# Supply chain

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 Revision as of 21:13, 18 August 2011 (view source)Krotov (Talk | contribs)← Older edit Revision as of 14:52, 21 August 2011 (view source)Krotov (Talk | contribs) Newer edit → Line 1: Line 1: '''Russian: [http://ru.scm.gsom.spbu.ru/Цепь_поставок Цепь поставок]''' '''Russian: [http://ru.scm.gsom.spbu.ru/Цепь_поставок Цепь поставок]''' + [[File:Supply chain.png|thumb|The supply chain.]] - Mentzer J., DeWitt W., Keebler J., Soonhoong M., Nix N. Smith C., Zacharia Z. (2001) Defining supply chain management Journal of Business Logistics, Vol. 22 Issue 2, p1-25, + Supply chain is a set of several independent companies that are involved in sourcing of materials, manufacturing, distributing and selling the product for ultimate customer. The term supply chain appeared along with the term “[[supply chain management]]”, however the supply chain exists whenever it is managed or not. Unlike the definitions if supply chain management, the definitions of  supply chain are homogeneous enough: + *A supply chain is a set of firms that pass materials forward La Londe and Masters (1994) . + *A supply chain is the alignment of firms that bring products or services to market Stock, Lambert, Ellram, 1998 + *A supply chain consists of all stages involved, directly or indirectly, in fulfilling a customer request Chopra, Meindl, 2003 + *A supply chain is a set of three or more entities (organizations or individuals) directly involved in the upstream and downstream flows of products, materials and/or information from a source to a customerMentzer J., DeWitt W., Keebler J., Soonhoong M., Nix N. Smith C., Zacharia Z. (2001) Defining supply chain management Journal of Business Logistics, Vol. 22 Issue 2, p1-25,. + It is important to note that these definitions of supply chain include the final consumer as part of it. Other authors see supply chain as a network of organizations, which is more closely to the reality: + *A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials into intermediate and finished products, and the distribution of these finished products to customers Ganeshan, Harrison, 1995 + * A supply chain is the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services delivered to the ultimate consumerChristopher M. (1992) Logistics and Supply Chain Management: Strategies for Reducing Costs and Improve Services. – London: Financial Times; Pitman. – 320 p.. + It is also important to note that any one organization can be part of numerous supply chains. + ==Types of channel relationships== + The core role in supply chains play the relationships between the actors (buyers and sellers). Supply chain type depends on what kind of relationships are between players. Below there are two classifications of relationship types (or strategies): given by J. Mentzer et al. (2001)Mentzer J., DeWitt W., Keebler J., Soonhoong M., Nix N. Smith C., Zacharia Z. (2001) Defining supply chain management Journal of Business Logistics, Vol. 22 Issue 2, p1-25,. and by N. Campbell (2002)Campbell N. 2002. An international approach to organizational buying behavior. In: Ford D. (ed.). Understanding Business Marketing and Purchasing. 3rd ed. Thomson Learning: London; 389-401. + ====Types of relationships by J. Mentzer==== + [[File:supply chain types.png|thumb|Types of channel relationships]] + According to J. Mentzer and his colleagues, there are three degrees of supply chain complexity: a "direct supply chain." an "extended supply chain," and an "ultimate supply chain" (see figure). '''A direct supply + chain''' consists of a company, a supplier, and a customer involved in the upstream and/or downstream flows of products, services, finances, and/or information. This might be either very big vertically integrated corporation that doesn’t have important second tier suppliers or small one without resources or need to monitor second tier suppliers. '''An extended supply chain''' includes suppliers of the immediate supplier and customers of the immediate customer, all involved in the upstream and/or downstream flows of products, services, finances, and/or information. This is traditional supply chain. '''An ultimate supply chain''' includes all the organizations involved in all the upstream and downstream flows of products, services, finances, and information from the ultimate supplier to the ultimate customer. + ====Types of relationships by N. Campbell==== + [[File:Campbell.png|thumb|Types of relationships strategies]] - The definition of "supply chain" seems to be more common across authors than the definition + N. Campbell described three types of relationship strategies: - of "supply chain management" (Cooper and Ellram 1993; La Londe and Masters 1994: Lambert. Stock, + *'''Competitive''' – independent relationships, price establishes by competitive market forces, - and Ellram 1998). La Londe and Masters proposed that a supply chain is a set of firms that pass materials + *'''Cooperative''' – interdependent relationships, developing new value, - forward. Normally, several independent firms are involved in manufacturing a product and placing + *'''Command''' – dependent, one party has a dominant position of strength. - it in the hands of the end user in a supply chain—raw material and component producers, product + Any of this strategies might be implemented by one of the sides: by buyer or by seller, depending on what bargaining power does it have, what are the plans of this player, etc. Some of parameters are listed here: - assemblers, wholesalers, retailer merchants and transportation companies are all members of a + *Product - supply chain (La Londe and Masters 1994). By the same token, Lambert, Stock, and Ellram define + **Frequency of purchase - a supply chain as the alignment of firms that brings products or services to market. Note that these + **Switching cost due to physical and human investments - concepts of supply chain include the final consumer as part of the supply chain. + **Product complexity - Another definition notes a supply chain is the network of organizations that are involved, + **Industry characteristics - through upstream and downstream linkages, in the different processes and activities that produce value + *Concentration - in the form of products and services delivered to the ultimate consumer (Christopher 1992). In + **Number of alternative partners - other words, a supply chain consists of multiple firms, both upstream (i.e., supply) and downstream + **Intensity of competition - (i.e., distribution), and the ultimate consumer. + **Traditions and norms + *Company characteristics + **Relative size + **Preferred infrastructure style + **Relative familiarity + **Centralization of purchasing + *Individual characteristics + **Relative familiarity + **Preferred interaction style + **Perceived importance of the purchase + **Risk aversion - Given these definitions, for the purposes of this paper, a supply chain is defined as a set of three - or more entities (organizations or mdividuab} directly involved in the upstream and downstream flows - of products, sen-icesjinances. and/or information from a .source to a customer. - Encompassed within this definition, we can identify three degrees of supply chain complexity: - a "direct supply chain." an "extended supply chain," and an "ultimate supply chain." A direct supply - chain consists of a company, a supplier, and a customer involved in the upstream and/or downstream - flows of products, services, finances, and/or information (Figure 1 a). An extended supply chain - includes suppliers of the immediate supplier and customers of the immediate customer, all involved - in the upstream and/or downstream flows of products, services, finances, and/or information (Figure - lbj. An ultimate supply chain includes all the organizations involved in all the upstream and - downstream flows of products, services, finances, and information from the ultimate supplier to the - ultimate customer. - Figure I c illustrates the complexity that ultimate supply chains can reach. In this example, a third - party financial provider may be providing financing, assuming some of the risk, and offering financial - advice; a third party logistics (3PL) provider is performing the logistics activities between two - of the companies; and a market research finn is providing information about the ultimate customer - to a company well back up the supply chain. This very briefly illustrates some of the many functions - that complex supply chains can and do perform. - Although we will address this point in greater depth later in this paper, it is important to realize - that implicit within these definitions is the fact that supply chains exist whether they are managed - or not. If none of the organizations in Figure 1 actively implements any of the concepts discussed in - this paper to manage the supply chain, the supply chain—as a phenomenon of business—still exists. - Thus, we draw a definite distinction between supply chains as phenomena that exist in business and - the management of those supply chaitis. The former is simply something that exists (often also - referred to as distribution channels), while the latter requires overt management efforts by the - organizations within the supply chain. - Given the potential for countless alternative supply chain configurations, it is important to - note that any one organization can be part of numerous supply chains. Wal-Mart, for example, can - be part of the supply chain for candy, for clothing, for hardware, and for many other products. This - multiple supply chain phenomenon begins to explain the network nature that many supply chains possess. - For example, AT&T might find Motorola to be a cu.stomer in one supply chain, a partner in another, - a supplier in a third, and a competitor in still a fourth supply chain. - Note also that within our definition of supply chain, the final consumer is considered a member - of the supply chain. This point is important because it recognizes that retailers such as Wai-Man - can be part of the upstream and downstream flows that constitute a supply chain. - A supply chain is the alignment of firms that bring products or services to market (Stock, Lambert, Ellram, 1998) - A supply chain consists of all stages involved, directly or indirectly, in fulfilling a customer request (Chopra, Meindl, 2003) - A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials into intermediate and finished products, and the distribution of these finished products to customers (Ganeshan, Harrison, 1995) - ==Types of channel relationships== + - [[File:supply chain types.png|thumb|Types of channel relationships]] + + + {| border="1" + !colspan="4"|Table 1: Basic EOQ Inputs and Evaluations + |- + |  K=2; h=.0027  || Warehouse  || Retail Outlet 1 || Retail Outlet 2 + |- + | Demand || 40 cases / day    || 25 cases / day || 15 cases / day + |- + |  $EOQ =\sqrt{\frac{2KD}{h} }$  ||  $EOQ =\sqrt{\frac{2\cdot 2\cdot 40}{.0066}} = 156$ + || $EOQ =\sqrt{\frac{2\cdot 2\cdot 25}{.0066}} = 123$ || $EOQ =\sqrt{\frac{2\cdot 2\cdot 15}{.0066}} = 96$ + |} ==References== ==References==

## Revision as of 14:52, 21 August 2011

Russian: Цепь поставок

The supply chain.

Supply chain is a set of several independent companies that are involved in sourcing of materials, manufacturing, distributing and selling the product for ultimate customer. The term supply chain appeared along with the term “supply chain management”, however the supply chain exists whenever it is managed or not. Unlike the definitions if supply chain management, the definitions of supply chain are homogeneous enough:

• A supply chain is a set of firms that pass materials forward [1].
• A supply chain is the alignment of firms that bring products or services to market [2]
• A supply chain consists of all stages involved, directly or indirectly, in fulfilling a customer request [3]
• A supply chain is a set of three or more entities (organizations or individuals) directly involved in the upstream and downstream flows of products, materials and/or information from a source to a customer[4].

It is important to note that these definitions of supply chain include the final consumer as part of it. Other authors see supply chain as a network of organizations, which is more closely to the reality:

• A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials into intermediate and finished products, and the distribution of these finished products to customers [5]
• A supply chain is the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services delivered to the ultimate consumer[6].

It is also important to note that any one organization can be part of numerous supply chains.

## Types of channel relationships

The core role in supply chains play the relationships between the actors (buyers and sellers). Supply chain type depends on what kind of relationships are between players. Below there are two classifications of relationship types (or strategies): given by J. Mentzer et al. (2001)[7]. and by N. Campbell (2002)[8].

#### Types of relationships by J. Mentzer

Types of channel relationships

According to J. Mentzer and his colleagues, there are three degrees of supply chain complexity: a "direct supply chain." an "extended supply chain," and an "ultimate supply chain" (see figure). A direct supply chain consists of a company, a supplier, and a customer involved in the upstream and/or downstream flows of products, services, finances, and/or information. This might be either very big vertically integrated corporation that doesn’t have important second tier suppliers or small one without resources or need to monitor second tier suppliers. An extended supply chain includes suppliers of the immediate supplier and customers of the immediate customer, all involved in the upstream and/or downstream flows of products, services, finances, and/or information. This is traditional supply chain. An ultimate supply chain includes all the organizations involved in all the upstream and downstream flows of products, services, finances, and information from the ultimate supplier to the ultimate customer.

#### Types of relationships by N. Campbell

Types of relationships strategies

N. Campbell described three types of relationship strategies:

• Competitive – independent relationships, price establishes by competitive market forces,
• Cooperative – interdependent relationships, developing new value,
• Command – dependent, one party has a dominant position of strength.

Any of this strategies might be implemented by one of the sides: by buyer or by seller, depending on what bargaining power does it have, what are the plans of this player, etc. Some of parameters are listed here:

• Product
• Frequency of purchase
• Switching cost due to physical and human investments
• Product complexity
• Industry characteristics
• Concentration
• Number of alternative partners
• Intensity of competition
• Traditions and norms
• Company characteristics
• Relative size
• Preferred infrastructure style
• Relative familiarity
• Centralization of purchasing
• Individual characteristics
• Relative familiarity
• Preferred interaction style
• Perceived importance of the purchase
• Risk aversion

Table 1: Basic EOQ Inputs and Evaluations
K=2; h=.0027 Warehouse Retail Outlet 1 Retail Outlet 2
Demand 40 cases / day 25 cases / day 15 cases / day
$EOQ =\sqrt{\frac{2KD}{h} }$ $EOQ =\sqrt{\frac{2\cdot 2\cdot 40}{.0066}} = 156$ $EOQ =\sqrt{\frac{2\cdot 2\cdot 25}{.0066}} = 123$ $EOQ =\sqrt{\frac{2\cdot 2\cdot 15}{.0066}} = 96$

## References

1. La Londe and Masters (1994)
2. Stock, Lambert, Ellram, 1998
3. Chopra, Meindl, 2003
4. Mentzer J., DeWitt W., Keebler J., Soonhoong M., Nix N. Smith C., Zacharia Z. (2001) Defining supply chain management Journal of Business Logistics, Vol. 22 Issue 2, p1-25,
5. Ganeshan, Harrison, 1995
6. Christopher M. (1992) Logistics and Supply Chain Management: Strategies for Reducing Costs and Improve Services. – London: Financial Times; Pitman. – 320 p.
7. Mentzer J., DeWitt W., Keebler J., Soonhoong M., Nix N. Smith C., Zacharia Z. (2001) Defining supply chain management Journal of Business Logistics, Vol. 22 Issue 2, p1-25,
8. Campbell N. 2002. An international approach to organizational buying behavior. In: Ford D. (ed.). Understanding Business Marketing and Purchasing. 3rd ed. Thomson Learning: London; 389-401

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