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Raw Materials

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by

Sebastian Montoya

on 13 October 2016

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Transcript of Raw Materials


Retailer
Consumer
Physical movement of goods
Orders and Scheduling
A Supply Chain is the sequence of processes involved in the production and distribution of a commodity.
Vertical Integration is a strategy that companies use to gain control over suppliers or distributors in order to:
Increase power in the marketplace
Reduce transportation costs
Secure supplies or distribution channels
Example of Forward and Backward Integration
Why?
Forward:
The manufacturer wants to bypass the retailer
The company would like to increase market share
This can be effective when:
Retailers have high profit margins
The industry is expected to grow
Distributors do not meet firm's needs
Company has enough resources to do so

Backward:
To secure stable flow of resources
More control over production
This is effective when:
Current suppliers are unreliable or expensive
Price of inputs are unstable
A few suppliers but many competitors
Advantage's and Disadvantage's
Advantage:
Lower costs due to elimination of transaction costs
Improved quality
Improved coordination of the supply chain
Greater market share
Secured distribution channels
New Competencies
Disadvantage:
Increased costs if the organization cannot manage activities efficiently
Higher bureaucracy can lead to reduced flexibility
Potential legal repercussions due to size (run the risk of monopolizing)
Alternatives

Manufacturer
Supplier
Distributor
3 Supply Chain Flows:
1)


2)


3)
Full transcript