MG 211 Lecture Notes - Lecture 11: Drop Shipping, Vertical Integration, Keiretsu
Document Summary
Supply chain management (coordinate activities within the supply chain to maximize the supply chain"s competitive advantage and benefits to the ultimate consumer). Coordination of all supply chain activities, starting with raw materials and ending with a satisfied customer. Includes suppliers, manufacturers and/or service providers, distributors, wholesalers, retailers, and final consumer. Large portion of sales dollars spent on purchases. Supplier relationships increasingly integrated and long-term: improve innovation, speed design, and reduce costs. Outsourcing (obtaining products/services externally): transfer traditional internal activities and resources to outside vendors, efficiency in specialization, focus on core competencies. Supplier is responsible for technology, expertise, forecasting, cost, quality, and delivery. Buyers form longer-term relationships with fewer suppliers. Create value through economies of scale and learning curve improvements. Developing the ability to produce goods/services previously purchased. Integration may be forward (toward the consumer) or backward (toward suppliers). Can improve cost, quality, and inventory but requires capital, managerial skills, and demand. Risky in industries with rapid technological change.
