BUSINESS
The area of business is characterized by a landscape of supply chain management, marketing channels used for distribution, logistics and purchasing. Each of the above areas interrelates with the other in an evolving nature hence contributing to the understanding of business as a whole.
Supply chain is a network of companies ranging from suppliers to users on the other end whose aim is to integrate supply and demand through the coordinated efforts of the company. Managing the supply chain involves coordinating and sourcing, procurement, conversion and logistics through working together with the supply channel partners. In order to have a good supply chain, one has to have managerial behaviour and make essential decisions which include areas such as system integration, business process management, supplier and customer relationship management and reengineering. The main thing about supply chain management is that it emphasizes the harmonization of operations among supply chain members, and it focuses on cross-functional business whose aim is to give value for the whole supply chain. There has been research done in supply chain management which has been developed in two areas. One is the descriptive research on industrial networks done by researchers from industrial marketing and purchasing. The other is the prescriptive research based in areas of strategic management, operation management and logistics. The unit of analysis earlier in the research was the dyad, emphasizing the management of boundary spanning activities. In the 2000s, the systems approach was used as it gives the best framework to respond to the requirements of business.
Marketing channels are the set of interdependent organizations which are involved in the process of making a service or a product available for consumption. It has a management system which is same as in supply management which involves managerial behaviour and decisions important to developing a functioning marketing channel including structured channel, governance and relationship management. Some of the important managerial issues relating to organization and management of channels include: how resource allocations to the channels should be made across global markets, how functions are shared between members of channel, the combination of push and pull strategy for firms using indirect channels, how coordination is achieved among distributors in supply networks, how to set goals and plans and how distributors should be operating their businesses.
The units of analysis include dyad, networks and systems. The level of analysis include tactical, operational, strategy and strategic. In future, due to the increasing emphasis of the focus of the customer, marketing channels will most likely go for units and levels of analysis that comply with those the customer hold. The theories in this area include some from economics which explains attendant to transaction cost analysis, agency theory and evolutionary economics. Theories from sociology explain power and group processes. Others from psychology involve theories of social influence, interpersonal relationship and conflict. Finally the marketing and strategic management theories explain the competitive advantage and path dependence, political economy and life-cycle theories. The methodology of this area of business research involves descriptive, quasi-experimental and analytic models.
Logistics refers to the total inbound and outbound flow and storage of goods, services and information with an emphasis on integration. Logistical management is the planning, implementing and controlling between the point of origin and use to reach the required customer expectations. The area of research on logistics cover two areas one is the supply chain logistics which deals with the flow of goods and the other area is the service response logistics, concerned with coordination of non-material activities which are important for fulfillment of service in a cost. The evolution of logistics research has shifted from a pure internal focus on cost control, and areas of inventory, transportation, warehousing and order processing to their role and impact with a given business process with regards to suppliers and customers.
The managerial behavior required in logistics include physical distribution, materials handling, packaging, order processing, return goods handling, information systems and customer service. The firm used to be the unit of analysis of logistics but in the 2000s to its present state, the system has taken over as the primary unit of analysis. The level of analysis include the external and strategic orientations involving consideration of the value adding activities used in process of getting a product to the market. The theories in this area include ones from economics, organizational strategy, and marketing theories. They include in particular, resource based theory, relational contracting theory, dyadic coordination theory, system theory and network theory. The approaches involved in this area include positivist, quantitative and interpretative methods. There has also been an increase in the use of case methods and multi-method approaches.
Purchasing involves satisfaction of the requirements of individual firms. It includes managing the supply of materials, services and information. In early days, purchasing focused on improving internal efficiency of a firm within network of supply. The focus was on exploring the most efficient approach to purchasing in relation to direct materials needed to produce company’s products, and indirect which include maintenance, repair and operations. Lately, the focus has changed to managing the supply of such materials and services and the use of internet has been collaborated to enhance information supply. The earlier unit of analysis was the internal performance of individual firms’ purchasing function. In the 2000s the unit of analysis was extended to include second tier suppliers and the collection of data from multiple sources in the chain of supply. Hence the unit of analysis is individual to dyad.
The level of analysis has also shifted from tactical to strategic to cover the areas of value of cooperation, redirecting the tactical focus on internal efficiency to improvement of network. It also includes the solicitation of help of willing partners in building a dominant chain of supply in a given industry. The theories involved in the purchasing and purchasing management include transaction cost theory, interdependence theory, management theory, decision theory, the resource-based theory of the firm, and the gaining theory. The methods involved in purchasing include descriptive ones, qualitative, contextual approaches and analytical quantitative models.
The areas of supply chain management, marketing channels of distribution, logistics and purchasing have gone through several important developments. The changes have affected the business landscape to which they relate and their ways of practice. This new landscape has opportunities and challenges for those in business area.
References
Alderson, W. (1957). Marketing Behaviour and Executive Action, Irwin, Homewood, IL.
Bowersox, D.J., Closs, D.J. &Bixby Cooper, M. (2006). Supply Chain Logistics Management (2nd ed). McGraw-Hill/Irwin, New York, NY.
El-Ansary, A. (2005). Interview, October 12, Jacksonville, FL
Kauffman, R.G. (2002). “Supply management: what’s in a name? Or, do we know who we are?” Journal of supply Chain management, Vol. 38 No 4, pp. 46-52.
