Implementing value strategy through the supply chain

David Walters and Geoff Lancaster

Management Decision

2000, Vol 38, Issue 3, pp. 160-78

 

1)      Intro

  1. a) Four Propositions
  2. i) SCM is the management of relationships between key stakeholders and functions that occur in wealth maximization
  3. ii) Customers drive wealth maximization

iii)     Wealth Maximization and customer satisfaction are facilitated by effective logistics management

  1. iv) Logistics management is the management of activities and costs occurring within the supply chain
  2. b) Task of management
  3. i) Identify customer needs and priorities
  4. ii) Identify the channels that can satisfy them

iii)     Identify the services/products best suited for those channels

  1. iv) Identify the inputs and raw materials required to create the product/service
  2. v) Identify the assets and core competencies essential to the inputs and raw materials

2)      Value Chain Model

  1. a) Value is created by effective response and delivery, facilitated through
  2. i) Identifying and understanding customer benefits
  3. ii) Identifying costs

iii)     Identifying combinations of organizational knowledge and learning

  1. iv) Identifying organizational structures
  2. b) Value Chain processes
  3. i) A firm’s competitive position depends on the effectiveness of the entire chain, not just it’s direct linkages
  4. ii) The value chain serves as a design for the business’ mission

iii)     The supply chain gives its strategic direction and organizational vehicle

  1. iv) The operation /implementation role is assumed by logistics management
  2. c) Effective value chain reconfiguration require structure
  3. i) Expansion in a company’s structure may require the value chain to change
  4. ii) Expansion is unlikely to occur without expansion of assets and core competencies

iii)     Vertical integration has alternative structural options

(1)   Coordination

(2)   Integration

(3)   Coordination is replacing integration

3)      Conclusions/ Key points

  1. a) Supply chain management and logistics management are supporting functions in an overall value chain
  2. b) The Objectives of all value chain participants should be maximized to a point where no preferable solution may be found
  3. c) Information and relationship management determine the effective organizational structure of the value chain and its efficient operational management.