The decisions made by marketers can have a significant impact on the effectiveness of the supply chain. Flynn, Huo and Zhao (2010) describe the supply chain as the mechanism for distributing components for delivery of a product to a customer. Indeed, the Apple supply chain reportedly has more than 700 suppliers for various components of the iPhone (Barreda and Wertime, 2013). Naturally, keeping this number of suppliers happy, ensuring they deliver on time and coordinating their activities involves forming relationships with key business supplies, forming a value delivery network (Srivastava and Singh, 2010).
However, a value delivery network has not always existed and as Flynn, Huo and Zhao (2010) note the evolution of the supply chain to the value chain was largely possible due to improved management by computers and the need for businesses to coordinate their activities and work together.
Efficiency and Cost Savings
The obvious benefit of the value chain approach is the improved efficiency of the supply chain resulting in cost savings for the business and an increase in the potential profits, some of which could be passed to consumers in a retail price reduction.
Hovarth (2011) examines these efficiency savings and their resulting impact on price suggesting that they must be applied to the whole supply chain to achieve the desired value chain. Hovarth states that “collaboration is key” as without each of the suppliers working together, it is unlikely that the values, efficiencies and cost savings will be achieved.
Taghizadeh and Hafezi (2012) discuss the value of relationships between suppliers to ensure reliability of the supply chain and also to ensure coordination between suppliers to ensure items are delivered in a timely manner.
In the case of Apple with its 700 or more suppliers, reliability of the supply chain is essential, as if any one of those parts were failed to be delivered, the distribution of the Apple product would be delayed and the business would potentially lose valuable market share in the fast-paced mobile communications market.
Reputation and Ethics
A recent scandal hitting the supermarket shelves in the United Kingdom was the inclusion of horse meat not fit for human consumption into everyday food products such as food labelled as beef burgers and beef lasagne. Lawrence (2013) cites the overly-complex supply chain as one of the key reasons for the failure to control the illegal trade in horse meat and its subsequent entry into human food manufacturing.
In this example there was a breakdown in the value chain as the large manufacturers put profit before ethical considerations, forcing supermarkets to manage the negative publicity and reassure their customers that the situation would be resolved and not occur again. A study by Hoejmose, Brammer and Millington (2013) found that a socially responsible supply chain was not just beneficial for reputation but also indicates a positive relationship with suppliers, leading to improved supply values.
Barreda, D. & Wertime, D. (2013) Apple Suppliers. [Online]. Available from: https://www.chinafile.com/who-supplies-apple-it-s-not-just-china-interactive-map (Accessed: 1 March 2014).
Flynn, B., Huo, B. & Zhao, X. (2010) ‘The impact of supply chain integration on performance: A contingency and configuration approach’, Journal of Operations Management, 28(1), pp. 58-71, ScienceDirect. [Online]. Available from: http://dx.doi.org/10.1016/j.jom.2009.06.001 (Accessed: 1 March 2014).
Hoejmose, S., Brammer, S. & Millington, A. (2013) ‘An empirical examination of the relationship between business strategy and socially responsible supply chain management’, International Journal of Operations & Production Management, 33(5), pp.589-621, Emerald. [Online]. Available from: http://dx.doi.org.ezproxy.liv.ac.uk/10.1108/01443571311322733 (Accessed: 1 March 2014).
Horvath, L. (2001) ‘Collaboration: the key to value creation in supply chain management’, Supply Chain Management: An International Journal, 6(5), pp.205-207, Emerald. [Online]. Available from: http://dx.doi.org.ezproxy.liv.ac.uk/10.1108/EUM0000000006039 (Accessed: 1 March 2014).
Lawrence, F. (2013) Horsemeat scandal: where did the 29% horse in your Tesco burger come from? [Online]. Available from: http://www.theguardian.com/uk-news/2013/oct/22/horsemeat-scandal-guardian-investigation-public-secrecy (Accessed: 1 March 2014).
Srivastava, V. & Singh, T. (2010) ‘Value creation through relationship closeness’, Journal of Strategic Marketing, 18(1), pp. 3-17, Taylor and Francis. [Online]. Available from: http://www.tandfonline.com.ezproxy.liv.ac.uk/doi/abs/10.1080/09652540903511274 (Accessed: 1 March 2014).
Taghizadeh, H. & Hafezi, E. (2012) ‘The investigation of supply chain’s reliability measure: a case study’,Journal of Industrial Engineering International, 22(8), pp. 1-10, Springer. [Online]. Available from: http://link.springer.com.ezproxy.liv.ac.uk/article/10.1186%2F2251-712X-8-22 (Accessed: 1 March 2014).