Evolution of Supply Chain Models

The assumption that underlies the notion of facilities focus is that a factory or, for that matter, any organizational entity will perform better when assigned a narrower, more clearly defined set of tasks than it would when required to perform a broader, more nebulous set of tasks. 

Robert H. Hayes and Steven C. Wheelwright Restoring Our Competitive Edge, Competing through Manufacturing 

In this chapter we describe several models that point to ways product and market strategy can be supported by excellence in operations, especially those operations we associate with the supply chain. The models described here provide needed background in support of the idea that the SCM role should be strategic in nature. If it is, it is potent by our definition in Chapter 3 and improves tiie ability to compete. The quotation above points to a theme common to many of these models. 

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Curran T, Keller G (1998) SAP R/3 Business Blueprint understanding the business process reference model, Prentice Hall, Upper Saddle River Datta S, Betts B, Dinning M, Erhun F, Gibbs T, Keskinocak P, Li H, Li M, Samuels M (2004) Adaptive Value Networks, In Chang YS, Makatsoris H, Richards H (eds) Evolution of Supply Chain Management. Kluwer Academic Publishers, Norwell, MA, pp 3-68... 

Lee HL, Billington C (1995) The Evolution of Supply-Chain-Management Models and Practice at Hewlett-Packard. Interfaces 25 42-63 Lee J-W, Swagel P (1997) Trade Barriers and Trade Flows Across Countries and Industries. The Review of Economics and Statistics 79 372-382... 

The concept of core competency is important to SCM. Traditional views of roles in the supply chain are giving way to new views. Chapter 18 describes the emerging model for supply chain partnerships. The traditional and emerging models reflect the impact of both cost reduction and competence building in the evolution of supply chain partnerships. 

Lee, H. L. and C. Billington. 1995. The evolution of supply chain management models and practice at Hewlett-Packard company. Interfaces. 25(5) 42-46. 

Evolution to a demand-driven supply chain will likely proceed in the order proposed above. Shortening the lead-time is fundamental to changing batch model economics. Basing decisions on demand comes after adopting the economics of the flow model. Along the path, there is feedback to earlier steps. For each phase in Fig. 2.6 above there are three to four methodologies to be applied towards a DDSC operation. 

The literature in supply chain management dates back to the work of Geoffrion and Graves (1974). Their work describes an optimal flow of multi-commodity logistics from the plants to the end users. This model is further explored in Geoffrion and Powers (1995) as a review of the evolution of the distribution strategies. 

This part traces the evolution of concepts that define the scope of SCM. It seeks to establish the SCM role in running the business and constantly improving its ability to compete. The part contains descriptions of models for competing, many of which have contributed to today s focus on supply chains as competitors rather than individual companies. From this work, we develop a model for classifying supply chain improvement projects according to their contribution to improving competitive position. 

In the emerging model, procurement departments must act more strategically. We described their traditional role in Chapter 14. The procurement function is often the interface between supply chain partners, and partnerships will make new demands on the fxmction. Dave Malmberg of CGR Management Consultants has defined four stages marking the evolution of the procurement function s role. 

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