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Supply Chain Relationships. Chapter 15. Systems Approach to Supply Chain. Upstream . Supplier. Manufacturer. Distributor. Retailer. Customer. Downstream. Information technology has been a driving force behind the ability to coordinate these interrelated activities.
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Supply Chain Relationships Chapter 15
Systems Approach to Supply Chain Upstream Supplier Manufacturer Distributor Retailer Customer Downstream Information technology has been a driving force behind the ability to coordinate these interrelated activities
Managing the Supply Chain for Services • Since services cannot be inventoried, they have difficulty buffering themselves from changes in demand • To deal with this problem: • Reservation systems • Optimizing time between service appointments for mobile workers • Managing idle capacity of service workers • Outsourcing
Outsourcing • Reasons for outsourcing • Allows the firm to focus on its core competencies • Service may be cheaper to purchase from an outside source than to perform in-house • Provides access to the latest technology without the investment • Leverages benefits from a supplier who has economies of scale
Outsourcing • Cautionary considerations: • Loss of direct control over quality • Jeopardizes employee loyalty because of fear of job loss • Expose to data security and customer privacy issues
Outsourcing • Cautionary considerations: • Dependence on one supplier compromises future negotiation leverage • Additional coordination expense and delays • Atrophy of in-house capability to perform outsourced service