Total and Immediate Supply Networks

1. Total and Immediate Supply Networks “Second tier” Suppliers “First tier” Suppliers “First tier” Customers “Second tier” Customers The Operation Supply side of the network Demand side of the network The Total Supply Network The Immediate Supply Network Internal Supply Networks

2. Motor Vehicle Parts Distribution Chains Installer Dealer network Local distributor Area distributor Vehicle manufacturer Prime distributor Distribution Chain of V.M. Distribution Chain of Parts Manufacturer Supplier Sub-supplier Manufacturing Chain Stockist Raw materials

3. Advantages of taking a network perspective Location of the Vertical integration operation H ow much of the network should the operation seek Where should the to own? operation be located? Taking a network perspective helps businesses address the three key network design decisions. Balance of capacity How should capacity be managed in the long-term?

4. Direction, extent and balance of vertical integration Should excess capacity be used to supply other companies? Raw Component Assembly material Wholesaler Retai ler maker operation suppliers Narrow process span Wide process span Up stream Downstream v ertical v ertical integration integration

5. Consequences of vertical integration • Inadequate ramp-up capabilities • overcapacity during recession • continuously unbalanced organisation • not enough money available for marketing and development • limitation of innovation speed • management not focussed on market, clients and products

6. Advantages & disadvantages of a network Advantages • Flexibility • Independency • Focusing on core competencies Disadvantages • Difficulty in alignment of strategies

7. Hierarchical model of supply chain OEM System suppliers Co-makers Jobbers

8. Bolwijn: Verandering van markteisen en prestatiecriteria Markt- eisen Prestatie- criteria 1970 1980 1990 1960 Prijs Efficiency Kwaliteit Kwaliteit Varieteit Flexibiliteit Innovativiteit Uniekheid

9. The five performance objectives • Quality Do things right • Speed Do things fast • Dependability Do things on time • Flexibility Change what you do • Cost Do things cheaply

10. New typology for thesubcontracting industry (source: NEVAT) market Generic system supplier Organisational- competence and projectmanagement Application system supplier Technology en application know-how market market Process supplier Specialised manufacturing- technology Parts supplier Product- en application- know-how market

11. Types of supply relationship Vertically Integrated Operation Do Everything Traditional Supply Management Do Everything Important The character of Internal Operations Activity Resource Scope “Partnership” Supply Management Virtual Spot Trading Long-term Virtual Operation Do Nothing Market Relationship Transactional - Many Suppliers Close - Few Suppliers Type of Inter-firm Contact

12. Transparent Integrated Planned Kaizen Cooperative Negotiated Monitored Shared Lean relationship Partnership relationship Traditional relationship Adversarial Historical Secretive Bids The nature of the interaction between players in supply networks is changing Information Price Quality Relationship Time

13. Change drivers • Ubiquitous availability and distribution of information • Accelerating pace of change in technology • Rapidly expanding technology access • Globalization of markets and business competition • Global wage and job skills shifts • Environmental responsibility and resource limitations • Increasing customer expectations