[8] 2002 e-business-strategies-for-virtual-organizations

e-Business Strategies for Virtual Organizations
5.4 The chain gang
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electronic marketplaces are forcing businesses to choose their
strategies now. Electronic business-to-business commerce is not
simply a question of automating existing channels and processes.
It is a whole new way of doing business. Aligning these
approaches with the i-business model and stage of maturity of
the virtual market requires the i-business to explore its supply
chain management and to exploit its business value chain
beyond the enterprise level to include interorganizational
relationships.
Supply chain analysis involves working across multiple enterprises
or companies (inter-enterprise) to shorten the supply
chain time in the delivery of goods and services to the consumer
or customer. The demand uncertainty in supply chains can be
addressed by faster response times. A basic product supply
chain can afford longer lead times and batch manufacturing of
large lot sizes to meet the demand. A supply chain that produces
fashion, electronic, or mass customization products must
respond quickly and be more agile. Most supply chains are
moving in the direction to support a more rapid changing of
demand by the consumer or customer.
Value chain analysis is used to identify a variety of potential
sources of economic advantage. The analysis divides a firm into
its major activities, considered as steps which each add value to
the goods as they are transformed at that stage. This may take
the form of complex operation upon the goods, or simply
moving them from one place to another. This is done in order to
understand the behaviour of costs and the existing and potential
sources of differentiation from others in the market. It determines
how the firm’s own value chain interacts with the value
chains of suppliers, customers and competitors. Companies seek
to gain competitive advantage from such analysis by finding out
how to do some or all of these activities at lower cost, or with
greater differentiation, than competitors.
What these two terms have in common is that each business
activity – upstream to exterior suppliers, internal to the
company, and downstream to the end customer – is examined in
the context of an overall value chain to reduce costs and
improve responsiveness to the customer. Customer focus – the
delivery end of the value chain – is the correct starting point for
both supply chain and value chain analysis.