The Progression to Strategic Supply Chain Management

The Progression to Strategic Supply Chain Management

 

Procurement is the foundation for creating the upstream supply chain as we know it

  • Supply Chains – A firm’s supply system includes a firm’s internal functions plus the external suppliers working together to fulfilling value for the customer.  A firm must view the value chain as a whole entity rather than fragmented groups each performing its own function.  The supply chain is the upstream portion of an organization’s value chain and is responsible for feeding the production or conversion process, while marketing and distribution are the downstream portion of an organization’s value chain.
  • The Supply and Value Networks:  The Next Phase of Supply Chain Management – Supply and value networks focus on the ultimate customer, and are designed and managed (or should be designed and managed) so that one member does not benefit at the expense of another.  In value networks, firms integrate with one another, which make the overall value chain highly adaptive, focused on speed, constantly innovative, and tightly integrated.  The are a number of elements of value in which value chains must deliver:
    • Value Creation – through the innovation, development and launch of new products and services.
    • Value Delivery – through the order fulfillment process.
    • Value Maintenance – through processes that provide after sales service and support maintenance.
  • The Extended Enterprise – The extended enterprise is a concept where a network of firms collaborates in partnership with one another.  When the group of forms views each other as partners (members of a supply alliance) and collaborates effectively for the good of the larger group, then the firms involved have established and extended enterprise characterized by vertical integration.