...FUTURE Chapter 16—SUPPLY CHAIN PROCESS INTEGRATION AND A LOOK TOWARDS THE FUTURE For those for whom integration is not happening, the future is bleak and getting darker.[i] There is a lot of value that is “trapped” between the processes trading partners use to transact business, and when companies work together, they can unlock that value and share its benefits.[ii] LEARNING OBJECTIVES After completing this chapter, you should be able to: • Discuss and compare internal and external process integration. • Discuss the requirements for achieving process integration. • Describe the barriers to internal and external process integration, and what can be done to overcome them. • Understand the importance of performance measurements in achieving internal and external process integration. • Understand why it is important to align supply chain strategies with internal process strategies. • List and describe the eight key supply chain processes, and how trading partners integrate these processes. • Discuss a number of the latest trends in the areas of process management and process integration. CHAPTER OUTLINE Introduction Achieving Internal Process Integration Extending Integration to Supply Chain Trading Partners A Look at Trends and Developments in Integration and Process Management PROCESS MANAGEMENT IN ACTION—An Interview with Zack Noshirwani, Vice President of Integrated Supply Chain for Raytheon The Raytheon...
Words: 19912 - Pages: 80
...Industrial and Corporate Change, Volume 19, Number 1, pp. 81–116 doi:10.1093/icc/dtp032 Advance Access published June 22, 2009 Who profits from innovation in global value chains?: a study of the iPod and notebook PCs Jason Dedrick, Kenneth L. Kraemer and Greg Linden This article analyzes the distribution of financial value from innovation in the global supply chains of iPods and notebook computers. We find that Apple has captured a great deal of value from the innovation embodied in the iPod, while notebook makers capture a more modest share of the value from PC innovation. In order to understand these differences, we employ concepts from theories of innovation and industrial organization, finding significant roles for industry evolution, complementary assets, appropriability, system integration, and bargaining power. Downloaded from icc.oxfordjournals.org at University of Dhaka on June 19, 2011 1. Introduction The power of innovation to reward pioneers with exceptional profits is well known. Yet, as recognized in various strains of the business strategy literature, the value generated from the innovation is generally shared by the innovator with some combination of component suppliers, intellectual property owners, providers of complementary products and services, competitors, and consumers. This is all the more true as firms focus on a set of core activities and rely on a network of allies and suppliers to help them create and produce innovative products. In such...
Words: 15353 - Pages: 62
...Task 3 A. Analyze whether a Keiretsu network, a virtual company, a vertical integration, or a different supply chain strategy should be adopted. Identifying a strategy is the first step in a supply chain management strategy so that is where we start. There are many options when selecting a strategy that will work best for our market and each strategy has advantages as well as disadvantages. No matter what type of strategy we chose we will face the same main question of if we should make the parts for our product or buy them. By choosing to make them we would chose a vertical integration strategy where we buy the suppliers and take over the management of more or perhaps all of the supply chain. This strategy could lower our cost of each product but we would take on more risk in owning the additional infrastructure as well as losing flexibility in changing the product by changing suppliers. In my opinion we would only want to use this strategy if we could not find suitable suppliers that we could be assured could meet our desired quantities and quality. Another option would be a sort of hybrid called a Keiretsu network where we would help fund our suppliers or work very closely with them and in turn be part of a network that is interdependent and works together to achieve the best result for all. This seems like a clear winner but again depending on the level of commitment to the suppliers we lose flexibility and take on added risks if the supplier fails. In turn...
Words: 4103 - Pages: 17
...accounted for over 75% of their frozen food sales. Problem Summary Birds Eye was losing its market share and profitability during the 1970's and 1980's due to increased competition in the frozen foods market. In 1978 their market share of 60% declined to 29%. Private label competitors had gained over 21% of the frozen food market. The increase of stiff competition drove prices down and lowered profitability for Birds Eye. A huge factor in loss of profitability and market stronghold was their internal strategy. The company’s vertical integration strategy worked for in the beginning to initially strengthen their brand, but lost its performance during the 1970's and 1980's. Due to the rising costs of producing frozen foods in the 1970's, and increasing market competition, the company needed to shift to a more horizontal strategic approach. Analysis Value Chain Birds Eye value chain was the chain of activates that it was operated on. The chain of activities gave them more value to its service and its products until early late 1960’s. The primary activities for Birds Eye were inbound logistics, operations, outbound logistics, marketing...
Words: 2104 - Pages: 9
...Introduction In examining, the case study on Crocs; it displays an overview of the company’s objectives in operations to include the supply chain. This examination reveals the success behind how the company thrives in times when others are unable. Part of Crocs leading objectives and primary function is to reinvent the supply chain to provide less shortages and increase awareness and customer satisfaction. This paper will outline a brief overview of company history, Crocs two primary core competencies and in which manner do they exploit them; continued evaluation will cover vertical integration, acquisition, or product extension growth. Further discussion consists of company production and inventory as well, as how margins affect their decisions. History and a Foundation for Core Competencies Lyndon Hanson, Scott Seamans, and George Boedecker created Crocs, INC. in 2002 out of Boulder Colorado. The idea came from a trip taken by the three, where one of them had purchase a pair made from a company out of Canada. The decision to start a business selling the shoes was realized after they leased a warehouse in Florida; when sales took off, they contacted Ronald Synder a college friend who which was employed for Flextronics (electronics manufacture) in an executive position. The addition of Snyder was positive as he helped invent their supply chain strategy (Schroeder, Goldstein & Rungtusanatham, 2011). In historical industry practice, it was commonplace to build orders for...
Words: 1721 - Pages: 7
...of the company. In order maintain this leadership, it has had to adapt to the ever changing business environment and market conditions. With the emergence of new information technologies and ideas from new high-tech industries, it must evaluate how these tools can be utilized to further the business. Recently, virtual integration has been proven very successful to companies like Dell and Cisco. However, this approach is best suited for companies that have very few layers of suppliers as well as more centralized production. The Ford motor company cannot simply change their entire supply chain to fit this model. That being said, some of these theories and practices can still be incorporated into Ford’s current supply chain. These must be calculated changes, involving various departments within Ford’s organization, collaborating with their most valued and dynamic suppliers. With Ford already moving somewhat toward this direction with suppliers who provide complete subsystems for their automobiles, further changes in these areas should prove feasible with limited risk. Issues • Determining whether or not to incorporate the virtual integration model used by other recently successful firms such as Cisco and Dell • Uncertainty on how to utilize emerging information technologies to interact with suppliers • Many tiers of suppliers, all with different levels of sophistication • Fierce global competition • Pressure from shareholders to increase value of company ...
Words: 1042 - Pages: 5
...A merger occurs when two companies pull their resources together and join as one. With any new acquisition changes will have to be made and they can either be beneficial to a respective industry or have adverse consequences. Kudler Foods is currently in the position to acquire a company which can have both positive and negative effects. In pursuing a vertical merger Kudler Foods will be in position where they will have an increased market share that places them in a position of reduced competition. Current consumers may not necessarily be attracted to this format, however, through new marketing tactics they can attract new consumers and target a broad demographic and also drive in more profits. If Kudler Foods proceeds with this merger it will allow this establishment to put in to play a new strategic direction. One of the benefits of using this strategic business method according to "More-For-Small Business.com" (2002), “it provides you with efficiencies related to economies of scale (from production, inventory, purchasing, sales and marketing, administration perspectives and more)” (vertical merger). Kudler Foods can benefit and exceed in this merger and in this industry by promoting competitive prices, they will be able to add a new dynamic to their stores by having trained personnel in new products and merchandise, and offer equipment to their employees that will allow them to conduct their work in an expedient manner therefore allowing savings and synergies. If Kudler...
Words: 688 - Pages: 3
...which means that the business environment for our manufacturing has been becoming more deteriorative. From government’s perspective, China need industrial transformation and upgrade industries. On enterprises’ viewpoint, the significant method for this situation is innovate the business model. This essay will demonstrate the gap between Chinese business model and the international advanced business model. The control power to industry chain determined the merchant mode. In modern business, controlling the upstream section of the industry chain means that the enterprises make profits and economize the resource and cost furthest. For instance, China only control the one part of industry chain. That is manufacture which is a low-income and high cost part. However, the upstream section of the industry chain was controlled by American companies. The most famous example may be the Apple Inc. that never produce even one element of electronic products. Apple Inc. masters the design and research section which is high yield and the crux of the whole chain. Then, Apple utilize this superiority to attract other manufacturer such as Foxconn. Apple will lower the price per unit to make more profits, which depress the Foxconn to only survive. Foxconn have to overburden workers to work for almost 12 hours per day. As a result, 11...
Words: 1662 - Pages: 7
...innovations that have contributed to globalization. In the book The World is Flat, Thomas Friedman argues in support of the Dell Theory of Conflict Prevention. On the other hand, William Duiker is not sure about the trend that globalization sets. He argues that globalization may be caused by a simultaneous trend towards fragmentation. In the Dell Theory of Conflict, Friedman states that the world has an economic interdependence that has a possibility of war. However, he says that when two countries or states engage in business together, they are less likely to go into war when they are equal parts of the same global supply chain. He clearly states that the two countries are unlikely to go to war because they have invested heavily in the business. Therefore, according to Friedman, the success of the business between the two countries involved depends on the supply chain. William Duiker in his book, Contemporary World History links social, cultural, economic and political history of the world to issues of globalization. His argument about globalization as an offset of a simultaneous trend towards fragmentation is wrong. Globalization as seen in the current has brought the world together rather than fragment it. Globalization has brought together different ideologies cultures and other different aspects that exist among societies, in the world. It has connected the world more...
Words: 887 - Pages: 4
...Q1. How has Solectron’s value to its customers evolved over time? Over the years, Solectron’s value to its customers has evolved drastically from a player in the Electronics Manufacturing Service industry to a Supply Chain integrator for major firms like IBM, HP, Sony, Ericsson, Cisco etc. Initially, Solectron manufactured a wide range of products for its customers in many business segments like Networking, Telecommunications, Computers, Computer peripherals, avionics, consumer electronics, GPS etc. As Solectron grew, it expanded its services so much so that by the end of 90s it had three strategic business units: * Technology Solutions, which provided technology building blocks which helped customers minimise time-to-market for new products * Global Manufacturing, which provided design, new product introduction, and manufacturing and distribution services * Global Services, which provided repair, upgrade, maintenance etc The company, with Mr. Chen concentrated on offering high quality, responsiveness, communication, service and technical support. The main objective was to achieve customer satisfaction by providing high quality. When Solectron offered contract manufacturing services to OEMs, its aim was to offer them services at reduced prices due to greater volume purchasing. Rather than outsourcing as a way to access relatively inexpensive skilled labour, it became a source of tactical advantage which they provided. Tactical turnkey assembly meant that OEMs...
Words: 1373 - Pages: 6
...an analysis of the profound changes in the productive structure of global capitalism. In the electronics industry, a new model of outsourced manufacturing has emerged as the centrepiece of globalized production networks: Contract Manufacturing (CM) or Electronics Manufacturing Services (EMS). This form of network-based mass production is closely linked to the disintegration of the value chain and the emergence of the “Wintelist” (Borrus and Zysman 1997) model of competition and the rise of “fabless” product design companies in key sectors of the IT industry. In contrast to the general perception of the “informational economy” (Carnoy et al 1993, Castells 1996) as service- or science-based, the rise of the CM-model demonstrates that manufacturing still matters in the "new economy" (Cohen and Zysman 1987). This development also highlights the interaction of new information networks with the restructuring of production, work, and the global division of labor in technologically advanced industries. In this paper, we want to take a closer look at the restructuring of production and commodity chains in the assembly of IT-hardware (such as computers, internet switching and telecommunications...
Words: 7914 - Pages: 32
...tricky issues in vertical integration is striking a balance between the need to have control over crucial elements of the value addition process and the need to encourage technology development among suppliers Firms often vertically integrate to reduce uncertainties in sourcing and marketing. They may also feel that control over a larger portion of the value chain, may facilitate differentiation. What is often forgotten is that different activities along the value chain may need different managerial styles. Vertical integration: Doing a Cost-Benefit Analysis Benefits • Bringing different elements of the value chain together can generate efficiencies. • Integration lowers the cost of scheduling, coordinating and responding to emergencies. • Integration reduces the need for collecting various types of information from the external environment and cuts transaction costs. • Upstream and downstream stages can develop more efficient and specialized procedures for dealing with each other than would be possible with independent suppliers/ customers. • The firm can gain more expertise in the technology associated with upstream and downstream businesses. • Integration reduces uncertainty about supply of parts/raw materials and demand for finished goods. • The bargaining power of suppliers and customers can be reduced. • By controlling a larger segment of the value chain, a firm has greater scope for differentiation. • In some cases, vertical integration can raise entry barriers...
Words: 359 - Pages: 2
...For years Barilla was successful in selling their brand of fine pastas but when a shift in demand for products resulted in items being sold out, Barilla tried to operate like a responsive supply chain which did not work for this functional product. Based on Fisher’s 2x2 model Barilla’s supply chain should be run as a functional product with an efficient supply chain. Barilla should run a more efficient supply chain which can be achieved through the use of the Just-In-Time-Distribution (JITD) program; effective communication with the distributor will allow Barilla to retailers with proper stock of goods through more accurate forecasting and sales data. The critical elements of the JITD program employ the use of distributors’ shipment data to send only what is needed to the retailer. Each day the distributor will provide information on what is shipped to retailers and current stock levels of each location; essentially the manufacturer would co-manage the inventory with the distributor. By implementing the JITD program the suppliers would receive the right amount of product due to Barilla’s ability to improve their forecasting through current sales data and provide the necessary product to the distributor. They would also be able to manage the shelf-space and material distribution through the use of vendor-created delivery schedules. This program takes the pressure off the distributor to hold inventory they didn’t carry and increase the stock of items they already had. The JITD...
Words: 767 - Pages: 4
...What current trends affecting operations are reflected in the success of a firm such as Li & Fung? Li & Fung considered global operations and global supply chain become more and more important nowadays because of the increase of global competition. Li & Fung immediately paid more attention to develop modern online communication and transportation capabilities, which can make that the company maximize comparative advantages. There are 5 or more links in supply chain, and Li & Fung might do better if it can control supply lines in order to provide faster and high-quality products and cater the need of customers. Li & Fung operates on an international scale. How does this factor affect the firm, both positively and negatively? At that time, China has joined in WTO for almost ten years, and kept his promise that actively participated in international economic and trade exchange and tried his best to standardize the order of market. In this situation, local business became to reach more foreign customers. In fact, China’s domestic market had large growth potential. At the time of Chinese market, products were divided into two types. One type of products was cheap but had low quality. This kind of products could only satisfy basic needs. Another type of products was luxury good. However, the products which had lower price and nice quality were hardly found in China. The reason why Chinese market did not have lower-cost and high-quality products was that domestic...
Words: 374 - Pages: 2
...Question 1 ECCO has a fully integrated vertical value chain. What are the pros and cons of that strategy? What economic and strategic factors should be analyzed to answer this question? The pros of a having a fully integrated vertical supply chain for Ecco include the following: * Improved supply chain coordination between tanning, manufacturing and distribution. This would ultimately help maintain quality and improve operational efficiencies such as logistics. * There is also an increase in the areas possible for differentiation, as Ecco can control more inputs. An example might be in the tanning process, in which their competitors may have less control over. * Ecco can also create greater barriers of entry for competitors. By differentiating competition out of the market such as marketing their strict in house controls of the tanning process. * Ecco can also access downstream distribution channels that may otherwise have been inaccessible if they were to just sub out distribution and be at mercy to what the market can provide. * Opportunities for control over investment or innovation both upstream or downstream which may otherwise not be possible will be advantageous for Ecco. * Facilities in different countries can take advantage of local resources and expertise in different areas like the leather research center in Denmark. * Overseeing operations throughout the whole value chain. * Better control and monitoring of inventory...
Words: 1264 - Pages: 6
