STRUCTURAL SEPARATION

In a competitive environment, single enterprises acting alone cannot fully achieve all management goals. Customer demands increasing and becoming more specific Firms must undertake initiatives to coordinate responsibilities across the supply chain in order to improve service and lower costs. Successful relationships require managers to rethink on integrated and focused supply chain strategies.

Supply Chain Management is: The integration of key businesses processes From end user through original suppliers That provides products, services and information Add value for customers and other stakeholders.

The relatively recent incorporation of the term network into supply chain management research can be seen as an attempt to make the concept wider.

A network is a structure where a number of nodes are related to each other by specific threads.
The business network approach assumes that the systems are open Thus, the network is embedded in and interacting with its environment. Firms in business-to-business markets are embedded in a complex network of relationships with suppliers, customers as well as a number of other stakeholders.

 Bowersox (1978, 1986), introduced the idea of channel separation with two flows: transaction creating efforts and logistical efforts. In order to achieve a satisfactory marketing process, a flow of transaction creating efforts and a flow of logistical efforts must exist and be coordinated.

Channel or Structural Separation

In modern era organizations separate four flows of channels to describe the structure of and better manage the supply chains. These are: Selling Ordering physical distribution, and payment channels.

Selling Channel
A chain of companies Concerned with all the operations in sales activities and decisions, from available possibilities as well as new structures for selling channel choices. Channel is responsible for serving customers with flow of all information concerning products and services

Ordering Channel
A chain of companies that consists of all the operations concerning ordering activities as well as decisions about ordering channels structure

Physical Distribution Channel

A chain of companies Concerned with product planning, production & physical movement of different types of products Decisions for the structuring of these activities starting from raw materials ending at final products

Payment Channel
A chain of companies covering the decisions and structures concerning payment, insurance, and finance activities in the supply chain

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