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Rehan Shaukat
Learning objectives Identify the main elements of supply chain management and their relationship to the value chain and value networks. Assess the potential of information systems to support supply chain management and the value chain.
Issues for managers Which technologies should we deploy for supply chain management and how should they be prioritized? Which elements of the supply chain should be managed within and beyond the organization and how can technology be used to facilitate this?
Members of the supply chain (a) simplified view (b) including intermediaries
Figure 6.1 Members of the supply chain: (a) simplified view, (b) including intermediaries
Figure 6.2 A typical supply chain (an example from The B2B Company)
Benefits included
rationalization of suppliers to 12 major partnerships (accounting for 60% of invoices). 80% of invoices placed electronically by 1990. Seven thousand items were eliminated from the warehouse, to be sourced directly from suppliers, on demand. Shorter lead times in the day to day from 10 days to 26 hours for items supplied through a standard contract and from 42 days to 10 days for direct purchase items.
Barriers
Mainly technological.
Aim
Provide a combined upstream and downstream supply chain solution to bring benefits to all parties.
Learnings
the difficulty of getting customers involved only 4 were involved after 4 years, although an industry standard method for data exchange was used. This was surprising since suppliers had been enthusiastic adopters. From 1994, there was no further uptake of this system.
Benefits
One example of the benefits has been reducing test certificates for products from $3 to 30 cents.
Barriers
The main barriers to implementation at this stage have been business issues, i.e. convincing third parties of the benefits of integration and managing the integration process.
Figure 6.4 Two alternative models of the value chain: (a) traditional value chain model, (b) revised value chain model
Porter and Millar (1985) propose the following fivestep value chain process.
Step 1. Assess the information intensity of the value chain Step 2. Determine the role of IS in the industry structure (for example banking will be very different from mining) Step 3. Identify and rank the ways in which IS might create competitive advantage (by impacting one of the value chain activities or improving linkages between them) Step 4. Investigate how IS might spawn new businesses Step 5. Develop a plan for taking advantage of IS. A plan must be developed which is business-driven rather than technology-driven.
Warner VO characteristics
Lack of physical structure: virtual organisations have little or no physical existence. Reliance on knowledge: the lack of physical facilities and contacts means that knowledge is the key driving force of the virtual organisation. Use of communications technologies: it follows that virtual organisations tend to rely on information technology. Mobile work: the reliance on communications technologies means that the traditional office or plant is no longer the only site where work is carried out. Increasingly, the office is wherever the worker is. Boundaryless and inclusive: virtual companies tend to have fuzzy boundaries. Flexible and responsive: virtual organisations can be pulled together quickly from disparate elements, used to achieve a certain business goal and then dismantled again.
Figure 6.7 The characteristics of vertical integration, vertical disintegration and virtual integration
Improved data integration between elements of the supply chain. Reduced cost through outsourcing.
Innovation.
Figure 6.9 Use of e-commerce for different aspects of supply chain management
Source: DTI (2002)
Figure 6.12 Alternative strategies for modification of the e-business supply chain