Supply Network Design Flashcards
Supply Network Design decisions:
Network configuration
Location and
Capacity
What does network configuration entail?
Downstream/Upstream Disintermediation Outsourcing Offshoring Vertical Integration
define outsourcing
ownership = don't own assets location = domestic
Domestic supplier delivers products and/or services
an arrangement in which one company provides services for another company that could also be, or usually have been, provided in-house
define offshore outsourcing
ownership = don't own assets location = international
Overseas supplier delivers products and/or services
define domestic operations
ownership = own assets location = domestic
focal company performs activities themselves
define offshore operations
ownership = own assets location = international
Focal company’s overseas operation delivers products and/or services
Supply-side factors in location decisions
vary to influence costs as location varies: e.g. labour costs land costs energy costs transportation costs community factors
Demand-side factors in location decisions
vary to influence customer service / revenue as location varies: e.g. labour skills suitability of site image convenience for customers
Balance of capacity
Capacity can either lead (luxury products) or lag (lower segment) demand
Inventory can be used to smooth out the peaks
Spare capacity can be used to supply other operations.
Capacity is associated with economies of scale
define structure
the shape and form of the network
define scope
the extent that an operation decides to do the activities performed by the network itself, as opposed to requesting a supplier to do them.
define supply network
an interconnection of organizations that relate to each other through upstream and downstream linkages between different processes and activities that produce value in the form of products and services to the ultimate consumer.
Who is on the supple/demand side of an operation
Supply side
-Suppliers of parts/ services
first-tier suppliers
Second tier suppliers-
Demand side
- Customers
First-tier customers, main consumer group for the operation
Second-tier customers, but an operation may supply second tier directly
define immediate supply network
the supplier and customers who have direct contact with an operation
define total supply network
the operations that form the network of suppliers’ suppliers and customers’ customers
define upstream
refers to the material inputs needed for production
define downstream
is the opposite end, where products get produced and distributed
Why is the structure and scope of an operation’s supply network important?
- It helps and understanding of competitiveness
- It helps to identify significant links in the network
- It helps focus on long-term issues
The scope of an operation activities within the network is determined by two decisions
- The extent and nature of the operations vertical integration
- The nature and degree of outsourcing it engages in
define disintermediation
companies within a network bypassing customer or suppliers to make contact directly with customers’ customers or suppliers’ suppliers
‘cutting out the intermediaries’
Develops new linkages in the supply network
what is co-opetition
Competitors can be complementors and vice versa
Companies cooperate in increasing the total size of the market and compete for a share of that market
All the players in the network can be friends and enemies at different times
define business ecosystem
an economic community supported by a foundation of interacting organizations an individuals- the organisms of the business world
difference between business ecosystem and supply network
The inclusion in the idea of the ecosystem of businesses that may have no or little direct relationship with the main supply network, yet exist only because of that network.
They interact, complementing or contributing significant components of the value proposition for customers
define dyadic interaction
the individual interaction between two specific operations in the network