Case study 1- Managing Supply chain Relationship

1. Three examples of how strategic alliances are, they must concentrate not just on
maximizing their own profits, but on maximizing the success of all organizations in the
supply chain. Strategic priorities must consider other key alliance partners that contribute
value for the end customer. Tactical and operational plans should be continuously
shared and coordinated. Instead of encouraging companies to hold their information
close, trust-building processes promote the sharing of all forms of information possible
that will allow supply chain members to make better, aligned decisions. Whereas
traditional accounting, measurement, and reward systems tend to focus on individual
organizations, a unified set of supply chain performance metrics should be utilized as
well. Finally, instead of “pushing products” into the supply channel, thereby creating
excess inventories and inefficient use of resources, consultative sales processes and
“pull” systems should be utilized. When organizations in a supply chain seek these
goals, they may discover the need to re-design the entire structure of their supply chains.

2. In the early stage of supply chain development is the planning stage. In order to address
how the products and services will satisfy the expectations and necessities of the
customers, we must design a plan or strategy. At this point, the planning should primarily
focus on devising a potential revenue approach. Companies must develop a strategy to
manage all of the resources required for designing products and offering services. The
main focus of supply chain management is on planning and generating a set of
measurements. For example, organizations often eliminate suppliers or customers that
are unsuitable, because they lack the capabilities to serve the organization, or they are
not well aligned with the company, or they are simply not interested in developing a more
collaborative relationship. Then, organizations may concentrate on supply chain
members who are willing to contribute the time and effort required to create a strong
relationship. Besides, the firms may consider developing a special type of supply chain
relationship, strategic alliances with this supplier to share confidential information, invest
assets in joint projects, and pursue significant joint improvements. A strategic alliance is
a process wherein participants willingly modify basic business practices to reduce
 duplication and waste while facilitating improved performance, efficiency, and
effectiveness.

3. In creating new value systems, the companies must rethink how they view their
customers and suppliers. They must concentrate not just on maximizing their own
profits, but on maximizing the success of all organizations in the supply chain. Strategic
priorities must consider other key alliance partners that contribute value for the end
customer. Tactical and operational plans should be continuously shared and
coordinated. Instead of encouraging companies to hold their information close,
trust-building processes promote the sharing of all forms of information possible that will
allow supply chain members to make better, aligned decisions. Whereas traditional
accounting, measurement, and reward systems tend to focus on individual
organizations, a unified set of supply chain performance metrics should be utilized as
well. Finally, instead of “pushing products” into the supply channel, thereby creating
excess inventories and inefficient use of resources, consultative sales processes and
“pull” systems should be utilized. When organizations in a supply chain seek these
goals, they may discover the need to re-design the entire structure of their supply chains.

Case study 2 - Amazon

1. The advantages of selling books over the Internet are that Amazon uses the Internet to
attract customers by offering a huge resource of millions of books. For example, a large
physical bookstore, in contrast, carries fewer than 100,000 titles. Next, Amazon also
uses the Internet to customize service to the individual. Amazon's software allows it to
develop and maintain customer relations by recommending books based on customer
purchase history, sending reminders at holiday time, and permitting customers to review
and comment on books. New titles are quickly introduced and made available online,
whereas a brick-and-mortar bookstore chain must distribute and stock the titles prior to
sale. Then, Amazon takes advantage of other Internet attributes, online ordering and
24-hour-a-day, 7-day-a-week availability. To this Amazon adds delivery to the customer's
door. Lastly, Amazon uses e-commerce to lower inventory and facility costs, but
processing costs and transportation costs increase. For example, Amazon is able to
decrease inventories by consolidating them in a few locations. A bookstore chain, on the
other hand, must carry the title at every store. Amazon carries high-volume titles in
 inventory, but purchases low-volume titles from distributors in response to a customer
order. This also tends to lower costs because the distributor is aggregating
(consolidating) orders across bookstores in addition to Amazon.

2. Amazon’s costs are higher as compared to other online bookstores. It is because

Amazon uses e-commerce to lower inventory and facility costs, but processing costs and
transportation costs increase. Amazon is able to decrease inventories by consolidating
them in a few locations. A bookstore chain, on the other hand, must carry the title at
every store. Amazon carries high-volume titles in inventory, but purchases low-volume
titles from distributors in response to a customer order. This also tends to lower costs
because the distributor is aggregating (consolidating) orders across bookstores in
addition to Amazon.

3. Traditional bookstores have to gain from setting up an e-commerce side to complement

their retail stores because it does not require the retail infrastructure that a bookstore
chain has, e-commerce allows Amazon to reduce facility costs. Amazon did not have a
warehouse at first and had to buy all of its books from distributors. When demand was
minimal, the distributor was a more cost-effective option. However, as demand for
high-volume books expanded, Amazon developed its own warehouses. As a result,
Amazon's facility costs are increasing, although they are still lower than those of a
bookstore chain. Amazon, on the other hand, has higher order-processing costs than a
traditional bookstore. A consumer chooses the books in a bookstore, and only cashiers
are needed to take money. No cashiers are required at Amazon, but each order is picked
from a warehouse and prepared for delivery. For books that are received from
distributors, additional handling at Amazon adds to the cost of processing orders.
Amazon's distribution incurs higher transportation costs than a retail store. Local
bookstores do not have the cost of shipments to customers, as most customers take the
books with them at the time of the sale. Amazon, in contrast, incurs this cost which
represents a significant fraction of the cost of a book (as high as 100% on an
inexpensive book). As demand has grown, Amazon has opened six warehouses, with
more than 3 million square feet, in an effort to get close to the customer, decrease
transportation costs, and improve response time.