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Supply Chain , an extended enterprise ?
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Organizations
increasingly find that they must rely on effective supply
chains, or networks, to successfully compete in the global
market and networked economy[1].
In Peter Drucker's (1998)
management's new paradigms, this concept of business
relationships extends beyond traditional enterprise boundaries
and seeks to organize entire business processes throughout a
value chain of multiple companies.
During the past decades, globalization, outsourcing and
information technology have enabled many organizations such as
Dell and Hewlett Packard, to successfully operate solid
collaborative supply networks in which each specialized business
partner focuses on only a few key strategic activities (Scott,
1993). This inter-organizational supply network can be
acknowledged as a new form of organization. However, with the
complicated interactions among the players, |
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the
network structure fits neither "market" nor "hierarchy"
categories (Powell, 1990).
It is not clear what kind of
performance impacts different supply network structures
could have on firms, and little is known about the
coordination conditions and trade-offs that may exist
among the players.
From a system's point of view, a
complex network structure can be decomposed into
individual component firms (Zhang and Dilts, 2004).
Traditionally, companies in a supply network concentrate
on the inputs and outputs of the processes, with little
concern for the internal management working of other
individual players. Therefore, the choice of internal
management control structure is known to impact local firm
performance (Mintzberg, 1979). |
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In the 21st century, there have been few changes in business
environment that have contributed to the development of supply
chain networks. First, as an outcome of globalization and
proliferation of multi-national companies, joint ventures,
strategic alliances and business partnerships were found to be
significant success factors, following the earlier
"Just-In-Time", "Lean Management" and "Agile Manufacturing"
practices.[2] Second, technological changes, particularly the
dramatic fall in information communication costs, a paramount
component of transaction costs, has led to changes in
coordination among the members of the supply chain network (Coase,
1998).
Many researchers have recognized these kinds of supply network
structure as a new organization form, using terms such as
"Keiretsu", "Extended Enterprise", "Virtual Corporation", Global
Production Network", and |
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"Next
Generation Manufacturing System".[3] In general, such a
structure can be defined as "a group of semi-independent
organizations, each with their capabilities, which
collaborate in ever-changing constellations to serve one or
more markets in order to achieve some business goal specific
to that collaboration" (Akkermans,
2001). |
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Supply chain
management is a cross-functional approach to managing the
movement of raw materials into an organization and the movement
of finished goods out of the organization toward the
end-consumer. As corporations strive to focus on core
competencies and become more flexible, they have reduced their
ownership of raw materials sources and distribution channels.
These functions are increasingly being outsourced to other
corporations that can perform the activities better or more cost
effectively. The effect has been to increase the number of
companies involved in satisfying consumer demand, while reducing
management control of daily logistics operations. Less control
and more supply chain partners led to the creation of supply
chain management concepts. The purpose of supply chain
management is to improve trust and collaboration among supply
chain partners, thus improving inventory visibility and
improving inventory velocity. |
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