Supply Chain Management

Supply Chain Management

The supply chain differs for a company that sells a physical product such as furniture, from that of a company that sells a service such as cellular services. Though both supply chains differ, with powerful strategies both companies were able to achieve the same result, profits within the organization. Ultimately for any organization, the main goal is to increase profits. Improving the supply chain is one way to reach this goal. According to Schneider, “When companies integrate their supply management and logistics activities across multiple participants in a particular product’s supply chain, the job of managing that integration is called supply chain management. The ultimate goal is to achieve a higher-quality or lower-cost product at the end of the chain” (Schneider, 2004, p. 228). Lets attempt to show how Direct Buy, a furniture company, and Verizon Wireless, a cellular service company has achieved that goal.

Product

In a supply chain for an organization that provides a product the model would look like this.

“Supplier_Manufacturer_Wholesalers_Retailers_Consumers”

To prove this point, let’s take a look at the Furniture Industry. In a typical supply chain model for the furniture industry, the suppliers would be any organization that provides raw materials for the furniture to be made of. The manufacturers would be organization that makes the furniture products in mass production. The wholesalers would be the organizations that store and sell the products to retail organizations. The retail organizations purchase these items in large orders for special pricing and resale them at a retail price in which the consumer pays for the items.

To illustrate how this model would change using E-Business, let’s take the same example and make changes for the new example. In the furniture industry, a customer may have a new choice in purchasing items at a good rate by illuminating the wholesaler and retailer from the supply chain. A good example of this would be “Direct Buy”(2004). With Direct Buy, a consumer can bypass the both the wholesaler and the retailer going directly to the manufacturer; therefore reducing cost in areas of transportation or storage, ultimately reducing the cost to provide the product to the customer. In this new example the supply chain model would look more like this.

“Supplier_Maunfactuer_Consumer”

In this example, the consumer can clearly see that Direct Buy is practicing “disintermediation” with the removal of the wholesalers, the organizations that store and sell the products to retail stores (Schneider, 2004, p. 525). In this disintermediation process, the retailer is also removed, which will reduce the mark up pricing; therefore reducing cost to the customer. To replace these entities or reintermediate the supply chain, Direct Buy has a website that consumers to use as their place of contact with the manufacturer (Schneider, 2004, p. 539).

Service

In a supply chain for an organization that provides a service the model would be more like this.

“Supplier_Service_Retailers_Consumer”

To prove this point, lets take a look at the Wireless industry. In a typical supply chain model for the Wireless industry, the suppliers would be any organization that provides the networks to use the services. The service would be the actual access to the networks. The retailers would be the locations that provide a contact to these services for a special price. The consumer is the person