The Internet Encyclopedia (Volume 3)

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406 SUPPLYNETWORKS:DEVELOPING ANDMAINTAININGRELATIONSHIPS ANDSTRATEGIES

Core

competencies,

capabilities and

processes

Resources

Supply

Network

Operations

Strategy

Actors Technologies

Key tactical activities

Linkages

Strategic

Network

Relationships

Figure 4: Components of a supply network operations strategy.

value-assessment methods. Monitoring and feedback of

relationship performance and process necessitates team

participation and involves all individuals working on

boundary spanning activities.

Having reviewed the nature of a supply network rela-

tionship, we can now establish a connection between the

earlier debate regarding demand complexity and the need

for flexible response, with the types of supply network re-

lationships likely to be seen in the future as part of an

operations strategy.

CUSTOMIZING SUPPLY NETWORK

RELATIONSHIPS AS PART OF AN

OPERATIONS STRATEGY

In the first section, the cluster of value was introduced,

with the suggestion that firms may simultaneously take

part in more than one type of supply network. It seemed a

logical supposition supported by research evidence, that

firms will also utilize a number of operations strategies to

match the complexity of their environment and achieve

competitive advantage (Lowson, 2002). It was also postu-

lated earlier in the first section, that each of these opera-

tions strategies would rely heavily on a number of building

blocks; including supply network relationships. We now

need to consider the process by which these strategies are

developed and deployed.

The Building Blocks of a Supply Network

Operations Strategy

In any supply network, an organization will view partic-

ular aspects of its undertaking as being of strategic im-

portance. These aspects include core competencies, ca-

pabilities, and processes; strategic network relationships;

resources; technologies; key tactical activities to support

a particular strategy or positioning; the actors in the net-

work; and its linkages. Figure 4 portrays these in a sche-

matic.

The building blocks of the operations strategy will re-

flect the strategic significance of the supply network strat-

egy adopted by the firm. Additionally, the firm will apply

a strategy that will represent a particular “blend” of all

these building blocks in order to be sure they align closely

with the organization’s strategic priorities. In Figure 5 we

see an example of a composition matrix forming a supply

network operations strategy with certain generic compo-

nents. Each element in the matrix has a particular empha-

sis depending on the firm and industry (hence the shad-

ing), with higher order strategic themes being dark.

We now add a little more detail to these building blocks.

Core Competencies and Capabilities

A firms core competencies and capabilities, can be (a)

process based (directly derived from transformation ac-

tivities); for a manufacturer such as Motorola these could

include the excellence of their production facilities; (b)

system or coordination based (across the entire opera-

tional system), as seen, for example, in Wal-Mart, with

fast replenishment of goods, vendor-managed inventory,

a broad variety of products, and the ability to customize

individual stores and product ranges and to modify and

develop new products quickly; (c) organization based

(across the entire organization), as, for example, Nord-

strom and Disneyland; and (d) network based (covering

the whole supply network), as in the case of FedEx and

McDonald’s.

Strategic Network Relationships

Strategic network relationships are the key relationships,

interconnections, and associations formed over time and

responsible for supplying inputs, whether services, prod-

ucts, components, or information. Clearly, decisions will

need to be made as to whether a particular input is likely