Supply production network rationalization

Product flow facility structure refers to the network structure for sourcing, manufacturing, and distribution across the supply chain. With reductions in inventory, fewer warehouses would be needed. Inventory is necessary in the system, but some supply chain members may keep a disproportionate amount of inventory. Since it is less expensive to have unfinished or semifinished goods in inventory than finished goods, upstream members may bear more of this burden. Rationalizing the supply chain network has implications for aU members. 

Within these value chains, change happens frequently. Relationships come and go. The value chain is characterized by the number of nodes in the network, the number and type of constraints, the variability of demand and supply, the rhythms and cycles of decisions, the products and shipments, and the latency of information. Five years ago, the design of supply chains and value networks was an ad hoc process. Today, over 35 percent of companies have planning teams to rationalize the design and refine the network for current conditions. In our interviews, we learned that these teams are growing in both size and importance. 

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). 

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