Summary of Chapter 1: Supply Chain Management and Competitive Strategy
In this chapter 1, I learn about the supply chain management which is the theory of
comparative advantage applied at the company level. Supply chain management allows
companies to focus on their unique skill sets. In the supply chain: Manufacturing example,
focal firm’s supply chain includes upstream suppliers and downstream customers. Supply
chain management known as the design and management of seamless, value-added processes
across organizational boundaries to meet the real needs of the end customer. Each of the
company in a chain must manage its own value chain effectively to help the overall chain
compete.
Supply chain collaboration involves one or more type of process which are internal process
integration, backward process integration with valued first-tier suppliers, forward process
integration valued first-tier customers and complete forward and backward integration. The
Bullwhip effect is the problems happen due to infrequent of demand. The demand variations
are likely to be exaggerated as decisions are made up the chain. The costs of Bullwhip effect
can be as high as 12 to 25% and can be mitigated by sharing point of sale data, collaborative
forecasting and collaborative future product promotion planning.
In this chapter also, there are three basic theories guide modern strategy formulation and
execution which is contingency theory, industrial organization theory, and resource-based
theory. Four decision areas for strategy involve environment, resources objectives and
feedback that must be considered in strategy formulation and execution. Supply chain