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

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

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

Direction, extent and balance of vertical integration Raw material suppliers Component maker Assembly operation WholesalerRetailer Downstream vertical integration Upstream vertical integration Narrow process span Wide process span Should excess capacity be used to supply other companies?

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 Consequences of vertical integration

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

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

Bolwijn: Verandering van markteisen en prestatiecriteria Markt- eisen Prestatie- criteria Prijs Kwaliteit Varieteit Uniekheid Efficiency Kwaliteit Flexibiliteit Innovativiteit

The five performance objectives Quality Do things right SpeedDo things fast DependabilityDo things on time FlexibilityChange what you do CostDo things cheaply

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

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

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

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