The Internet and the Customer-Supplier Relationship

Stefano Ronchi

• Publisher: Routledge
• Year: 2018
• Print ISBN:
  9781138714366
• eBook ISBN:
  9781351771429
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

This title was first published in 2003. An exhaustive and synthetic framework for the use of Internet tools in customer-supplier relationships is one aspect of e-business that is still missing from existing literature. This book analyses the main management implications related to the adoption of the Internet in the supply chain and unifies different research studies and contributions in order to build such a framework. It is based on wide empirical evidence including four in-depth case studies in both Europe and the US, a cross-industry survey of more than 160 US companies and website research describing emerging Internet initiatives in B2B relationships. By creating a concrete link between theory and practice it should appeal to academics and practitioners alike.

Chapter 1

Supply Chain Management: Concepts Overview

1.1 Origin and Definitions

Although the term Supply Chain Management appeared for the first time in literature only in 1982 with the contribution of Oliver and Webber, the underlining concepts find their roots in the stream concerning physical distribution in the early 1960s. An example of this first stage is provided by the National Council of Physical Distribution Management (NCPDM) in 1962, which defines physical distribution as:

A term employed in manufacturing and commerce to describe the broad range of activities concerned with efficient movement of finished products from the end of the production line to consumer, and in some cases includes the movement of raw materials from the source of supply to the beginning of the production line.

Fourteen years later, the same Council revised the definition including the manufacturing activities in order to coordinate better the inbound and outbound product movements:

Physical distribution management is the term describing the integration of two or more activities for the purpose of planning, implementing and controlling the efficient flow of raw materials, in-process inventory and finished goods from point of origin to point of consumption.

According to this latter definition, during the 1970s and the 1980s the first physical distribution stage embedded also manufacturing, procurement and order management functions leading to the Logistics era. The Council of Logistics Management proposed in 1986 its own definition of integrated logistics:

Logistics management is the process of planning, implementing, and controlling the efficient, cost-effective flow and storage of raw materials, in process-inventory, finished goods, and related information flow from point of origin to point of consumption for the purpose of conforming to customer requirements.

At this time, information sharing starts to appear as an important issue beside materials handling; Oliver and Webber (1982), Houlihan (1984), Jones and Riley (1985), Stevens (1989) and other researchers conveyed in defining the internal supply chain as the integration of the functions involved in the flow of materials and information, from inbound to outbound ends of the business.

The scope of the issue goes definitively beyond the company’s boundaries with Hayes and Wheelwright (1984) who described a commercial chain including all the actors from raw materials producers to the final consumers (Figure 1.1); the roots of this trend are in the industrial dynamics studies started with Forrester (1961) and Burbidge (1961).

Figure 1.1 An inter-business supply chain (adapted from Hayes and Wheelwright, 1984)

The studies in the last ten years have lead to the Integrated Supply Chain era in which supply chain management is seen as the management of activities including the supplier, the supplier’s supplier, the customer and the customer’s customer.

In this period, researchers, managers and consultants have addressed the topic using many different terms, some examples are network sourcing, supply pipeline management, network supply chain, supply base management, value chain management, and value stream management (Croom et al., 2000). In this landscape, Table 1.1 shows a set of the main definitions of Supply Chain Management provided in the last two decades.

Table 1.1 Main definitions of Supply Chain Management

Year	Author	Definition
1982	Oliver and Webber	Management of the internal supply chain that integrates business functions involved in the flow of materials and information from inbound to outbound ends of the business.
1985	Jones and Riley	An integrative approach to dealing with the planning and control of the materials flow from suppliers to end-users.
1991	Ellram	A network of firms interacting to deliver product or service to the end customer, linking flows from raw material supply to final delivery.
1992	Christopher	Network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer.
1992	Lee and Billington	Networks of manufacturing and distribution sites that procure raw materials, transform them into intermediate and finished products, and distribute the finished products to customers.
1994	Berry et al.	Supply chain management aims at building trust, exchanging information on market needs, developing new products, and reducing the supplier base to a particular OEM (original equipment manufacturer) so as to release management resources for developing meaningful, long term relationship.
1994	The International Center for Competitive Excellence (ICFCE)	Supply chain management is the integration of business processes from end user through original suppliers that provides products, services and information that add value for customers.
1995	Saunders	External chain is the total chain of exchange from the original source of raw material, through the various firms involved in extracting and processing raw materials, manufacturing, assembling, distributing and retailing to ultimate end customers.
1997	Kopczak	The set of entities, including suppliers, logistics services providers, manufacturers, distributors and resellers, through which materials, products and information flow.
1997	Lee and Ng	A network of entities that starts with the suppliers’ suppliers and ends with the customers’ customers, dealing with the production and delivery of goods and services.
1998	Tan et al.	Supply chain management encompasses materials/supply management from the supply of basic raw materials to final product (and possible recycling and re-use). Supply chain management focuses on how firms utilize their suppliers’ processes, technology and capability to enhance competitive advantage. It is a management philosophy that extends traditional intra-enterprise activities by bringing trading partners together with the common goal of optimization and efficiency.
1998	Metz	Integrated Supply Chain Management (ISCM) is a process-oriented, integrated approach to procuring, producing, and delivering products and services to customers. ISCM has a broad scope that includes sub-suppliers, suppliers, internal operations, trade customers, retail customers, and end users. ISCM covers the management of material, information, and funds flows.
2000	Global Supply Chain Management Forum (former ICFCE)	Supply chain management is the integration of key business processes from end user through original suppliers that provides products, services and information that add value for other customers and other stakeholders (customer relationship management, customer service management, demand management, order fulfillment, manufacturing flow management, procurement, product development and commercialization, returns).
2000	Ballou et al.	The supply chain refers to all those activities associated with the transformation and flow of goods and services, including their attendant information flows, from the sources of raw materials to end users. Management refers to the integration of all these activities, both internal and external to the firm.
2000	Lambert and Cooper	The management of multiple relationships across the supply chain. It is not a chain of business with one-to-one, business-to-business relationships, but a network of multiple businesses and relationships.

Although the definitions are slightly different (in some cases pretty different) and each one of those provides its own contribution; it is quite clear the step forward from a pure logistics perspective to a more holistic one. This step is explainable by identifying three main concepts recurring in the definitions and underpinning the research done in the supply chain management field (see Figure 1.2).

Process oriented approach

The authors all agree on thinking the supply chain management as a way to integrate all the activities performed across the different companies with a process perspective. This entails a strong focus both on the final consumer and on the immediate downstream customer. In this aspect there is a clear inheritance from the process organization literature (Hammer, 1990; Davenport, 1993; Hammer and Champy, 1993): supply chain management goes beyond and implies not only the process integration among functions within a company, but the integration of activities realized in different companies is also perceived as a competitive factor. This perspective refers to all the processes creating value for the end consumer, from the new product development to the reverse logistics and returns management.

Products, information and funds

Most of the authors see supply chain management dealing with products, information and funds flow. Such aspect is directly related to the previous one. Products mean not only physical materials (raw materials, work in progress and finished products) but also services (Fine, 2001). All the relevant information needed to pursue efficiency and effectiveness across the supply chain must be shared among participants. Finally, an important issue in transactions is surely money and how it is transferred.

Network of companies

The last important factor concerns the actors involved: in order to manage efficiently and effectively all flows across the chain, from the beginning to the end consumption, more companies need to interact. The presence of organizations with different and conflicting objectives makes ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of Figures
• List of Tables
• Preface
• Introduction
• 1 Supply Chain Management: Concepts Overview
• 2 The Role of the Internet in Supply Chain Management
• 3 Research Aims and Methodology
• 4 Case Studies
• 5 Research Hypotheses
• 6 Survey Analysis
• 7 The Emergence of Collaborative Markets
• 8 Conclusions
• Bibliography
• Appendix: The Survey Tool
• Index