Activity answers

Activity answers

6.1 The supply chain for The B2B Company

1. Upstream supply chain:

Disintermediation offers the opportunity to buy direct from the supplier with reduced costs and shorter cycle times.

Re-intermediation offers the chance to use business-to-business exchanges to source products at lower costs

Downstream supply chain:

Disintermediation offers the opportunity to sell direct to the customer with lower cost of sales and improved lead time for customers.

Re-intermediation offers the opportunity to compete in new marketplaces through B2B exchanges

A more detailed discussion can review the different options for distintermediation and reintermediation.

2. Without any restructuring of the supply chain technologies such as e-mail, web-based ordering, EDI and order tracking can be used to reduce costs and cycle times. Distintermediation and reintermediation options are also facilitated through e-mail, web sites, EDI and e-commerce.

Activity 6.2 Supply chain models in personal computer manufacture

3. Approach 1. IBM. Vertical integration. Approach 2. Dell. Virtual integration.

4. Some of the main advantages and disadvantages are shown in table.

Advantages and disadvantages of vertical integration and virtual integration

Approach 1. IBM. Vertical integrationApproach 2. Dell. Virtual integration

AdvantagesDisadvantagesAdvantagesDisadvantages

Control of manufacturing qualityLess pressure on manufacturing costsExcellent control of costs through supplier competitionLess direct control on quality (although can swap to other suppliers)

Lower overhead in dealing with third parties (easier to integrate systems internally)Costs of systems all borne by manufacturerFewer assets. Costs of inventory borne by suppliers. Costs of data integration shared with partners. Emphasis on management of suppliers

More responsive to short and medium term market demand variationsMore responsive to short and medium term market demand variations

The market success of Dell suggests their approach is superior.

5. Information systems can help both situations through using enterprise resource planning systems, EDI and groupware systems to integrate market research, product design, sourcing, material requirements planning, production, warehousing and distribution. As is pointed out in the table it may be easier to integrate systems with vertical integration, but more of the cost is borne by the manufacturer.

Activity 6.3 Software applications to facilitate supply chain management

E-mail messaging and WAP

Groupware for new product development (across intranets and partner extranets)

Auctions on business to business exchanges

On-line catalogues tailored for buyers

Price comparison engines (agents)

Extranet facilities (Dell Premier Pages)

Order tracking

CAD/CAM systems

Barcodes for traceabilty Document management systems for sharing standards, technical specifications, engineering drawings and user guides.