The supply network

The supply network

1. supply network perspective

   • setting an operation in the context of all other operations with which it interacts
     • Suppliers, customers
       • materials, parts, information and people flow through the network of a customer
   • understanding of competitiveness
     • immediate customers/supplies
   • identifies significant links
     • bits have greatest effect
     • Downstream and upstream links
   • focus on long-term positioning
     • strikes/breakdowns/fatalities
       • weaken supply chain
     • risk analysis

2. First Tier

   • Suppliers
     • separate companies
     • work under a service level agreement
     • will have their own first tier suppliers
       • considered second tier to main operation
   • customers
   • immediate relationship with operation with no intermediate operations

3. Disintermediation

   • cutting out the middle man

4. three key decisions

   • Vertical intergration
   • Location
     • corporate desires, labour availability , cost, cost of utilities, government incentives
     • analysis
       • qualitative
       • quantitative
         • location break even method
         • weighted factor method
         • centre of gravity method
   • Long term capacity management
   • Do it or buy it?
     • In-house
       • transform resources internally
         • not using other companies as part of the process
     • Outsourcing
       • Move firms internal activities and decision responsibility to outside providers
       • Upstream integration
         • Buy your suppliers
       • Downstream integration
         • buy your customers
       • Narrow process span = not vertically integrate
       • wide process span = vertically integrate
       • Reasons to outsource
         • Freed resources
           • don't need resources to make part
             • can use funds else where
         • reduce operating costs
           • process technology, and management/task control not needed
             • cheap
         • Easier to control costs
           • don't have to manage services, materials, components, sub assemblies of the part etc
             • just on suppliers cost
         • Superior design
           • better design/ improved specification of services
             • Lotus carlton
         • Market perception of sound design
           • purchase from known supplier
             • customers attributing similar view to companies own products/services
               • bose, aston martin
         • Access to capacity
           • meet demand surges/peaks easier.
         • Up-to-date technology
           • suppliers specialist capacities, accompanied by high volumes, they can invest in recent tech
         • Access to world-class capabilites
           • select world class vendors
         • Increased focus on own core tasks
           • development time and investment on companies own primary business