TYPES OF SC

What is your supply chain type

 WHAT IS YOUR
SUPPLY CHAIN TYPE?
• What is your supply chain type?
The definition that best captures the essence of Supply Chain management
(SCM), is: finding the best possible balance between meeting customer
needs and achieving operational efficiency.

• In view of the above definition, it is clear that there is no one-stop type of a

supply chain. Different companies have different supply chains based on the
strategy they have adopted and the business processes they operate.

• A study conducted by the Center for Strategic Supply Leadership has

identified sixteen different supply chain types. Knowing the supply chain
type the company operates in, gives managers useful insights into the next
level or blend of supply chain [SC] type the company can adopt to compete.
 TYPE: NONE

• Provides no competitive advantage

• Processes are inefficient and expensive
• Competitive and financial vulnerability
 TYPE: DON’T KNOW

• SC outsourced
• No pressure to innovate
• Provides no competitive advantage
• Exhibits competitive and financial vulnerability
 TYPE: TIE DOWN THE FIRM

• Only selected processes optimized (for example

logistics) at the expense of other processes
• Emphasis upon selected elements of the SC is
detrimental (damaging) to the total chain
• Exhibits competitive and financial vulnerability
 TYPE: NANO-CHAIN

• Maximizes manufacturing efficiency

• Diverts strategic emphasis toward mostly internal
activities
• Product innovation and customer service not
emphasized
• Common practice in industries where high fixed cost
require high plant utilization: aircraft, automobile, ship
building, etc.
 TYPE: MICRO-CHAIN

• Balancing of inbound logistics, manufacturing/services

and outbound logistics
• Focus on the flow of information and the flow of
physical goods
• This is the classic logistics model
 TYPE: PROJECT LOGISTICS

• Focused on specific projects

• Similar to the Nano-chain
• The goal is to get specific projects up and running
quickly (for example: plant construction)
 TYPE: CASH-TO-CASH

• Maximizes cash utilization and availability through

delaying payments. This leaves the company with a
high cash holding elsewhere
• Emphasizes financial goals and then logistics
• Can negatively affect suppliers and in turn your own
company
 TYPE: SYNERGISTIC CHAINS

• Common in highly decentralized, multinational companies

(large retailers such as Wal-Mart, Carrefour, etc.)
• Attempt to tie together existing SC elements to attain
buying synergies, manufacturing utilization improvements,
etc.
• For example, companies do not want to buy from
separate lines of business within one supplier. Instead,
they want single point of contact and administration
(among other things to make visible the volume and
achieve leverage)
 TYPE: DEMAND CHAIN

• Close collaboration with customers

• Focus on the need of a customer
• Common in companies that sell to large retailers (e.g.
Wal-Mart)
• Requires ability to configure chains to changing
demands from different customers
 TYPE: EXTENDED SUPPLY CHAIN

• Based on supplier-to-customer efficiencies

• Common in environments characterized by high purchase
costs and/or high product obsolescence
• Seek benefits from collaboration across the entire value
chain
• “In the future, firms won’t necessarily compete. Instead,
entire supply chains will compete against other supply
chains”
John Chambers, Cisco’s CEO, 1990
 TYPE: MARKET DOMINANCE

• Can build monopolistic market dominance

• Illegal in most developed countries
TYPE: SUPPLY INTEGRATION

• Managers are assigned to teams across the entire

chain to identify and take out costs
• Result: usually simplification of process flow
• Useful for competitive initiatives
• Highly interdisciplinary process
 TYPE: SPEED-TO-MARKET

• Emphasizes product development and its market

introduction
• Time is the major metric
• Requires process flexible organizations and supply
chains
 TYPE: INNOVATION

• Companies focus on products in early stages of

their life cycles
• Stresses manufacturing flexibility
• Suppliers and customers involved in the innovation-
supporting processes
• Companies OK with outsourcing of non-core
competencies
• Price minimization is not the primary objective
TYPE: VALUE CHAIN

• Focus on partnerships with other key organizations

across the SC.
• Partnerships create ongoing innovation and process
integration
• Within the SC, the procurement tasks are more based
on relationship management than on negotiations and
competition.
TYPE: INFORMATION NETWORKS

• The emphasis is on information, knowledge, business

intelligence
• Innovation ideas can arise from any part of the
company or supply chain
• Core competencies are constituted by efficient and
agile processes
 The 8 Key
Business Processes
Information Flow

Tier 2 Tier 1
Supplier Supplier Logistics Customer Consumer
Purchasing Marketing & Sales
PRODUCT FLOW
Production Finance
R&D
Supply Chain Business Processes

CUSTOMER RELATIONSHIP MANAGEMENT

CUSTOMER SERVICE MANAGEMENT

DEMAND MANAGEMENT

ORDER FULFILLMENT

MANUFACTURING FLOW MANAGEMENT

SUPPLIER RELATIONSHIP MANAGEMENT

PRODUCT DEVELOPMENT AND COMMERCIALIZATION

RETURNS CHANNEL
 GROUP ASSIGNMENT - 1

• What is the ‘BEST’ type of Supply Chain

practiced by your organisation. Is it effective.
Can it be improved. How?