BBA-MBA Integrated Programme

Batch: 2016-21, Semester: VII

ADVANCED COURSE IN OPERATIONS MANAGEMENT

GROUP ASSIGNMNET - I

TOPIC: Supply chain management and Value and value chain

Submitted to: Prof. Diljeetkaur Makhija

Date of Submission: 20th October, 2019

Submitted by Group No. 10:

Name Roll No.

Harshul Kamani 167220
Krishna Menda 167229
Pranav Nair 167238
Purav Acharya 167241
Shubh Vagrecha 167254
Acknowledgment

We would like to take the opportunity to thank the Institute of Management, Nirma University for
giving us the platform to prepare this assignment where it helped us to expand our knowledge
regarding the subject and to understand the concepts about Operations Management and how a
company uses it in its daily life to improvise its productivity. We would like to extend deep sense
of gratitude to Prof. Diljeetkaur Makhija who guided us throughout the completion of our
assignment. We feel privileged to have the Institute of Management, Nirma University, library
resources.
ABOUT SUPPLY CHAIN AND VALUE CHAIN

Point of Value Chain Supply Chain

Difference

Meaning Value chain refers to the series of Supply chain refers to the steps
activities undertaken to add value undertaken to make the product reach
to the product, starting from the end users, ranging from the flow of
procurement of raw material, information and materials till the
production and manufacturing selling of the product.
process, till the product is ready to
be sold.

Objective Creating a competitive edge for Increasing customer satisfaction by

the company by adding value to effective manufacturing and
the product. transportation processes.

Concept/ Perspective The concept of value chain comes The concept of supply chain is derived
from a business management from operational management.
perspective.

Functions Value chain includes functions or Supply chain includes functions like
activities like inbound and product development, distribution and
outbound logistics, operations, finance.
marketing and services.

Sequence Customer Request - Value Chain Product Request - Supply Chain -

- Product Customer

1|Page
Figure 1: Value Chain Model

Figure 2: Supply Chain Model

2|Page
ANALYSIS

Case 1: Strategic Supply Chain Management Implementation: Case Study of IKEA

IKEA is one of the most famous furniture brands of the world. They are known for their products
with the best quality at an affordable price. IKEA has 27 trading service offices in 23 countries,
33 distribution centers and 15 Customer distribution centers in 17 countries and 43 industry
production units in 11 countries (Sandybayev, 2017). This creates a need for a robust supply chain
for IKEA with a variety of suppliers in various parts of the world who are willing to sell a product
which meet the standardization and quality requirements of the company.

IKEA serves in various parts of the world trying to fulfil separate consumer demands everywhere.
A majority of the company’s stores are located in the economically developed countries in Europe,
America, Asia, and the Middle East, and thereby focuses on operating in highly lucrative markets
(Sandybayev, 2017). To meet these requirements IKEA ties up with regional suppliers who meet
the region-specific demands of the company.

The core value of IKEA is Consumer Satisfaction by delivering a quality product to its customers.
Therefore, its supply chain has also been crafted accordingly with the value “Customer is King”.
They maintain this by obtaining a constant feedback from the customers, this feedback is obtained
through direct interaction with customers at the showroom, website and post delivery feedback.
This feedback helps reduce the inadequacies of the existing supply chain process thereby
increasing the efficiency of operations.

IKEA has a set of strategies which it uses as a part of its Supply Chain Management process. These
strategies have been formulated in such a way so as to promote efficiency and cost reduction to
the company while meeting the quality standards set by the company. To achieve this they follow
the SCOR Model for their supply chain management which aims to keep customer satisfaction at
the centre of Supply Chain Management Process. All the activities like Plan, Source, Deliver,
Return and Enable are crafted in a way that they promote consumer value.

The company sources raw materials from its suppliers. Having a large number of suppliers (i.e.
998) helps the company to create competition amongst its suppliers. This enables the company to
procure the raw materials at the lowest possible prices (Sandybayev, 2017). This means that the
company has a considerable amount of bargaining power towards the suppliers due to which
they’re able to control the price in the market which is leading towards their goal of cost cutting.

Also, by making the suppliers adhere to the IWAY code, the company ensures that the quality of
the materials conform to the appropriate standards (Sandybayev, 2017). IKEA always selected
companies which were conforming to the industrial quality standards which helped them maintain
quality standards thus leaving a satisfied customer.

In conclusion, it can be said that IKEA has managed to build a really efficient supply chain which
is quite efficient by cost reduction and maintenance of quality standards. This will help promote
stakeholder value of the firm and also help reducing operational costs like Holding cost and
Setup Cost.

3|Page
Case 2: Just Do It: How Nike Turned a Supply Chain Crisis into Opportunity

For almost 15 years Nike was tainted as a company under which factories didn’t follow any labour
laws and there were reports of inhuman practices going on in the factories run under its name.
This had started to turn out as a problem for the company as it was affecting the goodwill of the
company and the corporate governance of the company was starting to be questioned. This had
started to negatively impact the sales of the company.

In the early 1990s Nike executives began to see reports of abusive labour conditions in their
supplier factories as a risk to their brand image. Nike’s traditional line denying responsibility for
conditions in these factories no longer satisfied a growing number of customers. On top of that,
media images of children sewing Nike soccer balls and running shoes sent social activists,
academics and journalists into a costly anti-Nike campaign (Tobah, 2012). This was seen as supply
chain problem because Nike didn’t own any of the factories that produced its goods it still managed
to affect the goodwill of the company. Nike had to do something very soon as its brand’s image
was starting to get destroyed.

This also portrayed that Nike had a little degree of control over its suppliers which meant that they
had no standardized procedures maintained for all their suppliers. This made Nike’s customers
question the product it was selling, thus reducing their brand loyalty towards their company.

To overcome this Nike decided to take up a variety of steps which were Conduct a basic audit,
Create a corporate responsibility and compliance division, Assign field managers, Establish a
global database, Initiate external expert review. All of these steps were focused on increasing the
transparency of the company thereby working towards making the brand image better.

Nike introduced an internal monitoring system called SHAPE which monitored if the code of
conduct was satisfied or not. If not the factories would undergo a physical audit by professionals.
The new corporate responsibility brought sustainability and compliance in the employees. Field
managers were assigned to various regions who were responsible to ensure compliance to labor
laws and the code developed by the company.

This step benefited Nike in a variety of ways where it not only helped improve the corporate
governance but also became a marketing opportunity where Nike could portray its transparent
practices to the world. Transparent practices also help instill standardization in these factories
which meant giving a quality product to its customers. When in 2015 Nike launched the list of all
its factories, its brand image improved and also forced all its competitors to do the same.

4|Page
Case 3: Starbucks: A Strategic Change and Management Perspective

Starbucks is one of the largest coffee chain franchise in the world where it is operated on a huge
scale. It was once opened with a single store in Seattle and now it various stores where all it
happened with their implementation of the value chain model. The concept of the Value Chain
Model was mentioned in the book of Michael Porter where the main purpose of the value chain is
to add a centric value to the product during its manufacturing process so that the customers feel
satisfied after using it. When more value is added to the product, more value is experienced by the
customers which therefore helps to create brand loyalty and brand management which in the end
results into the better competitive edge. The primary activities and secondary activities are the two
types of the business activities.

Under Primary activities, it includes inbound logistics, operations, outbound logistics,

marketing and sales and service. For the inbound logistics, the main aim is to select the best
produced coffee beans of the finest quality which are produced in Latin America, Asia and Africa.
From the Starbucks buyers, the green and unroasted beans are directly procured. After all the beans
been collected they are sent to the distribution centers where most of them are company owned
and the rest by the logistics firms. There is the reason why Starbucks does not outsource any of it
coffee selection process as it has to ensure its own high quality coffee beans for the value to be
added. For operations, it is present in 65+ countries as direct stores and licensed stores. The
company has 21,000 stores which includes Starbucks Coffee, Teavana, Seattle’s best coffee and
evolution fresh retail. As per the annual report 2013, the company earned 79% of the revenue from
the company operated stores than 9% from the licensed stores. For outbound logistics, the is no
presence of intermediaries due to the different business model of the company. The company has
come up with single origin coffees which are sold in the biggest retailers of the U.S.A which are
Guatemala Laguna de Ayarza, Rwanda Rift Valley and Timor Mount Ramelau. For Marketing
and Sales, their marketing is not aggressive as their main aim is to invest more in superior products
and customer valuation by adding value to the products. During the launch of the new products,
the company performs sampling in certain selected areas to carry on with the marketing activities.
For Service, the customer service at the stores is high as compared with the other famous chains.
The staff is expected to remember their frequent customers with first name and they are also trained
at various quality services. The staff also writes the name of the customers on the cups as well.

Under Support activities, it includes infrastructure, human resource management,

technology development, procurement and bottom line. For infrastructure, it includes various
departmental functions such as Management, Legal, Finance, etc. which are essential to keep the
company operational and for the better goodwill of the company. The stores are well furnished
and well designed with pleasing attractions along with dedicated working staff wearing signature
green aprons. For Human Resource Management, for the positive growth and success of the
company in all these years is due to the dedicated workforce which is the key element of the
Starbucks. The employees are provided with benefits and incentives which boosts their motivation
along with various training schedules to understand the work culture and diversity. The turnover
of employees in Starbucks is low as the company always takes care of its employees regularly and
that the reason the value added in the products is the same everywhere. For Technology
Development, the company always uses high end technology equipments to produce its coffee,
shakes and other menu items which add a great value to its products. The stores also provide free
WiFi to its customers for which many meetings take place over here so that socializing also takes

5|Page
place along with coffee. The company takes frequent feedback from its customers both online and
offline. For procurement, adding the best values to the final product is done by procuring the best
raw material at the beginning. The company’s agents travel worldwide in search of the best coffee
beans available. There is a quite unique strategic relationship with the supplier from the company’s
agents which is formed by certain agreements to sure smoother transfer of messages. For Bottom
Line, the company always ensures that there is minimum wastage with more outputs to be
produced and that with better value-added items.

6|Page
Case 4: Nintendo’s broken Supply Chain by Mark Leahey

Nintendo is one of the top three gaming companies which manufactures both games and hardware
for its users. During the new launch of the Nintendo Switch, the product became an instant hit
where later the product got out of stock at most of its retailers. Nintendo mentioned that it was an
error from their side as their supply chain ecosystem was not well integrated and they were in
supply shortage. In the year 2016, Nintendo released the NES (Nintendo Entertainment System)
Classic Mini which is the revised version of the old NES which was launched in the year 1985.
This product also become an instant hit where Nintendo could not predict about the sales and had
to discontinue it in 2017 as Nintendo was not able to forecast the demand and supply for the
consumers properly. Due to such problems of shortfall of products and incorrect forecasts, it will
be difficult for Nintendo to compete against Sony’s PlayStation and Microsoft’s Xbox and
therefore it will end up in low sales and customer satisfaction. Therefore they do need to come up
to digitalize their supply chain. Their major supplier is Alps Electric who provides parts for
Nintendo Switch components where they are not able to fulfil Nintendo’s demand for the
immediate request of the parts and therefore this is creating a bottleneck for Nintendo. This is also
happening as the company is competing against Toshiba and Apple for the manufacturing parts.
Toshiba has higher demand due to flash drives where Nintendo fails for the transparency on
orders and therefore there is inefficient turnaround from suppliers.

During the launch of the Nintendo Wii U in the year 2012, the product failed and the supply
was huge where the demand grew less. Due the data collection of such product, it led to the same
statistics for the new products as well but the new products performed better and therefore the
demand grew and Nintendo was not able to cope up with it. Nintendo is trying to improve on their
forecasting of demand, data collection and relationships with suppliers. For short term goal,
Nintendo must come up with digital supply chain where if they sense customer demand shifts,
the Managers in the company can share the data with the suppliers to reduce the bottleneck and
there will be a proper flow of communication between the parties to have a competitive edge. For
medium term goal, the company should focus on demand prediction and poor supply where they
must opt for predictive analytics in demand planning where the forecasting error can be reduced
by 30-60% as this method helps the company to understand the trend on social media and can take
up to 2 years and they can improve with the help of this data analytics.

Nintendo has always been a successful company in terms of providing high quality games and
consoles to all age groups but it only lacks in distribution channel. The value addition to its
products which are the games and consoles have always been high and therefore there has always
been high customer satisfaction value in terms of service and brand management. Nintendo must
plan according when the parts are to be brought from its suppliers and for this the company can
opt for Just in Time (JIT) technique where the company can order the stock as per the
requirements by the forecast of supply and demand and with the help of this technique there can’t
be any shortage of raw materials and the manufacturing of the products can be done in a smoother
process. The other technique that the company can opt is ABC Analysis where the company can
categorise its inventory as per the consumption value and quantity of the materials and it is based
on the Pareto’s principle i.e. the 80-20 rule. A class items have the largest consumption value and
the C class items have the lowest consumption value. With the use of any of these techniques, the
company can improvise with its supply chain management to outperform other competitors and be
the leader in the video game industry.

7|Page
Case 5: The Supply Chain Economy by Mercedes Delgado and Karen G. Mills

An industry such as breakfast cereals, for example, sells more than 90 percent of its output to
households; semiconductors and cloud computing sell almost 100 percent to businesses. “When
those inputs go into other industries, it can transform them and generate more innovation,” says
Delgado. “It can have a multiplying effect.”

Once they categorized industries this way, it became clear that manufacturers that sell directly to
consumers are not creating the best jobs. Supply chain industries comprise 43 percent of jobs
nationwide, and their average wages are 70 percent higher than those in B2C industries: $65,800
versus $38,800.

In fact, the highest paying jobs are not in companies that are making parts, but in those providing
supply chain traded services, where average wages are $83,500. That fact is ordinarily obscured
because service suppliers are usually lumped in with direct-to-consumer or “Main Street” services
(think retail and restaurants), which have the lowest average wages, $29,400.

“We find that the supply chain economy is a distinct and large segment of the economy, and
includes manufacturers and primarily service providers,” according to the paper. Mills adds, “We
feel we have contributed a new insight and perspective about lots of good jobs that are being
created in important industries that are hidden from view.”

Implications for policymakers

The findings have many implications for policymakers, the researchers say.

Since the supply chain service category also has the highest percentage of STEM workers, these
results argue for increased investment in training in those skills—and perhaps increasing high-
skilled immigration as well. “If we want to continue to grow our economy and become innovative
and spur creativity, we need to make sure we have the inputs, including the workforce,” says Mills.

The findings also argue for policies that encourage clustering of supplier companies and buyers to
magnify innovation, and creating more access to capital for suppliers. “When we talk to
companies, we talk about partnering with suppliers, rather than squeezing every last dime out of
them,” she says. “Being sure that suppliers have access to the workers and the capital they need is
good for everyone.”

In ongoing research, Delgado and Mills are extending their analysis to other countries, many of
which have similar input-output tables that can gauge the importance of their supply chain
economies.

For now, however, it seems that the United States is a leader in this area—benefiting from being a
country that produces innovative service inputs for businesses that produce final goods and
services. Recognizing and building upon the importance of the supply chain economy will be a
good way to keep America a leader in growth and innovation.

8|Page
Business researchers have discovered an important part of the US economy, but are covered by
traditional innovation policies, but they represent tens of millions of jobs and produce goods for
the United States. And the ability to serve is critical.

The study is rethinking the so-called supply chain of scholars and practitioners – a loose alliance
of individual suppliers that provide goods and services to businesses and create products for
consumers and businesses. But a deeper understanding reveals an important "supply chain
economy."

“The supply chain industry is an important part of the economy,” the researchers said. In 2015,
they created more than 53 million jobs, accounting for 43% of US jobs.

Harvard Business School researcher Karen Mills said: "We think this is a new achievement, a new
way of categorizing the economy, which identifies the unique role of the supplier and seems to
encourage innovation and good The policy of work has had an impact."

For example, the study challenges the focus of revitalizing manufacturing as the primary means of
economic reconstruction in the United States. Since 2000, due to the roller coaster landing,
domestic manufacturing jobs have been reduced by 30%, or 5 million jobs, mainly due to
competition in the field of import and automation. The department still has about 12 million jobs.

“We think this is a breakthrough – a new way of categorizing the economy...”

For many politicians and policy makers, the best way is to rebuild the country's production
capacity, especially the final product. New supply chain research suggests that a broader view is
that innovation and high-paying jobs can also come from service providers.

How does the supply chain work?

When Mills served as the US small business manager at the Obama White House, she noticed a
secret national treasure: a prosperous supply chain of parts and services, made up of innovative,
large and small companies across the country. However, no one seems to know all the industries
in the sector or how many jobs are included.

Mercedes Delgado used a unique approach to visualize and save the supply chain using US Census
data. Their worksheet was released in December, a new classification of the US economy: the role
of the supply chain industry in innovation and economic performance (pdf).

They found that the supply chain is an important part of the US economy and the source of the
highest-paying jobs. Moreover, most of these jobs are not about providing spare parts, but rather
providing services such as engineering, computer programming and design.

Their findings provide a new way to break the traditional US manufacturing service gap, rather
than focusing on the hidden role of the supply chain economy in promoting innovation and
employment.

9|Page
Case 6: Walmart’s Successful Supply chain Management Practices

“According to Supply Chain Digest, this global retail giant operates more than 11,700 stores under
59 company names, with 2.3 million employees in 28 countries around the world while managing
an average of $32 billion in inventory.” (Lu, 2018) The key principle and agenda of Walmart is to
cut costs from the Supply Chain and enable consumers to save their money and live better lives.

Walmart has become the leading giant in the industry and has managed to increase the inventory
turnover and operating profit than any other retail store from its effective supply chain
management.

How supply chain of Walmart contributed in its success:

Walmart has kept very few links in its supply chain right from the start of the company in 1962,
when Sam Walton, Founder purchased goods in bulk and transported directly to the Walmart stores
thus avoiding more channels in the supply chain. Walmart has now adapted a new technique called
Vendor Managed Inventory (VMI), in these techniques all the manufactures are the sole
suppliers of Walmart and manages the supply in the Walmart warehouses. From this technique
Walmart has managed to reduce the costs from its supply chain and has managed to become the
retailer of the decade. Walmart has reduced the supply costs to just 1.7% of its sales.

Walmart being the largest retailer in the industry has partnered with strategically with its suppliers
and managing to get the lowest costs from their suppliers and in return Walmart offers them high-
volume purchases.

Cross-Docking a practice which is the core reason behind Walmart’s reduced transportation costs,
less delivery time and helps eliminate efficiencies. Cross-docking means direct transfer of goods
from the trucks sent by the manufactures to the trucks of Walmart by eliminating the need of
storage facilities by transferring materials directly to the delivery trucks.

Walmart has invested in advanced inventory technology, with its best in class inventory
management technology and network design that allows Walmart to forecast demand, helps in
keeping a track of inventory levels, developing efficient transport routes, manages customer
relationships and service response logistics. Walmart is also currently using RFID technology
which scans pallets moving in the supply chain from large distance using numeric codes.

Other than this Walmart has also adapted a new system called top-stocks in which back room
space is freed and top shelves are utilized for more storage. This system allows both the customers
and the staff getting more visibility and helps them in tracking the products that they don’t see on
the shelf.

Walmart’s supply chain management techniques has given the company several competitive
advantages such as lowest inventory costs, lowest product costs, dominant customer base and
improved in-store variety and selection.

10 | P a g e
Case 7: Is Apple Supply Chain Really the No. 1?

The supply chain management at Apple Inc. is one of the best examples of the supply chain
management. The supply chain model of apple is as follows: Apple Inc. does the sourcing of the
basic raw materials and other manufacturing components from China, Europe, United States
and some other Asian countries. Next, comes the manufacturing process and Apple being a
company which has its head quarter in California, United States does all the manufacturing process
in China. All the apple products are assembled in China and by using the immediate warehousing
facility provided by FedEx and other shipment providers. Apple has its warehouse facility in Elk
Grove, California where the manufactured products from China are shipped and stored. The
immediate warehousing facility of Apple gives the company an advantage of making its product
reach all over the world. FedEx and other service providers directly ship the products to the
consumers who buy products from Apple online store. The products are stored at Apple’s
warehouse in California and shipped all over the world to the retailers and wholesalers from there.

R&D – the research and development process of the supply chain planning is the best example of
New Product Development process. The R&D process begins from acquiring 3rd party suppliers
and manufacturers for apple and also licensing of the new patents for the upcoming products.

Tim Cook, after Steve Jobs rejoined the company, he joined Apple in 1998 and helped transform
Apple's messy business into a successful global supply chain. He became Chief Operating Officer
in 2005 and was appointed CEO in 2011 through Jobs. Cook is a world-renowned supply chain
expert known for facilitating Apple's supply chain and building the world's powerful supply chain.

Over the years, Apple's $ 741.8 billion has become "the most valuable brand in the world" from
the humble beginnings of Steve Jobs' garage assembly. Last year alone, Apple earned $ 10.7 billion
in led coke. Apple's recent success is largely due to outsourcing manufacturing and simplifying
the supply chain by helping companies reduce inventory levels.

Success Factors of Apple’s Supply Chain:

1. Focus on developing products with breakthrough innovations

2. The product provided is no seasonal product and has been in existence for more than 12
months.
3. Reduce the number of warehouses in a central location in California
4. Synchronize data between the central warehouse and its own stores and customers,
making operations more efficient and cost-effective.
5. Outsource manufacturing, thus shortening the manufacturing cycle
6. Reduce the number of major suppliers involved in manufacturing, transport and storage
7. Ask for a price reduction and a supplier to go around the Apple Factory.
8. Reduce the number of skis to at least 26,000 to facilitate and assist more accurate demand
forecasts.

11 | P a g e
Although Apple's challenge to supply chain responsibility is not unique to Apple, the company's
record profits and huge brand value make it an easy target. Despite Apple's supply chain
challenges, the company is still a global leader in supply chain management. Key factors for
success include: keeping customers first, streamlining high inventory management processes,
outsourcing manufacturing, and adapting to customer needs through the continued development
of their supply chain.

12 | P a g e
Case 8: Supply Chain Management Concepts by Aziz Muysinaliyev and Sherzod Aktamov

One of the interesting results of the results obtained through data analysis is that supplier
management practices have an impact on the effectiveness of supply chain performance. Supplier
management is one of the factors that affect the overall cost of supply chain management, so
suppliers can help reduce costs and thereby contribute to performance through effectiveness.
Research on supply chain practices in automotive and manufacturing found that there is an
important relationship between supplier and manufacturer priorities and competitive practices. In
addition, other findings indicate that integration has an impact on the effectiveness of the supply
chain. In recent years, the importance of mergers of suppliers, manufacturers and customers has
grown. Effective integration of suppliers into the supply chain is a key factor in the competitive
advantage of certain companies. Companies are uncertain or suspect that information will be used
unfairly to their advantage and may lead to divergent interests and opportunistic behavior of supply
chain partners. This difference in information can have a potentially negative impact on supply
chain performance.

Research pointed out that if information cannot be effectively exchanged with supply chain
partners, and this may not help improve supply chain performance through effectiveness, it will
involve high transaction costs. In addition, sometimes high integration between organizations may
reduce their ability and willingness to make rapid changes in business relationships, which may
reduce the impact of integration on the effectiveness of the supply chain, so CRM does not have
any impact on the organization. Supply chain effectiveness, customer management may not have
a direct impact on the effectiveness of the supply chain, because the complexity of supply chain
implementation (supply chain) can only be achieved through several elements: for example, supply
chain operations, supply chain network structure, management components. These factors may
influence the effectiveness of supply chain performance through customer management practices,
which in turn affects the overall effectiveness of supply chain performance. This study provides
an empirical basis for the framework, which outlines five structures for supply chain management
practices and describes the relationship between SCMP and supply chain performance
effectiveness in the context of the Sudanese industrial sector. Most previous studies that supported
the importance of SCMP were used and linked SCMP to organizational performance, not SCP.

The main contribution of this research is to develop the dimensions of SCMP through a
comprehensive perspective to study its impact on SCP. According to survey data from 110
manufacturers, the weight of the study is higher due to the limited quantitative methods available
in the existing literature, especially for general purposes. In general, effective SCMP is important
to the SCP. The limitation of this study is that each company can only use one respondent. In
addition, this study relies on a simultaneous survey conducted by the manufacturing sector.

Therefore, future research should seek to collect data from multiple members of the entire supply
chain, including semi-structured interviews. Future research should also develop dimensions of
supply chain management practices and focus on assessing the new dimensions of supply chain
performance effectiveness and future scope, preferably focusing on factors that influence supply
chain effectiveness.

13 | P a g e
This study raises many administrative implications. First, it provides SCM managers with the
appropriate formula for assessing the effectiveness of supply chain performance and developing
new dimensions of supply chain management practices. Second, the results also show that supply
chain management practices may directly affect the effectiveness of supply chain performance. In
the long run, the success of Sudanese industrial companies may depend to a large extent on their
supply chain practices, and finally the research is scientists. Provide a theoretical contribution to
the new approach.

14 | P a g e
COMPANIES THAT USE VALUE CHAIN AND SUPPLY CHAIN MODEL OPTIMALLY

AMAZON

Amazon is one of the largest e-commerce websites in the world. It is a market leader in this
segment in the majority of the countries it functions in. To achieve this it has to add value to the
company as well as the end customers. There are a variety of activities which add value to the
company and are illustrated in the figure below.

The primary activities are at the core of Amazon and add the most value to it. These activities are
at the crux of Amazons operations and the company cannot function without it.

• Inbound Logistics: Amazon does not have a lot of inbound logistics but it does have a
function called Fulfilment by Amazon where it stores the supplier’s product, packages it
and then ships it to its end consumer freeing the suppliers from all this hardship.

• Operations: Amazon is an American company that operates internationally. Therefore, its

operations have been classified into three parts namely North America where it started,
International as its operations are now international and Amazon Web Services (AWS)
as it provides services like pay-as-you-go cloud storage, compute resources, networking
and computing services. AWS is one of the segments which is not very known amongst
general public but it contributes to a large chunk of revenues for Amazon.
• Outbound Logistics: Amazon has always been dependent upon logistics services like UPS
and Fedex bit now it has decided to start its own logistics where it aims to lease 20 Boeing
767. This will lead to a massive increase in efficiency of the organization but also would
increase the financial burden on the company. Its outbound logistics is also divided
amongst three different processes namely Fulfilment centres where company uses robotic
technology in an extensive manner to manage receipt, stowing, picking, and shipment of
products, Digital delivery which pertains to products and services that can be downloaded
from Amazon website and Physical stores where it sells perishable products.
• Marketing and Sales: The main focus of this department at Amazon is to ensure that the
largest selection of products and services, attractive prices, fast delivery of products and
overall superior customer services.
• Service: Amazon is a market leader because it is able to satisfy a consumer want
efficiently. This is because of how easily and quickly services are provided to the customers

15 | P a g e
 be it the buying process, return process or the exchange process. All of these processes
have been devised in such a way that the consumer faces no problems.

INTEL

Intel embraces artificial intelligence — the foundation for what it calls "cognitive computing "—
to manage its global supplier army. Intel's supply chain's very essence is undergoing a profound
change, guided by new processes and innovations such as industrial processing and autonomous
vehicles. At the same time, the $63 billion business has to cope with rising volumes, increasing
complexity, mergers and acquisitions effect, and an ensuing data flood.

Cognitive computing is expected to address all facets of supply chain management, including the
Supply Chain Operations Reference (SCOR) model's Plan-Source-Make-Deliver-Return format.
But it hopes to create special value in the sourcing environment, which has been governed by a
mixture of limited data and human instinct up to now.

Intel aims to raise its supplier intelligence level by setting three primary objectives: enabling
product managers to make appropriate sourcing decisions, efficiently tracking selected suppliers,
and continuously improving those decisions.

Once a supplier has been chosen, Intel will track it on an ongoing basis, with the ability to detect
operational chaos, financial instability and intentions to buy another supplier. Again, everything
depends on the quantity, accessibility and reliability of information. Managers of sourcing and
procurement should rely on information from both inside and outside the business, including
analysis, news reports and social media. Much of this information is unstructured and not easily
given to assessment.

Intel is able to collect all available data from any source and assimilate it into a single body of
knowledge with the aid of cognitive computing. The natural language features of the program help
to extract vital information from unstructured text. Use of A.I. proprietary. The software known as
Saffron allows the company to link previously undetected raw data obtained from different
sources.

New vendors are scored on several factors, including unique competences, job positions and
regional presence. In a sequence of bar graphs, the cognitive machine engine classifies the
applicants.

The system also generates a digital map that reduces the need for managers to conduct extensive
research into the capabilities of each supplier. In this way, the customer has access to more relevant
information, can guide quota claims to the most competent suppliers, gains more negotiating
leverage if more than one supplier is considered and speeds up the whole decision-making process.

16 | P a g e
DOMINOS

Domino pizza is very popular in India. Again, the challenge is that they will offer the app for free
after 30 minutes of booking. This means they must close the app within 30 minutes. How many
achievements have they made? The following observations were made by Rummana Shaikh in a
case study.

A. Reduce duplication of processes such as raw material procurement and processing.

B. They have chosen a special crop from every region of the country and can therefore buy
it at the lowest price.

C. They have refrigerated trucks that can hold materials such as cheese.

D. According to the traffic density, the ports are divided into four types. It is therefore easy
to supply according to the classification. Modern strategy in supply chain management

Given the different challenges faced by SCM discussed earlier, organizations have developed
different strategies to address the situation. Let's take a quick look at the modern technology in
SCM.

Integrated supply chain management

The modern design of supply chain management spans the boundaries of the organization and
establishes direct links between company communications and information. ISCM firmly supports
organizational affairs by developing mutually beneficial policies and procedures. It avoids many
problems, such as the lack of appropriate communication systems and inter-departmental policies.

Digital supply chain

Digital technology disrupts traditional practices in various fields. They also have a major impact
on supply chain management. Digital technology at work and continuous improvement in
performance can help improve business performance. To convert from a traditional method to a
digital method, the following factors must be considered.

A. Modify the SCM technology.

B. Develop a Digital Provisioning Network (DSN).

C. Quickly connect all stakeholders, including customers, to the DSN.

D. Develop new markets.

E. Use the appropriate software

Here are some of the IT giants in DSN development, such as Accenture and Capgemini.

17 | P a g e
Sustainable Supply Chain Strategy

This particular technology was developed to address the changing environment in the field of
supply chain management. JIT (timely), reduced transit time, and environmentally friendly
products have enabled many organizations to view the sustainability of their supply chains as a
new way to measure profitability. In 2008, the future laboratory developed Level 3 sustainability.
As described below.

A. Get basic rights: In this very simple strategy (such as switching lights, personal computers),
there is no need to make a decision to reduce daily carbon emissions.

B. Learning sustainable thinking: The company's supply chain operations should be evaluated on
an environmental basis

C. Sustainability Science: Auditing and metrics are critical to supply chain operations. It provides
the accuracy and clarity of the environmental impact of supply chain operations. Green processes
in the supply chain are maximized to reduce costs in environmental conditions.

18 | P a g e
REFERENCES:

• Sandybayev, A. (2017). Strategic Supply Chain Management Implementation: Case Study

of IKEA . Noble International Journal of Business and Management Research.
• Tobah, B. (2012). Just Do It: How Nike Turned a Supply Chain Crisis into Opportunity.
Network for Business Sustainability.
• Lu, C. (2018). Walmart's successful supply chain management.

• Aziz, M. and Sherzod, A. (2014) Supply chain management concepts: literature review.
IOSR Journal of Business and Management (IOSR-JBM)
• Mercedes, D. and Karen, M. (2018) The Supply Chain Economy: A New Framework for
Understanding Innovation and Services. Harvard business School Publication
• [Link]
[Link]
• [Link]
• [Link]
• [Link]
• [Link]
• [Link]
supply-chain/#
• [Link]
[Link]
• [Link]
ahead-of-holidays-1503835201
• [Link]
• [Link]
• [Link]
l_Corporation
• [Link]

19 | P a g e