Differentiating Between Supply Networks and Supply Chains

The supply networks are inhibited within the larger organizational networks, where they interconnect with other entities. Their primary objective is the procurement, use and resources transformation into goods and services. The supply networks enable products and services flow from the original resources of supply to the end user. They are described to be more complex than the supply chains; they involve sub-links, reverse loops, mutual exchange, resource acquisition, development and transformation (Kim et al., 2011).

The following section highlights the research questions, the research problem, then it provides a critical analysis of the literature review.

The research questions could be stated as follows:

• What are the required processes of opportunity exploitation to developing supply networks?
• Do suppliers have enough flexibility to respond to changes in the environment?
• Should new products and services be developed within the current internal network? Or should it be extended to become a global supply network?
• What are the required distribution networks to meet the customers’ needs?
• How can organizations establish and manage competitive developed supply networks in local and global markets?

Organizational purchases contribute to its large expenditure and its strategic decisions, the matter that requires devoting special effort to effectively managing it. Organizations rely on the supply side to survive, the organizational activities utilize the resources to be able to perform certain activities by different players within the supply network. But there is not any organization that can individually manage and control all of the resources, it has to interconnect with other organizations (Braziotis et. al, 2013). The highly important factor is that the supply side represents the main source of development for every organization. Organizational development should consider the external environment by seeking opportunities, responding to the market conditions and the customer needs. The supply network development leads to the maximization of the benefits that results from the interdependence between the organization and the industrial networks. These benefits are called the economies of scale and scope, economies of innovation and economies of integration (Najafi, 2018; Mazzola, Bruccoleri, & Perrone, 2015). Accordingly, the research problem is to analyze the organizational ability to optimize its benefits by performing certain activities within the supply network.

Supply networks

The conceptual model for supply networks creation and operation involves nine various types of networking activities represented in, integrating resources, partner selection, capturing knowledge, processing information, social coordination, sharing benefit and risk, making decisions, motivation and conflict resolution. The mentioned activities involve 4 variables of the market environment, network structure, product and process and the organization’s network (Kim et al., 2011).

According to Holmen et al. (2007), as cited in Najafi (2018), the management of supply network involves the role of the focal organization in connecting the different suppliers within the larger supply network. The relationships among the supply networks are dynamic and evolve over time and change. They result in changing the mechanisms of relations across the network, including the activities, key players and resources. Every development results in particular consequences for every individual firm involved in the supply network. The changes that happen to an organization’s relationships have to be aligned with the rest of organizations in the same network. This is considered a strategic issue that maintains the balance in relationships among organizations due to their high and critical interdependency. In fact, no single organization could lead the network, although, all of the organizations should guide the resource combination and coordination to influence each other. Along the network, all of the organizations act together in harmony to develop the actors involved in the network (Li & Nagurney, 2015).

New product development

Optimizing Benefits Within the Supply Network

Hamburger & Shipley (2017) argue that innovation takes a high priority across different industries. Innovation represents a challenge for organizations to develop over the time and introduces innovative products and services that satisfy customer needs. The newly developed products lead the market success, according to the stage-gate model that represents the most common approach of new product development. It is mainly designed to assure that the new product is developed according to the market needs, risk and resources within each stage before evolving to the next stage. The leading organization within the supply network focuses on the optimization of the process through incorporating the latest IT development to improve the process at each stage of the process model.

The developed supply network

Yin (2003), as cited in Lorentz & Ghauri (2010), developed the logic model for the developed supply network that represents an extension to the industrial network theory, the organization internationalization, development of opportunities in business networks and the multidisciplinary supply chain management domains. The paradigm of industrial network analysis the relationships and connections among the activities, organizations and resources and how the organization can gain a competitive position within the network. The organization’s strategic action influences its position within the business network relationships to become more influential. Opportunity development is very important because it allows organizations to exploit new discoveries that add value to their market position. Uncertainty significantly impacts the opportunity process of developing supply networks. The main factors of uncertainty are the manufacturing processes, performance of the supplier and the consumer demand. Although, the interrelationships and cooperation between organizations in the supply network are likely to reduce the uncertainty level.

The competitiveness of each individual organization within the supply network develops according to their market participation, which means that the increasing market share results in increased competitiveness. According to Lovreta, Milosevic, & Stankovic (2013), the zero-sum game of the interactive movements within the supply network result in decreasing market share of the other competitors.  

Global supply networks management as an instrument to mature

The global development of the supply network could be based mainly on new logistic ways, through which the profits increase and products and services are developed according to the market needs. The export opportunity is a function of the organization development and growth rate and its dependency level on innovation and technology. The expansion of the distribution network in the foreign markets paves the way for establishing distribution centers. The global supply networks enable organizations to create core competencies represented in quality, timely delivery, flexibility and networks integration that facilitate cost reduction, integration of the major business functions and added value (Zhuravlev & Haasis, 2016).

The role of flexibility in supply network development

Conceptual Model for Supply Networks Creation and Operation

Gaining a competitive advantage within the supply network development requires speed and high response to the external environment. The lean and agile manufacturing allow organization flexibility and ability to respond to the environmental uncertainty in the required time. Flexibility allows the organization to adapt its system according to the required behavior and facilitates changing from a state to another, usually revealed in terms of time and cost. Based on these arguments, flexibility of supply networks comprises two major types of flexibility; the vendor flexibility, which represent the individual supplier degree of flexibility and the sourcing flexibility, which represent the system’s ability to reconfigure the supply chain network through the process of vendor selection (Purvis, Gosling, & Naim, 2014).

Conclusions

Organizations rely on the supply side to survive, although there is not any organization that can individually manage and control all of the resources, it has to interconnect with other organizations. Along the network, all of the organizations act together in harmony to develop the actors involved in the network. The leading organization within the supply network focuses on the optimization of the process through incorporating the latest IT development to improve the process at each stage of the process model. The competitiveness of each individual organization within the supply network develops according to their market participation.

References

Braziotis, C., Bourlakis, M., Rogers, H., & Tannock, J. (2013). Supply chains and supply networks: distinctions and overlaps. Supply Chain Management: An International Journal, 18(6), 644-652.

Hamburger, H., & Shipley, J. (2017, May 22). How the supply chain can help improve new product development success. Retrieved from Supply & Demand Chain Executive: https://www.sdcexec.com/sourcing-procurement/article/12336811/how-the-supply-chain-can-help-improve-new-product-development-success

Kim, Y., Choi, Y., Yan, T., & Dooley, K. (2011). Structural investigation of supply networks: A social network analysis approach. Journal of Operations Management, 29(3), 194-211.

Li, D., & Nagurney, A. (2015). A general multitiered supply chain network model of quality competition with suppliers. Int. J. Production Economics, 170, 336–356.

Lorentz, H., & Ghauri, P. (2010). Demand-supply network opportunity development processes in emerging markets: Positioning for strategy realization in Russia. Industrial Marketing Management, 39, 240–251.

Lovreta, S., Milosevic, S., & Stankovic, L. (2013). Competition policy and optimal retail network development in transitional economies. Economic Analysis, 58(199), 57-84.

Mazzola, E., Bruccoleri, M., & Perrone, G. (2015). Supplychainofinnovationandnewproductdevelopment. Journal ofPurchasing&SupplyManagement, 21, 273–284.

Najafi, N. (2018). Economizing on supply network development. Sweden: Chalmers University of Technology.

Purvis, l., Gosling, J., & Naim, M. (2014). The development of a lean, agile and leagile supply network taxonomy based on differing types of flexibility. Int. J. Production Economics, 151, 100-111.

Zhuravlev, D., & Haasis, H. (2016). Development of global supply networks to market integration. In H. Kotzab, & J. Pannek, Dynamics in logistics, Lecture notes in logistics (pp. 621-625). Switzerland: Springer International Publishing.