The Internet Encyclopedia (Volume 3)

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CUSTOMIZINGSUPPLYNETWORKRELATIONSHIPS ASPART OF ANOPERATIONSSTRATEGY 407

Core Competencies &

Processes

Key Tactical Activities

Technologies

Strategic Network

Relationships

Actors

Strategic Network

Relationships

Technologies

Resources

Core Competencies &

Resources Key Processes

Tactical Activities

Linkages

Linkages

Actors

Figure 5: Generic composition of a supply network operations strategy.

to become or remain strategic (this is a fluid situation, re-

quiring constant review). It is clear that increasingly oper-

ational effectiveness will rely heavily on supply networks

and their key relationships. For many firms, this becomes

a strategic issue, as can be witnessed in Volkswagen’s Rio

de Janeiro plant, which employs 1,000 workers, only 800

of which work for Volkswagen. The rest represent such

suppliers as Rockwell, Cummins, and Remon—they ac-

tually perform the assembly work on behalf of individual

firms.

Resources

Clearly, resources vary by industry and firm, but generi-

cally, they can be considered on two levels: the individual

resources of the firm (capital equipment, skills, brands,

and so on), and the way the resources work together to

create competitive advantage. Given the individuality of a

resource-based strategy, we have to think of resources as

being (a) tangible (physical, technological, financial, etc.),

which is important for such producers as Sony and Lexus;

(b) intangible (communication and information systems,

reputation, culture, brands, and so on)—for investment

banks such as Merrill Lynch, reputation is critical; and (c)

human (specialized skills and knowledge, communication

and interaction, motivation and the like), as is important

to Southwest Airlines and the Ritz-Carlton hotel chain.

Technologies

In addition to being a resource used in the general

sense (equipment, etc.), technology also includes core

technological know-how in product and process innova-

tion across the whole organization and its supply network,

as, for example, for Compaq or Microsoft.

The Key Tactical Activities Vital for Supporting

a Particular Strategy or Positioning

Certain core tactical activities will be vital to sustaining

any particular supply network operations strategy or busi-

ness positioning. Taco Bell’s operations strategy has three

main objectives: quality food, good service, and clean en-

vironment. However, to deliver these, speed of service at

an operational level is equally important and has probably

the greatest impact on its revenues.

Actors

Actors range from individuals to groups of companies op-

erating at various levels of control within the network.

Daimler-Chrysler has one of the most advanced supply

network and outsourcing operations—their workforce

and management receive extensive training in these

aspects.

Linkages

Linkages are as important as the components. There

will be clear linkages and relationships between all the

elements in a supply network, and the degree of coordi-

nation and control in any particular instance will strongly

influence competitive performance. Linkages are usually

in the form of shared information and continuous com-

munication. Their importance can be witnessed in the op-

erational approach of a channel assembler, such as IBM,