Supply chain viewpoints

Right now, we would say that there are factions comprised of managers with a common mindset about the supply chain. Here we describe the generic perspectives we ve encountered and attempt to tie them together. We will work bottom up from what we judge to be the narrowest of the supply chain interpretations to the broadest. 

The quote by Francis Quinn taken from the periodical Logistics reflects a common response in companies. In essence, they scramble to project the image of responding to the challenges of supply chain management (SCM). How tasks associated with SCM are defined very much depend on the eyes of the beholder. To start the diseussion, Chapter 1 defined the terms supply ehain and supply chain management. This chapter describes how those dehnitions are applied in praetiee. 

Different companies — and even managers in a single company — have different paradigms, or viewpoints, about SCM and what it is. Our view is that there is no right or wrong supply chain viewpoint. In fact. 

A common company definition has important practical considerations for the day-to-day conduct of business. Here are a few examples  

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The typical mindset lags far behind what is needed to build great supply chains. First, the supply chain is not usually seen as a source of strategic advantage. But the functions that comprise the supply chain, such as procurement, manufacturing, and distribution, do contribute their pieces to their strategic plans. They do so, however, as functions and not with an integrated supply chain viewpoint. 

His situation calls to mind the discussion in Section 2.1 about different industry supply chain viewpoints. These begin with lip service, where the supply chain label is placed on an existing department with no real change in the scope of responsibility. Other viewpoints do have expanded roles but tend to focus on either procurement or distribution, functions associated with purchasing, warehouses, and transportation. 

The functional supply chain viewpoint exists in most companies today, and should be considered the "base state." When talking to companies about SCM, we assume this is the perspective that exists in the company. Organiza-... 

Supply Chain Management Viewpoint. Retrieved February 6, 2006, from http //www.accenture. com/Global/Research and Insights/By Subject/ Supply Chain Mgmt/ThePlanning.htm... 

As seen in the APICS definition, physical, information, and financial flows are frequently cited dimensions of the supply chain. The viewpoint, a very common one, of supply chains as only physical distribution is too limiting. Information and financial components are as important as physical flow in many supply chains. As mentioned above, often omitted from the supply chain discussion is the role of knowledge inputs into supply chain processes. 

In the functional organization, strong department heads sponsor change projects. Cross-talk in pursuit of interdepartmental process improvement is minimal. Information systems also center on the needs of the departments. Projects may or may not improve the supply chain as a whole. In fact, a local optimum can be injurious to the whole, yet department heads take credit for their savings. Where the functional viewpoint prevails, the actual impact of improvement projects on the total supply chain is not measured. 

The information viewpoint seeks to improve links both within the company and the supply chain by implementing information technology. New software products plus new ways of moving information around make this an active area. In the Preface, we commented on the proliferation of software solutions for SCM, citing eight categories of software and over 200 providers on the CSCMP Web site. 

Some view supply chain design as integral to their strategies for competing. For them, competing successfully centers not only on products, but also on the operations that make up the extended product as described in Chapter 1. These operations deliver the physical and extended products to customers hands. With this viewpoint, supplier relations, logistics, and information systems support customer satisfaction and fall within the definition of SCM. This, in turn, leads to increased market share and profit. Costs, while important, are secondary with this viewpoint. Efforts to reduce cost must also support strategy. 

From the major supplier s/OEM point of view, some would refer to the upstream side as the supply chain and the downstream side as the demand chain. This viewpoint is company-centric and should be discouraged. However, it is quite common for companies holding the procurement viewpoint for SCM. It emphasizes, often unrealistically, the company s own importance in the supply chain and overlooks the impact of competitors and multiple pathways to reach a wide range of end-user market segments. 

Also, in this view, competitive position depends on product innovation and being distinctive in the competitive field, in some ways different from everyone else. We asserted previously that the supply chain is an important opportunity to establish that difference. Other models contend that being the low cost producer equates to market leadership. The next section summarizes opposing viewpoints. 

To effectively control costs in most supply chains, we must raise the visibility of costs. Alternative forms of accounting and reporting are needed. We discuss this topic in Chapter 27 from two viewpoints (1) presentation of costs in a way that illuminates rather than obscures, and (2) matching the cost type and the appropriate solution for gaining reductions. 

I continue to view my role as interpreting the models and viewpoints from a number of disciplines into a supply chain context. Then I recommend for consideration a plan for acting on these insights. The goal is to reduce confusion and make the work of supply chain managers both faster and more on target with actual needs. 

As discussed throughout the chapter, the viewpoints offered by the supply chain intermediary theory and the bargaining theory could potentially broaden the scope for supply chain coordination. In the following, we outline a few research opportunities offered by the proposed paradigm. 

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