2.4.1 Matching customer and supplier practices
The core product offered by the supplier, does not represent the single source of value creation for a business customer. Rather, value emerges from the entire customer-supplier interactions, which represent a pillar in using the core resource according to Gronroos (2010). In the following figure is presented the match between customer and supplier processes, which has implications upon both sides’ businesses, in terms of value creation.
Fig. 2.6 Customer and supplier practices (Source: Gronroos, 2010)
According to goods business logic, the manufacturer focuses upon how well can his product fit into his customer’s production process, being translated into operational efficiency. In contrast,
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In other words, service supply chains customers provide input materials such as labour, specifications and so on, taking an extended role in comparison with the roles of “nonservice supply chain” customers (Sampson and Spring, 2012).
In a traditional manufacturing company, the supply chain covers the following roles: suppliers, labour, engineering, production, product, quality assurance, inventory, competitors and customers. The last role, that of customers, is different from the rest of the roles within a classic supply chain, meaning that suppliers are oriented upstream, while customers downstream; the labour is situated internally, while customers are external; engineering is done only by qualified engineers; production is protected from customers; products represent the offering that the customers obtain; quality assurance prevents faulty products to get to the customers; inventory can be managed in order to saturate the demand in time; and finally competitors offer customers different choices to satisfy their needs. Taking separately, the customer role in the traditional supply chain often resumes at “selecting, paying for, and using the outputs” and sometimes proving feed-back and promoting a company’s offerings by recommending to others (Sampson and Spring,
The Home Depot Supply Chain Management model is based on integrated inventory management through a centralized network of 20 distribution centers, called Rapid Deployment Centers (RDCs) and three Direct Fulfillment Centers (DFCs) aimed at the e-commerce market (Bond, 2015). Orders are processed and managed to meet current and forecasted demands, sent to the regional RDCs, which service approximately 100 stores each, and sent to retail outlets to meet stock requirements (Bond, 2015). Direct Fulfillment Centers are e-commerce distribution systems. Home Depot delivers within a two-day timeframe to 90% of US based customers, and the system also leverages in store stock for same day pick-up (Bond,
In the 1960s through the 1970s, companies realized strong engineering, design, and manufacturing functions were strong market strategy keys to create and capture customer loyalty. As the demand for new products rose in the 1980s, these market requirements were to increase their flexibility and responsiveness to adapt existing products and processes or to develop new ones in order to meet customer needs. As manufacturing improved in the 1990s, managers began noticing material and service inputs involving suppliers and their major impact on an organization’s ability to meet customer needs. As a result of these changes, organizations now find that it difficult to manage their own organizations. First, they must be involved in the management of their network of all upstream firms that provide directly or indirectly, as well as the network of downstream firms, which are responsible for delivery and market service of the product to the end customer.
It is important to reinforce that, its processes are directly connected to its customers, and how both can benefit from them. To illustrate it, we can mention here the supply chain, which entails not only internal processes, but the customer relationship as well. This includes management in a variety of aspects such as inventory, contracts, logistics, forecasting, warehouse networking and performance. Moreover, by providing those systems and processes, Mosaic states a positive and proactive reputation in the market.
Quickly becoming apparent after only a few rounds of play was in the absence of coordinating direction the individual supply chain links immediately focused upon acting in their own best interests much more so than the organization as a whole. Whether the end use customer was satisfied became secondary to avoiding stock outages for the next link in the chain, or their specific “upstream customer”. The real world application of this example is that focus on the end use customer must be consistent and maintained throughout the process up to and including delivery. Undoubtedly internal customers, such as retailers to wholesalers and distributors to production, must be serviced along the way for the transaction to ultimately occur. However, unless an end use customer is involved no profit can be realized by anyone.
The purpose of the business is to eliminate the cost of the production particularly in the bulk production. The concerns personnel around the business oriented do have concerns that economies of the scale by mass production will maximise the profits and reduce costs. They need to avoid the processes for the production efficiency that lowers the quality of the product. To maximise the quality of production will increase the product’s appeal to the customers.
Huggins & Izushi (2011) affirms that "all firms in a given industry have a similar value chain, which includes activities such as obtaining raw materials, designing products, building manufacturing facilities, developing cooperative agreements, and providing customer service. " For this, it is necessary to carry out activities aimed at creating value for the customer, which will directly and positively affect the company's
All companies have a set of strategies to play by when it comes to the way they produce their products and services, and in this fast moving economy, the link between product and service have become ever more important. However, in order to produce the product and services that a firm is to offer to their customers, the must first look at their production process.
The entire companies always endeavor to get large amount of profit, this is achieved by conducting large-scale production, marketing management, and certainly on product innovation (Sundbo,1997). Providing new services for existing customers can create value, and magnetize new customers, are basic to enlarge the competitiveness of successful the organizations (Edvardsson et al,2010). Product innovation can attract the customer that implicated to companies benefits. In S-D logic perspective the firm cannot make value but only offer the value through value proposition (Vargo & Lusch, 2008). Value proposition seeing that reason why the customer have to buy product from companies not buy from its competitor.
A company can transform these recourses and outperform rivals if it delivers greater value for customers at a lower cost, or comparable value with competitors. The difference between organisations will be the strategy made to perform the hundreds of activities required to create, produce and deliver these goods to consumers with relatively low cost. (Porter, 1996, pp. 62)...
Supply chain management has been defined as that process that involves the management of information, materials, and all the finances that are handled within and across the entire supply chain process (Christopher, 2016). The management is usually done through out the entire supply chain management from that moment when the suppliers are involved through all the manufacturing activities, different distribution activities, and the way that the products are served to the final product consumer (Turban, et al., 2002). The process also includes all the activities that different organizations offers to their customers as after sale services for purposes perfecting their services and products towards their highly valued customers (Christopher,
Sustainability of the supply chain has increasingly become a crucial aspect of corporate responsibility. Apart from being good for business, management of social, economic, and environmental effects of supply chain remains the right thing to do. Constantly changing markets have created complex landscapes that businesses must navigate to build sustainable supply chains. Sustainable supply chains aim at creating social, economic, and environmental value for all stakeholders throughout the supply chain. Building sustainable supply chains not only benefits the stakeholders but also aims at safeguarding business interests. Businesses can easily become sustainable by understanding who they are and working closely with people. Nestle is company that has been at the forefront in advocating for sustainable supply through the ‘creating shared value’ platform. The report makes recommendation on the role of supply chain management in attaining sustainability.
... management ande-procurement: creating value added in the supply chain”,Industrial Marketing Management, Vol. 33 No. 2, pp. 219-26.
A customer should research about the suppliers whether they satisfy the customers’ requirements. Such as if a customer does not have a budding relationship with sales and marketing functions of needed services and products then they are required to find a supplier who can satisfy their requirements. If the customer did not gather information about the suppliers they might be in trouble...
‘Supply chain management integrates supply and demand management within and across companies. It encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, thir- party service providers, and customers’. (Web: Council for Supply Chain Management Pr...
As pointed by Parsons A.L (2002), there was increasing dependent on the relationship and customers is demanding to receive high standard of products and services for them to sustain the business in the intense manufacturing environment. Besides, Xu et al. (2008) has highlighted that supplier is developing a long-term relationship with their crucial suppliers to increase the competitiveness and to establish an effective and efficient supply chain. Trend (2005) also mentioned that work closely in partnership with suppliers is the only way to survive in today’s competitive business environment.