Supply chain structure

The first is what one might term producer values . The early producers of organic products did so almost exclusively because they believed in it . They were often not particularly market orientated or market aware and had to develop new and alternative marketing methods and supply chain structures. 

Corsten points out that a supply chain is a special type of network composed of multi-level logistic chains owned by legally separated companies. The focus in the supply chain is the coordination of flows of materials and information between these companies. Corsten s examples show the supply chain structure starting with raw materials up to the final consumer (Corsten/Gossinger 2001). 

While the previous illustrations are focused on the intra-company supply chain structures, inter-company structures of the supply chain are related to Porter s value chain as shown in fig. 5 (MeyrAVagner et al. 2004, p. 113 based on Rohde/Meyr et al. 2000). 

The value chain in the study focuses on the company internal value creation in the primary activities consistent to the company-internal supply chain structures by Meyr et al. (2004) and Rohde et al. (2000) as illustrated in fig. 6. 

Supply chain management is a comprehensive concept capturing objectives of functional integration and strategic deployment as a single managerial process. Figure 1 depicts the supply chain structure. 

The supply chain structure is the network of members and the links between members of the supply chain. Business processes are the activities that produce a specific output of value to the customer. The management components are the managerial variables by which the business processes are integrated and managed across the supply chain. In combination, the SCM definition and this new framework move the SCM philosophy to its next evolutionary stage. 

Nonmember process links. Managers understand that their supply chains are influenced by decisions made in other connected supply chains. For example, a supplier to the focal company is also a supplier to the chief competitor. Such a supply chain structure may have implications for the... 

In order to establish market coverage objectives, management must consider consumer/customer buying behavior, the type of distribution required, supply chain structure, and the degree of control... 

Customer service represents the place component of the marketing mix. Customer service can be used to differentiate the product or influence the market price—if customers are wUling to pay more for better service. In addition, the supply chain structure will determine the costs of providing a specified level of customer service. 

Next, management must analyze supply chain structure to determine whether the corporate strategy has been successfully implemented. Measures of structure efficiency include member turnover, competitive strength, and related issues. When management evaluates supply chain structure, it must compare the firm s ability to perform the functions/activities internally with another member s ability to perform these functions/activities. 

The flowshop problem is the simplest structure that resembles a simple supply chain structure. The problem is extensively studied in the literature with various models of different types and efficiencies developed and examined for different objective functions and constraints. Integer programming was one of the first models developed for optimizing flow shops. 

More general supply chain stractures are studied in the literature. An example of such structure is shown in Fig. 3.10. A model for a similar supply chain structure will given next. 

A model for a more general supply chain structure and requirement will be introduced to illustrate medium range integrated planning and scheduling in supply chains. The model is adopted from Kreipl and Pinedo [5]. 

This example illustrates the benefit of thinking outside the box as defined by Industrial Chemicals and examining the root causes for order variation, i.e., the supply chain structure. But it also means moving to a bigger box, i.e., including more entities in the supply chain. The new perspective considers the link between demand variation and truck capacity driven by existing coordination agreements (backhaul discounts). The case shows the benefit... 

The net effect of the changes in the supply chain was to provide a more finely tuned link between supply and demand by product type. The impact on the supply chain was projected to be 14 million (out of 87.9 million spent). The impacts on individual steps in the supply chain are as shown in Figure 1.12. This example shows how supply chain structure and its adjustment can impact cost competitiveness. 

This chapter focuses on supply chain structure and ownership, one of the Cs in the supply chain framework. The chain structure is the backbone or the pipeline through which information and material flow in the supply chain. It is the process map of a supply chain that typically crosses many independent company boundaries. Once a supply chain map is generated, the location of entities, as well as ownership, and the connections to the rest of the supply chain architecture influence the observed lead times, costs, incentives, and thus performance, of the supply chain. 

Our goal in this chapter is to understand commonly observed supply chain structures and discuss their potential impact on performance. Key supply chain features include the number of links in the chain, the locations where capacity is shared, the level of flexibility of the entities and their impact, the impact of chain structure and capacity, the impact of uncertainty on performance of the network and finally, how country boundaries interact with flows across the chain. 

The following are commonly used supply chain structures. 

A serial supply chain consists of a number of entities that work sequentially to deliver product. In a serial supply chain, any given node s supply is affected by the decisions of upstream entities, and that node s demand is generated by downstream entities. Serial supply chains provide a simple supply chain structure, but it often implies use of a one-size- fits-all strategy that can generate significant costs if products and customer segments... 

Choosing Supply Chain Structure Under Uncertain Future Scenarios... 

If the goal of the supply chain is to minimize purchase cost, then this approach offers a supply chain structure that enables that performance metric to be rninitnized. But will the customer wait for delivery in such a system If not, alternate configurations will be appropriate. 

In today s global operations environment, competitive suppliers are expected to follow manufacturers to different locations around the globe and provide product with consistent quality and delivery metrics. How should a supplier position a supply chain structure to succeed in such an environment Should operations be established in all of the locations where the manufacturer plans to operate Should alliances be established with local suppliers to supply this manufacturer Or should logistics companies be used to supply locally but from central manufacturing locations Each of these questions provides interesting alternatives to be competitive on the global access dimension. Given the need to coordinate... 

In summary, an important decision for a supply chain is the metric of competition. We have identified several different metrics that have significant impacts on the supply chain structure. The key takeaway is that the metric of competition will affect the supply chain structure chosen. This suggests that prior to evaluating supply chain structures, it is important to understand the metric of competition. 

Ernst R, Kamrad B (2000) Evaluation of supply chain structures through modularization and postponement. Eur J Operat Res 124(3) 495-510... 

Competitor s supply chain structure (e.g., number of plants, DCs, manufacturing strategy, distribution strategy, procurement alUance, quabty goals, etc.)... 

SCM was part of the overall business strategy (and hence a CEO-level agenda item), and where companies were willing to reorganize the supply chain itself when appropriate, rather than simply making adjustments within the existing supply chain structure (sometimes called breaking the mould ). 

Beech s model, displayed in Figure 5, portrayed the demand chain as a sequence of backward-reaching processes, initiated by the end-customer, and enabling the business to anticipate customer demand characteristics. The supply chain structure, responsible for moving products and services upstream to the customer, remained inexorably linked to the demand chain. 

Of the three versions, the Forester Research version from Navi Radjou captures the widest range of decision-making activity, going beyond transactions to supply chain structuring. It also most clearly covers collaboration processes such as strategy setting and sharing of needed investment to compete on a supply chain basis. 

Netessine, S. and N. Rudi. 2001a. Supply chain structures on the Internet and the role of marketing-operations interaction. Forthcoming in "Supply chain analysis in e-business era D. Simchi-Levi, S.D. Wu and M. Shen, Edts., Kluwer. 

Netessine, S., N. Rudi. 2000. Supply Chain Structures on the Internet Marketing-Operations Coordination Under Drop-Shipping. Working paper, Wharton School, University of Pennsylvania, Philadelphia, PA. 

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