External supply chain integration

These service value chain approaches involve combinations of external supply chains, internal value integrators, and various strategic approaches. This complexaggregated structure is thus better termed a service value network. 

The quant-based combinatorial optimization accounts for the entire value chain and its associated processes, that is for all of its inputs, outputs and system parameters. Based on these data an integrated and complete model of a company s supply chain is derived, detecting in advance what impact a decision or an external influence will have on the total system. 

A regime of external conditions e has to be defined and integrated in the simulation model. This is referred to as a scenario. In common sense, a scenario comprises both, stochastic processes reflecting environmental conditions and the general structure of the modelled system. Typically, the focus of simulation is on the internal processes of a supply chain under a more or less specific environmental regime. E.g. in chemical industry an SC s revenues depend mainly on product prices that can be realized. Due to the highly competitive market for basic chemicals and the inflexibihty of (continuous) production processes in combination with immense capital commitment for production plants, the focus for optimization is on the internal processes of a chemical supply chain. 

A second advantage of integrating the customer into the supply chain is that this integrates the product development function with the other functions in the firm. This integration allows the product development staff to communicate more with the customer both internally and externally to the firm, which decreases the firm s response time to the customer s needs and tends to reduce product development time. 

These downstream features, delivered upstream through the external integration of the service supply chain, combined with the linked internal integration of the operational functional... 

Vanhaverbeke [21] argues that the open innovation business model should be based on integration of theoretical frameworks, like value chain analysis, transaction-costs theory, rational view of the firm, and the resource-based view (RBV). In addition, governance of iimovation networks, on internal, firm and external level, needs to be studied. Networks or supply chains that will eventually produce the product need to be designed also with appropriate governance (see also Sect. 2.4). 

All these measures are part of supply chain management. They often lead to consolidation or integration (internal or external). M. Abrahamsson and S. Brege (1997, p. 40) proposed a model of international distribution systems comprising a number of different areas involving structural changes related to the entire supply chain ... 

It confirms that a company is integrating its supply chain in a prescriptive manner. The social issues of supply chain development are growing more important, in particular in the context of the considerable degree of supply chain internationalisation and the increase in outsourcing and offshoring of operations. Social capital has ceased to be merely an external factor determining relationship development in the supply chain. It has become an important element in the internal potential of the supply chain. Social capital of the supply chain is conducive to relationships between the parties involved. High levels of trust, commitment and loyalty of partners make the supply chain more visible, stable and efficient. 

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