Chapter 6 Supply Chain Management

Chapter 6 Supply chain management Self-assessment questions 1. Define supply chain management: how does it relate to:  logistics;  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 – large overlap according to definition from IOLT on p. 219.

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? A change in supply chain thinking, and also in marketing communications thinking is the move from push models of selling to pull models or combined push–pull approaches. The push model is illustrated by a manufacture who perhaps develops an innovative product and then identifies a suitable target market. A distribution channel is then created to push the product to the market. This situation is shown in Figure 6.3 (a) where it can be characterized by the statement ‘This is a great product, now who shall we sell it to’ or the quip about the original model T Ford – ‘you can have any colour, so long as it is black’. The typical motivation for a push approach is to optimize the production process for cost and efficiency.

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