Page 187 - Operations Strategy

162 CHAPTER 5 • PuRCHAsing And suPPly sTRATEgy
and preferably innovative. For an ecosystem to thrive, the relationships between ele-
ments (businesses in this case) must communicate, establish trust, share information,
collaborate, experiment and develop in a mutually supportive symbiotic manner. The
comparisons with the natural biological ecosystem is also important because it empha-
sises that the relationships between things matter and that, to some extent, everything
in a supply network touches everything else.

A network perspective confronts the operation with its strategic resource options
A supply network perspective illustrates to any operation exactly where it is positioned
in its network. It also, therefore, highlights where it is not. That is, it clearly deline-
ates between the activities that are being performed by itself and those that are being
performed by other operations in the network. This prompts the question of why the
operations boundaries are exactly where they are. Should the operation extend its
direct control over a greater part of the network through vertical integration? Alter-
natively, should it outsource some of its activities to specialist suppliers? Furthermore,
should it encourage particular patterns of relationships in other parts of the network?
Again, it is the network perspective that raises the questions – and sometimes helps to
answer them.

A network perspective highlights the ‘operation-to-operation’ nature of business
relationships
This may be the most far-reaching implication of a supply network perspective. It con-
cerns the nature of the relationships between the various businesses in the network.
Traditionally, these relationships have been seen as ‘customer–supplier’ relationships.
What is new in the way supply networks are now treated is that rather than conceptu-
alising the relationship as ‘doing business’ with customers and suppliers, we are con-
cerned with the ‘flow of goods and services’ between operations. Look at any supply
network and the vast majority of businesses represented in it have other businesses as
their customers rather than end customers. Not that the end customer is unimportant.
But behind each business serving the end customer is a whole network of other busi-
nesses. To the end customer, it is the chain of operations lying behind the one they
can see that is important. For that chain of operations the important questions are
not ‘How can I sell to my customer?’ and ‘How can I get supplies from my supplier?’
Rather, the questions should be ‘How can my operation help my customer’s operation
to be more effective?’ and ‘How can my supplier’s operation help my operation to be
more effective?’

globalisation and sourcing

Globalisation is the more or less simultaneous marketing and sale of identical goods
and services around the world. So widespread, says The Economist newspaper, has the
phenomenon become over the past two decades that no one is surprised any more to
find Coca-Cola in rural Vietnam, Accenture in Tashkent and Nike shoes in Nigeria. It
has made supply network strategy into a global issue. Global sourcing means iden-
tifying, evaluating, negotiating and configuring supply across multiple geographies.
Traditionally, even companies who exported their goods and services still sourced
the majority of their supplies locally. Companies are now increasingly willing to look
further afield for their supplies and for very good reasons. Most companies report a

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