Supply Chain Configuration Revisited – Challenges and Strategic Roles for Western Manufacturers

Abstract

Globalization is revolutionizing the way manufacturers operate and perceive themselves (Coe et al., 2008). A key question in the pursuit of excellence in global value chains remains: from where does the firm primarily derive its competitive advantages? Does the firm primarily rely on the marketingand positioning-oriented aspects, which it derives from product/service development, or from its operations resources and capabilities? Arguing against current governing beliefs, this chapter claims that sustainable competitive advantage may be gained through excellence in operations capabilities, as firms purposefully work their way around traditional tradeoffs. Forward-thinking companies see their global value chain as an opportunity to innovate their operations systems, seeking lower cost, new manufacturing capabilities, improving customer responsiveness, and entering new markets, but also realizing that tapping into these opportunities requires a fundamental rethinking of their current supply chain configuration. In the pursuit of this rethinking, these companies have succeeded in developing innovative and robust operations networks, from which they build and sustain competitive advantages. This chapter takes its outset in four such companies that have been through this transition, but with different initiating conditions, different sets of choices with regards to process and content, and with different supply chain configurations as outcomes. We know of their success, but have little knowledge about why. Therefore, in this chapter, we aim to map and understand the current conditions and process for supply chain configuration and its effects on the resulting supply chain configuration. The increased scale and scope of global operations, both with respect to markets and supply, has broadened the scope of manufacturing and supply chain management. The supply chain has undergone a radical fragmentation geographically as well as in terms of functional sub-categories and organizational boundaries, leading to an ongoing reorganization of the value chain on a global scale. This has partly rendered the division between operations management and supply chain management obsolete. At the same time, drastic reductions in product lifecycles and delivery times have eliminated inventories and, as a consequence, have called for management of interdependencies among subsystems. This means that increased complexity has worked its way into supply chain management partly induced by the nature of activities and partly by the organization