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O rg a n i z a t i o n s i n c re a s i n g l y fi n d t h a t t h e y m u s t re l y o n
e ff e c t i v e s u p p l y c h a i n s, o r networks, to successfully
compete in the global market and networked economy. In
Peter Drucker's (1998) management's new paradigms, this
concept of business relationshipsextends beyond traditional
enterprise boundaries and seeks to organize entire
business processes throughout a value chain of multiple
companies.During the past decades, globalization,
outsourcing andinformation technologyhaveenabled many
organizations, such asDellandHewlett
Packard, to successfully operatesolid collaborative supply
networks in which each specialized business partner focuses
ononly a few key strategic activities (Scott, 1993).The concept
involved in a supply chain can be well understood by the following
listof figured models.A Generic Supply chain modelIssues in
Supply Chain ManagementThe classic objective of logistics is
to be able to have
the right products in the
right q u a n t i t i e s ( a t t h e r i g h t p l a c e ) a t t h e r i g h t m o
ment at minimal cost
. Figure (from
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I t i s i m p o r t a n t t o n o t e th a t th e d e c i s i o n s m a d e w i th i n
t h e S C M s t r a t e g y p y r a m i d a re interdependent. That is, it
must be understood what capabilities and limitations affect
thefunctional and implementation decisions and consider
those factors while developing asupply chain management
strategy and structure.The SCM models used in practice lie in
a continuum between two extreme models: onone end of
the spectrum lies the vertically integrated supply chain
model in which theorganization has direct control over each and
every component of the supply chain, whileon the other end of
the spectrum lies the horizontally diversifi ed supply chain
model(ideally) in which the number of participant is as large as
the number of distinct parts of the supply chain. In a vertically
integrated supply chain system, the organization cancontrol
every component of the chain and can make various
changes to the system tooptimize the chain very easily. But in
a horizontally diversified supply chain the tendencywill be to
optimize only the functions that the organization is involved in,
thus consciousefforts must be made by the various participants in
the supply chain for the integration of their respective
components in the supply chain. If an organization can be
identifi ed asthe major/dominant partner in the supply
chain, then this organization has to take an initiative in