Agile Network Businesses

Collaboration, Coordination, and Competitive Advantage

Vivek Kale

• Publisher: Auerbach Publications
• Year: 2017
• Print ISBN: 9781498748322
• eBook ISBN: 9781315351537
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

"A highly readable and yet comprehensive book on network businesses that have become governable with the advent of cloud and big data computing. Vivek Kale is a master of simplifying the complex world of network theory and its relevance to business."
—Jagdish N. Sheth, Charles H. Kellstadt Professor of Marketing, Emory University

Agile Network Businesses: Collaboration, Coordination, and Competitive Advantage reflects the shift from traditional networks to virtual and agile networks that enable businesses to operate dynamically, thereby representing markets more closely. This book enables IT managers and business decision-makers to understand clearly what network businesses and enterprises are, what they can do for them, and how to realize them.

Customers in geographically dispersed markets are demanding higher quality products in a greater variety, at lower cost, and in a shorter time. Thus, enterprises have moved from a few centralized and vertically integrated facilities to geographically dispersed networks of capabilities, competencies and resources, which are the core of network businesses. Enterprises are now constructing more fluid network businesses in which each member facility focuses on differentiation and relies increasingly on its partners, suppliers, and customers to provide the rest. Network businesses have emerged as an organizational paradigm for collaboration and coordination across loosely connected individual organizations.

This pragmatic book:

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• Introduces network solutions and distributed systems that are a first step towards enabling a network enterprise. It also gives a detailed description of networks and agent system that have paved the road to network enterprises.
• Describes the basics of service-oriented architecture (SOA), cloud computing, and big data that are essential to network enterprises.
• Details the distinguishing aspects of network enterprises, which include virtual enterprises, management of network enterprises, and collaborative network enterprises.
• Covers such major application areas as supply, manufacturing, e-business, platform, social and wireless sensor networks.
• Introduces decision networks in the context of supply chain networks

This book reinterprets the traditional supply chain in terms of the flow of decisions, information, and materials, which leads to reconfiguring the traditional supply chain network into mutually separate decision networks (e.g., fourth-party logistics or 4PL), information networks (e.g., wireless sensor networks), and logistics networks (e.g., third-party logistics or 3PL).

NETWORK BUSINESSES EXAMPLES	IV

This section deals with examples of network enterprises. Chapters 13 and 14 present the supplier and manufacturing network enterprises respectively. Chapter 15 and 16 describe e-business and platform network enterprises respectively. Chapter 17 is on popular social network enterprise applications like Facebook and Twitter. Chapter 18 introduces the sensor network enterprises.

Chapter 13Supplier Networks

Chapter 14Manufacturing Network Enterprises

Chapter 15E-Business Networks

Chapter 16Platform Networks

Chapter 17Social Networks

Chapter 18Wireless Sensor Networks

To avoid being tedious, we may refer to network enterprises as networks, but the reader should not lose the sight of the fact that every time we refer to network we are truly referring to network enterprises.

Chapter 13

Supplier Networks

Enterprises that wish to engage in e-business find that they must be involved in managing the network of all upstream companies (supplier side) that provide input directly or indirectly, as well as the network of all downstream companies (customer side) that are responsible for delivery and aftermarket service of a particular product to a customer. Essentially, a supply chain is a network of interlinked suppliers and customers, where each customer is, in turn, a supplier to the next downstream organization, until a complete product reaches the end customer. We may define a supply network enterprise as the network that encompasses all the organizations and activities associated with the flow and transformation of decisions, information, and goods from the raw material stage, through to the end user.

In this definition, decisions, information, and materials flow both up and down the supply chain, while the supply network manages the ICT infrastructure, enterprise information systems, sourcing and procurement, production scheduling, order processing, inventory management, warehousing, customer service, and overarching policies and strategies that oversee enterprise operations. Supply networks are typically comprised of geographically dispersed facilities and capabilities, including sources of raw materials, product design, and engineering organizations, manufacturing plants, distribution centers, retail outlets, and customers, as well as the transportation and communication links between them. The supply network includes all of the capabilities and functions required to design, fabricate, distribute, sell, support, use, recycle, and dispose of a product, as well as the associated decisions and information that flows up and down the network enterprise.

13.1Suppliers

Suppliers can be categorized into the following types:

1.Facilities and equipment builders or vendors: These are companies involved in the construction of supply chain network (SCN) facilities or in the production–distribution of manufacturing and warehousing equipment. They provide the lasting resources used by the company to perform insourced activities.

2.Contract manufacturers: These are the subcontractors selected by the firm to perform outsourced manufacturing activities.

3.Logistics service providers: These are warehousing and/or transportation companies providing storage space for outsourced storage activities and transportation means for the movement of products between activity locations.

4.Material vendors: These are external raw material, component, or product sources. In a manufacturing context, they provide the material associated with the leaves of bill of material (BOM) trees. In a distribution context, they provide the products sold to customers. In an activity graph, they provide the material identified on the arcs adjacent to the generic supply activity.

5.MRO vendors: MROs are maintenance, repair, and operating supplies. They are required to perform activities, but they do not become part of the end product or are not central to the firm’s output. MRO items include consumables such as cleaning, testing, or office supplies; minor industrial equipment such as measurement instruments and safety equipment; spare parts, lubricants, and repair tools required to maintain facilities and equipment; computers; furniture; and so on. MRO items are usually not shown explicitly on activity graphs.

The nature of the relationship developed with suppliers is significantly influenced by three contextual factors:

1.The value creation impact of the product or service: The value creation impact is related in particular to technology. A commodity has much less value than a high-tech component based on proprietary technology.

2.The complexity of the supply process: Supply complexity depends on how easily a product or service can be obtained. A commodity largely available on the market is easy to procure. However, if only a few vendors qualify to supply the product, if capacity is limited, if just-in-time (JIT) deliveries are required, or if quality is critical, then it is much more difficult to find good suppliers.

3.The risks involved.: Risks are related mainly to the possible disruption of the supply line and to price fluctuations. If an item is procured close by in the same country, risks are lower than if it is purchased overseas in a country with highly fluctuating exchange rates and strong inflation.

The nature of the relationships developed with suppliers depends on whether the need for its products or services is repetitive or not. Most buying and outsourcing relationships involve repetitive needs. They may also involve a single product or a family of products. This is important because significant economies of scope may be generated when several items are procured from the same vendor. In this context, some kind of contract must be negotiated with suppliers. These can range from mid-term commodity-specific contracts to long-term partnerships. For example, contracts with material vendors could take the following forms:

1.Fixed price: The vendor sets a unit price based on expected volumes and the buyer has the flexibility to order any quantity at any time during the contract period. This type of contract is widely used in practice.

2.Fixed commitment: A periodic (say, monthly) fixed delivery quantity is specified by the contract. Discounts are offered based on the level of the fixed quantity commitment.

3.Minimum quantity commitment: Periodic minimum quantities are imposed by the contract and the buyer has the flexibility to order any quantity above this minimum in each period of the contract (say, each month of a yearly contract). Discounts are offered based on the level of the minimum commitment.

4.Order band commitment: Periodic minimum and maximum quantities are imposed by the vendor and the buyer has the flexibility to order any quantity in the interval specified. Discounts are offered based on the level of the minimum commitment and the range of the interval.

The procurement of plant, equipment, and MRO supplies is often nonrepetitive. In the former case, it takes the form of investment projects. Alternative proposals are usually evaluated using a life cycle cost approach; that is, the evaluation is based on the total cost of ownership over the life of the asset. In addition to the financing of the construction acquisition costs, the expenditures considered include operations, maintenance, overhaul, and replacement or disposal costs. When relevant, the environmental and social impact of the options considered must also be evaluated. ...

Table of contents

• Cover
• Half-Title
• Title
• Copyright
• Dedication
• Contents
• List of figures
• List of tables
• Preface
• Acknowledgements
• Author
• Other Books by Vivek Kale
• SECTION I GENE SIS OF NET WORK BUSINESSES
• SECTION II ROAD TO NETWORK BUSINESSES
• SECTION III NETWORK BUSINESSES
• SECTION IV NETWORK BUSINESSES EXAMPLES
• Epilogue
• Bibliography
• Index