is one of the keywords these days. BI is precisely the means to
generate agility in this information and decision process within the SCM.