Supply Chain Strategy
A. Supply Chain Strategy
To fully appreciate the recommendation for a supply chain strategy, it is necessary to know something about them. There are numerous strategies one can use for supply chain: Keiretsu, vertical integration, and virtual companies. These Three are by no means the only strategies, but ones which may be considered.
First, the Keiretsu will be discussed. Keiretsu is a Japanese term to describe many companies that link together or around a central bank to do business. This link is often represented by each company owning a small portion of the other companies in the Keiretsu. The advantage for such an arrangement is less competition among all parts of the supply chain. If you own a portion of your suppliers, you are more apt to not have such an adversarial relationship (Keiretsu, 2009). The relationship is not limited to just the first level; each company may also be members of other Keiretsu organizations, creating multi-tiered networks. The advantage of having networks keeps costs lower because each business has a stake in the other businesses in the Keiretsu.
The disadvantage of trying to create a true Keiretsu in the United States is the capitalism system that has been in place for centuries. In Japan, codes of conduct are rigid and founded in tradition and honor. The Keiretsu is based in family business practices and American business is more ridged in rules because of mistrust. The Keiretsu concept is not wholly appreciated in the U.S. because the adversarial relationship between the manufacturer and supplier is deeply rooted and not easily dismissed. Without a product and no established suppliers or distributers, a Keiretsu is not a good choice at this time.
The second strategy is vertical integration. Vertical integration owns specific portions of the supply chain either in supply (backward) or after manufacturing (forward). The relationship is represented in figure one
Fig 1. Vertical Integration The figure shows in backward
To fully appreciate the recommendation for a supply chain strategy, it is necessary to know something about them. There are numerous strategies one can use for supply chain: Keiretsu, vertical integration, and virtual companies. These Three are by no means the only strategies, but ones which may be considered.
First, the Keiretsu will be discussed. Keiretsu is a Japanese term to describe many companies that link together or around a central bank to do business. This link is often represented by each company owning a small portion of the other companies in the Keiretsu. The advantage for such an arrangement is less competition among all parts of the supply chain. If you own a portion of your suppliers, you are more apt to not have such an adversarial relationship (Keiretsu, 2009). The relationship is not limited to just the first level; each company may also be members of other Keiretsu organizations, creating multi-tiered networks. The advantage of having networks keeps costs lower because each business has a stake in the other businesses in the Keiretsu.
The disadvantage of trying to create a true Keiretsu in the United States is the capitalism system that has been in place for centuries. In Japan, codes of conduct are rigid and founded in tradition and honor. The Keiretsu is based in family business practices and American business is more ridged in rules because of mistrust. The Keiretsu concept is not wholly appreciated in the U.S. because the adversarial relationship between the manufacturer and supplier is deeply rooted and not easily dismissed. Without a product and no established suppliers or distributers, a Keiretsu is not a good choice at this time.
The second strategy is vertical integration. Vertical integration owns specific portions of the supply chain either in supply (backward) or after manufacturing (forward). The relationship is represented in figure one
Fig 1. Vertical Integration The figure shows in backward
Cited: Keiretsu. (2009, October 16). The Economist. The Economist Newspaper Limited. Retrieved 12 22, 2012, from http://www.economist.com/node/14299720 Christopher, M. (2005). Supply Chain Risk - forgotten? Retrieved 12 29, 2012, from Husdal.com: http://www.husdal.com/2009/04/13/supply-chain-risk-the-forgotten-discipline/ TYPES OF SUPPLY CHAINS. (n.d.). Retrieved 12 27, 2012, from http://carl.sandiego.edu/itmg350/types_of_supply_chain.htm Vertical Integration. (n.d.). Retrieved 12 22, 2012, from QuickMBA.com: http://www.quickmba.com/strategy/vertical-integration/