Supply, Driven Commodity Chain Essay example

Supply, Driven Commodity Chain Essay example

Length: 701 words (2 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

Gereffii, G. (1994) introduced the concept of “supply” or “producer” driven and “buyer” driven commodity chain in identifying the different structure or organization of the GVCs. In producer driven chain, because of the technical knowhow and technology there will be a large lead firm being the influential one. The return is mainly boosted by scale economies. Its product specifications are very sensitive and interest in the protection of the knowledge, trust and relationships are very key in this kind of GVCs. Most of the time this GVCs are vertically integrated and have high barrier to entry of new actors/firms. The business relationships built here are mostly long lasting. Best examples of producer driven VCs are semi-conductor or the pharmaceuticals industries.

Buyer driven GVCs on the other hand produce very much standardized products which are like mass consumption items which are not capital intensive. Here the lead firms are retailers and brand owners. There is easy entry and exit into this value chain and small and medium sized suppliers can participate. Relationships are more or less transactional or market based aimed at for the specified transaction may not last beyond that. GVCs like this are more spread out and have so many suppliers participating. Lead firm’s investment on suppliers is very minimal. Apparel, vehicle parts and electronics are some of the examples of buyer driven value chains. This type of value chains are preferred by developing countries to enter into and going up the ladder into high value products. (Humphrey, J., & Schmitz, H. 2000)

Further study in the production coordination, globally, has exposed the inefficiency of considering only these two types of commodity chain. Especially the studies in ...

... middle of paper ...

...ence between the buyers and the suppliers. The cost of breaking this relationship and start a new one is very high since building the trusted relationship can take a lengthy time and process. Therefore it is expected to have limited suppliers in this kind of value chains.
4. Captive value chains. In this network there are many small suppliers that are highly dependent on the buyers for production and marketing. It is very costly for the small supplier to change or stop the business relationships. The buyer has also much investment on the supplier to get its specified products and because of its investment it demands or in the business arrangement the lead firm maybe the sol-buyer of the product.
5. Hierarchy. This is the vertical type of GVCs where transaction takes place within a single firm which might be located in different operational sites or subsidiaries.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Supply Chain Management ( Scm ) Essay

- Throughout this assessment, different views of the proposed analytical frameworks will be analysed, as well as insights from other authors about Supply Chain Management, Global Supply Chains, Global Value Chain and Global Production Networks, in order to more clearly understand the complexity of the themes addressed. Supply chain Management: Regarding Supply Chain Management (SCM), there are two different frameworks, each one with its view. The first, focused on a mainstream view, is developed by Martin Christopher while the second one is presented by Andrew Cox and it develops a more critical approach....   [tags: Supply chain, Supply chain management]

Better Essays
1411 words (4 pages)

Essay about Supply Chain Management ( Scm )

- Introduction Supply chain management Supply chain management (SCM) is the management of the flow of goods and services. It includes the movement and storage of raw materials work-in-process inventory and finished goods from the point of origin to point of consumption. Meaning and definition of supply chain management “Supply Chain Management is the process of planning, implementing and controlling the operations of the supply chain with the purpose of satisfying the customer 's requirement as efficiently as possible....   [tags: Supply chain management, Supply chain, Management]

Better Essays
1183 words (3.4 pages)

Strengths And Limitations Of Supply Chain Management Essay

- Global Supply Chains is chains, clusters, networks of firms involved in different activities and stages of production that are linked by the flow of commodities, value, and information. There are many frameworks in enabling us to understand and analyse how a global supply chain is managed, maintained and operates. In this essay I will be examining the strengths and limitations of three analytical frameworks. Supply Chain Management concept is derived from a ‘chain’ based theory. Martin Christopher defines it as the “Upstream and downstream relationship with customers and suppliers defines it in order to deliver a superior value to its customer and suppliers at a lower cost to the chain as a...   [tags: Supply chain management, Supply chain, Management]

Better Essays
1510 words (4.3 pages)

The Concept Of The Supply Chain Management Essay

- In this essay, I will discuss the notion of Supply Chain Management through analysing the different types of supply chains. Next I will look at the concept of sustainability and how it applies to SCM. This will lead into the discussion that SCM also involves the process of New Product and Service Design as well as Strategic Capacity and Project Management. A supply chain entails various entities that are involved in the beginning to end business process of delivering a product (good or service) to its end consumer (Cooper, Lambert & Pagh 1997)....   [tags: Supply chain management, Supply chain, Logistics]

Better Essays
1236 words (3.5 pages)

Global Supply Chain For A Business Essay

- In today’s markets, the drive for a business to continue to lower costs, improve quality, provide world class customer service and to continue to grow, drives many companies to consider moving some production to low cost countries as well as develop sales channels in countries other than their home country. A manufacturer, based in the United States that has decided to move some production to another country to continue to grow and compete must consider a variety of risks and opportunities to ensure that the venture is a positive one for the company, its employees, customers and shareholders....   [tags: Supply chain management, Supply chain, Management]

Better Essays
1120 words (3.2 pages)

Operations and Supply Chain Strategy Essay

- (MLOM 700, Operations and Supply Chain Strategy) Individual Assignment Table of Contents Introduction 2 Review of Literature 2 Risk in General. 3 Supply Chain Risk Management (SCRM)................................................................................4 Various Theories/Models in Supply Chain Risk Management..................................................5 Summary and Conclusions: 11 Referances 12 Introduction Supply Chain Risk Management (SCRM) denotes the identification of likely sources of risk as well as the implementation of suitable strategies through a synchronized approach among supply chain parties, to condense supply chain susceptibility to pot...   [tags: supply chain, tehory, mangement]

Better Essays
2496 words (7.1 pages)

Zara Clothing Company Supply Chain Essay

- The following paper analyzes the supply chain strategies conducted by Zara, European based retail store, with the aid of “Zara Clothing Company Supply Chain,” a recent article that analyses Zara’s success through its supply chain. Further, it highlights the strengths and key practices that allow Zara to be able to have such a successful supply chain in regards to efficiency and responsiveness. “Zara Clothing Company Supply Chain” (2016) is a study conducted by SCM Globe, an online supply chain design and simulation tool....   [tags: Supply chain management, Supply chain]

Better Essays
928 words (2.7 pages)

Supply Of Supply Chain Management Essay

- Supply change management refers to managing materials and processes as they move from the suppliers of raw materials to manufacturers to wholesalers to retailers and finally to the customers. It involves managing the supply-side activities to gain competitive advantage and to increase customer value. It also involves coordination among different firms at different levels within the supply chain. A good supply chain management should be both economical and efficient. Supply chain management manages and controls the production, shipment or movement of products and their distribution processes....   [tags: Supply chain management, Supply chain, Inventory]

Better Essays
994 words (2.8 pages)

Essay on A Research Report On Supply Chain Systems

- Now a day’s organisations have to face vibrant market. Quickness, flexibility and configuration are the main practices which have to be used by the organisation to be in this competitive market. In this report we (consultant) are going to carry out a ‘short audit’ of one day and understand the present performance of the clients’ supply chain systems then recommend possible improvements to the potential client. Quick Scan Audit Methodology (QSAM) will be the best technique used for a short audit....   [tags: Supply chain, Vertical integration]

Better Essays
912 words (2.6 pages)

Supply Chain Management Success ! Essay

- Supply Chain Management Success. Organizations today all consist of three main functions. These functions include marketing, operations, and financial accountability. Marketing generates the demand through the promotion or sale of a product or service. The operations is the backbone of any organization, which involves the creation of the product, the movement of the product, and final delivery of the product. The financial accountability is ultimately, how the organization is doing financially concerning accounts receivable and accounts payable....   [tags: Supply chain management, Supply chain]

Better Essays
889 words (2.5 pages)