Assignment 2: Chain Management at Durham International Manufacturing Company
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1. Determine whether integration efforts should start with suppliers, distribution, or both. Explain the rationale for your decision. Supply chain business process integration involves collaborative work between buyers and suppliers, joint product development, common systems, systems, and shared information. (Supply Chain) This can be used to maximize max imize efforts in the realm of competition and give c ompanies an edge over their competitors. competitors. It would seem seem that integration integration efforts should start with suppliers. They are the ones who supply suppl y the products and services necessary to make the products for the customers. To demonstrate mediation with suppliers, there are two sets of indirect paths to be proposed. First, the greater the focus on strategic supplier selection, the more likely there there will also be enhanced integration. (Koufteros, Vickery, & Droge, April 2012, pg. 99) Second, support for mediation would require that the more integrated the suppliers, the better the competitive performance capabilities of the buyer. The arguments for the supplier integration – buyer performance capability links focus on the premise that the viability and efficacy of suppliers may rest upon the relationships that the buying firm can construct. construct. (Koufteros, et al, al, April 2012, pg. 99) 2. Recommend ways that DIMCO could benefit from leveraging B2B e-Commerce. According to Reid and Sanders, Sand ers, business-to-business e-commerce is the selling and buying of products to and from other businesses. (2010, (2010, pg. 107)
If Lucille Lucille Jenkins wants to increase
operational profit, B2B e-commerce is almost a surefire to raise that profit. There are a great many benefits in doing B2B e-commerce. Based on Senn’s research a company can significantly benefit from using e-commerce in five different ways:
Assignment 2: Chain Management at Durham International Manufacturing Company
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1. Tending the firm's reach 2. Bypassing traditional channels 3. Augmenting traditional markets 4. Boosting service 5. Advertising (Spring 2000, pg. 25) The ability of a firm to interact with customers or with business partners is defined by its reach. The ultimate objective is to be able to reach any potential buyers, regardless of location, without the need for prior arrangement. Even though they are valuable business tools, interorganizational systems cannot achieve this objective because they depend on predefined relationships and communications paths. (Senn, Spring 2000, pg. 26) Having the ability to communicate without predefined relationships can help build a superior business in that there is an unlimited potential to reach buyers with sales and marketing. By dealing directly with manufacturers, companies can pass along savings to buyers in the form of lower prices. Electronic markets are a natural evolution of catalog selling and direct dealing are both online. Service knows no boundary when markets are electronic. Time windows are eliminated because online services can be delivered 24 hours a day. Carefully chosen listings in online catalogs and databases enable a firm's buyers to learn about the company and its products even when they lack prior knowledge of their existence. Electronic links make it possible for shoppers to jump from the advertising spot to the firm's location in the market. (Senn, Spring 2000, pg. 26-27) DIMCO can cut costs, reach more customers, and provide timely services by investing in business-business e-commerce. 3. Determine what steps DIMCO could take to improve its relationship with suppliers.
Assignment 2: Chain Management at Durham International Manufacturing Company
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Currently DIMCO uses 375 different suppliers at different locations around the world. With regard to relationship resources dealing with suppliers, many firms excel in value creation and capture by virtue of unique relationships with suppliers/partners who possess superior capabilities, brands, access to global markets, and other potential sources of advantage. The purchasing (supply management) function performs integral mediating roles through capabilities in identifying, establishing, and securing such relationships. (Priem & Swink, April 2012). In today’s complex networks, suppliers are often customers, and vice versa. Accordingly, research efforts can be aimed at understanding purchasing roles in identifying potential value cocreators/co-inventors, gaining access to specific product and consumer market information via partners, and providing macro-market trend information. (Priem & Swink, April 2012) DIMCO could take learn something from the Toyota example listed below. Toyota puts in a lot of work to enhance, maintain, and begin relationships with their suppliers. As stated by Priem & Swink: Toyota constantly scans for new suppliers with leading edge cap abilities, invests substantial time and effort to explore capabilities and relationship potential, and deploys a cross-functional team to work closely with the potential supplier to resolve all critical issues as part of its lengthy selection process. Toyota then reaps greater effectiveness and lower transaction costs after the contract is awarded. Supplier partnerships can alleviate fears for opportunistic behavior and thus can motivate sup pliers to engage in continuous improvement programs. Such long-term relationships are characterized by p ath dependence, social complexity and causal ambiguity, making them prime, potential sources of competitive advantage in the RBV sense. (April 2012, pg. 97-98)
Assignment 2: Chain Management at Durham International Manufacturing Company
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4. Discuss the most effective way for DIMCO to eliminate waste in its supply chain. Lack of standardization is the root cause of the waste in the supply management field. “Float" exists across the entire chain and results in sub-optimal working capital management Where there is significant money to be saved, however, progress is certain. (Greafish, October 2006, pg. 72) Pioneering companies are progressing and are vocalizing their demand for open standards and interoperability. This ensures that demand begets supply, which ensures that waste is kept at bay. Once standards are in place, competitive forces will take over and lead to the launch of value-added products and services that use the standards. As standards take hold along the financial supply chain, e-payments in business-to-business transactions will flourish, and the final thaw of the financial supply chain glacier will occur. (Greafish, October 2006, pg. 73)
Assignment 2: Chain Management at Durham International Manufacturing Company References Greafish, Alenka. (October 2006). Eliminating Waste in the Financial Supply Chain. United States Banker. Koufteros, Xenophon, Vickery, Shawnee K., & Droge, Cornella. (April 2012). Effects of Strategic Supplier Selection. Journal of Supply Chain Management. Priem, Richard L. & Swink, Morgan. (April 2012). A Demand-Side Perspective on Supply Chain Management. The Journal of Operations Management. Reid, R Dan. & Sanders Nada R. (2010). Operations Management: An Integrated Approach. th
(4 ed). Hoboken, NJ: John Wiley & Sons, Inc. Senn, James A. (Spring 2000). Business-to-Business E-commerce. Information Systems Management. Supply Chain Business Process Integration. Retrived from http://logistics.bafree.net/supplychain-business-process-integration/
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