Virtual operations do relatively little themselves

Virtual operations do relatively little themselves but rely on a network of
suppliers that can provide products and services on demand. The core
competence in a virtual operation can only lie in the way it is able to
manage its supply network.
• Partnership relations in supply chains are sometimes seen as a
compromise between vertical integration on the one hand (owning the
resources which supply you) and pure market relations on the other hand
(having only a transactional relationship with those who supply you).
Suppliers and customers are expected to cooperate, even to the extent of
sharing skills and resources, to achieve joint benefits beyond those they
could have achieved by acting alone.
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• Customer relationship management (CRM): analysing data to understand
customers. It is a method of learning about customer’s needs and
behaviours in order to develop stronger relationships with them.
• The supply chain policies, which are seen to be appropriate for functional
products and innovative products, are termed by Fischer efficient supply
chain policies and responsive supply chain policies.
o Efficient supply chain policies include keeping inventories low,
especially in the downstream parts of the network, so as to
maintain fast throughput and reduce the amount of working
capital tied up in the inventory. Information must flow quickly up
and down the chain.
o Responsive supply chain policies stress high service levels and
responsive supply to the end-consumer. The inventory in the
network will be deployed as closely as possible to the consumer.
• Fisher matrix:
• The bullwhip effect is used to describe how a small disturbance at the
downstream and of a supply chain causes increasingly large disturbances,
errors, inaccuracies and volatility as it works its way upstream.
• To reduce the bullwhip effect, operations can adopt some mixture of three
coordination strategies:
o Information sharing
o Channel alignment
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o Operational efficiency
• Supply chain improvement can be done via business process modelling,
benchmarking of performance and best practice analysis.
• New information technology applications combined with internet-based
e-business have transformed supply chain management practice. Largely,
this is because they provide better and faster information to all stages in
the supply chain.
• Channel alignment means the adjustment of scheduling, material
movements, stock levels, pricing and other sales strategies so as to bring
all the operations in the chain into line with each other.
• Vendor-managed inventory (VMI): upstream supplier manages the
inventories of its downstream consumers.