Discuss, Using Examples, How the Relationship Between Operations in a Supply Chain Can Affect Way the Chain Works.

2997 Words May 1st, 2012 12 Pages
Discuss, using examples, how the relationship between operations in a supply chain can affect way the chain works.

Supply chains are an important factor in the running of a company. A lot of business decisions can be based on how well the supply chain is flowing. The relationship between different operations within a supply chain can have a huge impact on the way the chain works, depending on how well these relationships are managed. This is why companies try to practice good supply chain management. This essay is going to be looking at supply chains and analysing the way in which the relationship between the different operations can affect the way they work.
Supply chains are a system of organisations, people, technology,
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This is an example of vertical integration. Vertical integration has become more common over time as companies realise the importance of good supply chain management and they feel if they have all their suppliers in less places its easier for them to keep track of their operations. ‘For example , in fords European operations, the old escort model took parts from around 700 direct suppliers, while the newer focus model used only 210 (future models may have less than 100)’ Slack (Chambers and Johnston, 2007, p. 152).
Companies that do not use vertical integration will outsource. Large firms and companies may chose to outsource different operations within their supply chain to smaller companies for different things. One common source of outsourcing is for transportation. Transportation is a very important part of the supply chain. It links each part of the chain together. There are links between suppliers where transportation is needed and obviously links between the manufactures and their customers, high street stores for instance.
Outsourcing is a very common practice for companies. They purchase goods and services from outside their company in pure market fashion. Companies will search for the best priced supplier every time in order to keep costs down. Smaller companies may outsource a lot of their operations ‘Few Companies will have the expertise or the inclination to create, make and market their products by themselves. Companies will focus on what they do
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