The Internet Encyclopedia (Volume 3)

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402 SUPPLYNETWORKS:DEVELOPING ANDMAINTAININGRELATIONSHIPS ANDSTRATEGIES

so that the product can be tailored to her or his

requirements. It requires flexible production processes

and delivery capability. It is sometimes referred to as

“superficial customization.”

Agility and flexible operations: The agile producer aims

to provide highly customized products at a cost

comparable to mass production within short lead

times. The tailoring of products to demand includes

a higher element of service and, thus, greater added

value. A flexible workforce, structure, and production

technologies (especially through the use of computer-

integrated manufacturing) are all contained within a

learning culture. Externally, the concepts of vertical in-

tegration and long-term partnerships are replaced with

short-term, flexible contracts and horizontal outsourc-

ing, allowing rapid response through an expansive sys-

tem of communication networks.

Flexible specialization: This is rejection of “Fordism” and

mass production, satisfying a new demand pattern

moving toward individualization. It is a return to a

craft form of production, based upon the use of infor-

mation technology and customized, short-run manu-

facture, in a network of small firms operating in niche,

segmented markets.

Customized supply network operations strategies:Weare

now beginning to witness a new trend. Recent empir-

ical research (Lowson, 2001a) suggests that many or-

ganizations (retailers and manufacturers) are reacting

to the cluster of value scenario by adopting more than

one type of supply network operations strategy. These

strategies include the development and maintenance

of strong supply network relationships. This has three

major implications. First, just as a firm may take part

in more than one cluster of value, it will often also

use more than one supply network operations strat-

egy. Second, these strategies are customized to meet

the individual needs of each situation, for example a

particular customer or a main product group—an op-

erations strategy for each individual demand situation.

This simple yet powerful approach provides organiza-

tions with the ability to match and respond to the de-

mand complexity of the value stream using unique op-

erations strategies. Third, the operations strategies de-

ployed are intended as integrative relationship devices

in a supply network, and as such, they are broader in

scope than a functional strategy, such as that for manu-

facturing or production. We return to these issues later.

DEVELOPING AND MAINTAINING

SUPPLY NETWORK RELATIONSHIPS

Against this background of customized supply network

strategies, we can examine necessary relationships and

their development and maintenance. First, however, a few

misconceptions need to be addressed.

Genealogy and Definitions

The broad subject of supply networks, supply chain

management, demand chains, strategic purchasing and

supplier development, quick response, and so forth, has

been one of the most contentious areas of management

theory. There is a certain amount of confusion as to what

does and does not constitute a supply network or chain

and what their attendant operations strategies are. In-

deed, some commentators are of the opinion that a supply

strategy subsumes all these terms (Harland, Lamming, &

Cousins, 1999). Clarification is in order, and to do this we

propose a genealogy as an overall guide (see Table 1).

Table 1A Genealogy of Supply Network Operations Strategies and Approaches

Classification Description

Kingdom (the highest category of

taxonomic classification)

Organizational business strategies.

Division or phylum (a generic

group)

A generic model of a supply network operations strategy that is not any particular

identifiable type, but containing interrelated building blocks.

Class (a grouping of organisms) An identifiable type of supply network operations strategy (quick response,

efficient consumer response, etc.) demonstrated in a qualitative pattern of

organization. This will then be physically embodied in an individual and

quantifiable deployment (the structure) unique to each situation.

Subclass A narrower operations strategy used in a linear supply chain, value chain, or part

of the chain (logistics strategy for example).

Order (taxonomic rank constituting

a distinct group)

Strategic decisions about the various building blocks of a supply network

operations strategy (the order).

Genus (taxonomic grouping

containing several species)

Groups of building blocks (or species) form a particular operational or tactical

approach, such as supply chain management and logistics.

Species (individuals with common

characteristics—in practice the

species will be made up from

subspecies or elements)

Individual building blocks are the species: core competencies, capabilities and

processes; resources; technologies; and certain key tactical activities that are

vital to support a particular strategy or unique positioning. These building

blocks are grouped into a class of supply network operations strategy (a specific

instance) or described in the generic form (the phylum). They will also be used

at a more tactical level as a particular operational approach (the genus).