Roberts and Zahay (2013) give importance to the integrated value of the supply chain; the value chain and the virtual value chain. These are not separate entities–rather; they form a growing hierarchy that is focused on satisfactory outcomes for both suppliers and customers (Roberts & Zahay, 2013, p. 37). In context to this view, importance is given by how they meet the needs of both suppliers and cutomers.
Critique this view by:
i) Identifying the core processes of the supply chain, value chain and virtual value chain–with focus to their integrated values rather than a description of each;
ii) What stages in development does an enterprise need to adopt in order to take advantage of this view;
iii) What are examples of particular systems/business integration models that support this view;
iv) How is such an approach of value to the hospitality industry in general–particularly, is this a new concept or something else
The purpose of this report is to provide a brief introduction about the three aspects of supply chain, value chain and virtual value chain as well. The report focuses on identifying the core processes of supply chain, value chain and virtual value chain. It also explains the stages of development that the hotel enterprises need to adopt or should adopt in order to take advantage of the three aspects mentioned. The latter part of the report also explains the system/business integration models that support the organizations in using this type of value chain. Along with which, it also explains the value of use of such approaches in the hotel industry.
Further, supply chain refers to the process under which all the parties of the organization are involved in fulfilling the satisfaction level of the customers. Supply chain is the integration of all the activities of the company like procurement, logistics, sourcing, conversion etc. to properly initiate the activities of the company. Value chain refers to the process under which the company aims to increase the value derived from the products and services in response to its cost. And virtual value chain refers to the business model that describes the distribution value generated information services in other parts of the organization (Xu, & Gursoy, 2015). According to Robert and Zahay (2013), all the three aspects are not different instead they are a form of growing hierarchy that is only concerned about the satisfactory outcomes for both the suppliers and the customers. Further, more details about the report are discussed below:
Talking about the core process of supply chain, it should be noted that there are some building blocks of supply chain that helps the management to initiate this facility. These blocks are strategic planning, demand planning, order fulfillment, supply planning, manufacturing, procurement etc. (Poirier, 2016).
Strategic Planning: The initial step is strategic planning which involves strategic supply chain design and strategic sourcing. The strategic supply chain refers to the design, optimization, and evaluation of the supply chain model used in planning process. Every part of the model of supply chain like resources, warehouses, transportation etc. is modeled in such a way so that it executes the plan effectively (Christopher, 2016).
Strategic Sourcing Process: This process of supply chain helps the business to identify a minimized set of suppliers with the help of which they can effectively manage strategic relationship. Vendor analysis and purchasing statistics are used to develop the potential of the suppliers. The strategic sourcing process develops parameters that drive the procurement execution in the organization. Under this process of supply the company gains the value of planning the optimization of resources properly (Gattorna, 2017).
Demand Planning: The process of demand planning involves forecasting, promotion planning, lifecycle planning, and consensus demand planning.
Supply Planning: the process of supply planning involves the supply network planning, safety stock planning, supplier collaboration, outsourcing, customer collaboration and lastly, distribution planning.
Procurement: This process of supply chain involves the process of purchasing order processing, invoice verification and receipt confirmation. The procurement process provides value to the organization by purchasing the adequate amount of quantity and verifying it with the invoice as well.
Manufacturing: Under the process of manufacturing, the management needs to perform the production planning, manufacturing execution (Ptak, & Schragenheim, 2016).
Warehousing: In the process of warehousing, the company initiates inbound, outbound processing, warehousing, storage and physical inventory, and cross docking. This aspect is mainly related to storage and shipment of goods produced by the organization. This process gives value to the company in such a way that it helps the organization to store the required product or inventory and deliver it when demand is increased.
Order Fulfillment: Order fulfillment process includes the sale order processing and billing business process (Verdouw, Wolfert, Beulens, & Rialland, 2016).
Transportation: lastly, transportation is the end process of the supply chain that completes the whole activity of the company. This process involves transportation planning, freight costing planning and transportation execution.
The value chain process focuses on the systems and how the inputs of the company are changed to derive output for the consumers of products of the organization. The system of value chain is derived by Porter who said that these activities are common in all business process which are divided in primary and support activities.
Primary activity: These activities are directly related to the creation of goods, its sale, support and maintenance of products and services. This activity consists of following aspects:
Inbound operation: This part of value chain involves receiving, storing and distributing the inputs in the process. The suppliers act as the key factor in this case (Hugos, 2018).
Operations: Under this process, the inputs are changed in outputs of the company that are further distributed to the customers. This process delivers value in the products formed by the organization.
Outbound Logistics: The outbound logistics provide the products and services to the customers in the market. This aspect includes collection, storage and distribution system. This process delivers value from one person to other (Wisner, Tan, & Leong, 2014).
Strategic Sourcing Process
Marketing and sales: under this process, the employees convince the clients to purchase the products of the company. Communication is the best way to convince the client to purchase the products of the organization. This process increases the value of the customers derived from the product and services (Stadtler, 2015).
Service: This aspect helps in integrating all the above mentioned activities and increasing the value received to the customer with the use of products and services.
Support activities: These activities act as a helping hand to the primary function activities. Apart from supporting the operation process, this process supports the marketing and sales activities of the company as well. Below mentioned form a part of the support activities of the value chain analysis:
Procurement (purchasing): Under this process the organization purchases or procure the resources that are actually needed for the creation of products. The management finds the best vendor at best prices for the organization (Monczka, Handfield, Giunipero, & Patterson, 2015).
Human resource management: Under the process of HRM, the organization recruits, hire, motivate, give reward, train and retain the employees in the organization. People are the most important asset of the organization so the management can get good advantage with the use of good HR practices in the environment. The HRM activities aim to motivate the employees to integrate all the activities and derive best positive results for the organization.
Technological development: under these activities, the organization manages and process information and protects the knowledge base of the organization as well. The company aims to use technology to enhance the activities of the company by minimizing the cost of operation as well.
Infrastructure: this aspect is the support system of the company. The infrastructure supports the organization to function the activities and allow the management to maintain daily operations as well (Vermesan, & Friess, 2015).
Virtual Value Chain
A virtual value chain is just like the supply chain or value chain, but it includes the use of e-marketing techniques in the business process. The virtual value chain includes the procurement of raw material, operations, sales and marketing and delivery of the products of the organization. The use of information technology has signification changed the way to look at the supply chain; the use of information technology has introduced the concept of virtual value chain. Further, the components of this aspect are:
Gather: under this process, the organization aims to digitalize the information. With the help of this process, the organization easily gains information from the internet are the market, type of customers, economies, government policies etc. (Schönsleben, 2016).
Organizing: The information received through the first stage of virtual value chain is now changed or transformed into the way in which it is easily retrieved by the employees. The organization gathers information and organizes them to help the company in using it.
Selection: Under this process of virtual value chain, the organization analyzes the gained information and uses them to attain satisfactory results from the products and services rendered by the company. With the use of this information, the company gains way to deal with the customers in a better way.
Synthesization: Under this process, the organization synthesizes the captured data. In this way, the data reaches to the end user in the desired format (Fawcett, & Waller, 2014).
Distribution: it is the last stage of the process of vital value chain under which the information is delivered to the end user. In the value chain system, the products and services are delivered to the customers, whereas in virtual value chain, this aspect is replaced by digital products in the market.
The fact should be noted that as discussed above all the three processes are not different, they are just extended version of each of the framework, so the organization should use the integration of all the three process an effectively derive satisfaction for the organization (Mangan, Lalwani, & Lalwani, 2016). Further, the below mentioned are the stages in the process of development with the help of which the company can easily attain maximum level of satisfaction in the environment:
Gather information through cloud: By integration and services of supply chain and virtual value chain, the organization to should make use of the cloud to gain information from the environment. The companies should make use of enterprise resource planning system with the help of which the can easily can information about the capabilities present in the market. The organization should store such information in the cloud for future use. Thus, the company should use the cloud to gather information. This will help them to gain accurate information according to the past records. The information received from cloud will help the organization in demand planning as well (Stair, & Reynolds, 2017).
Procurement of resources: The resources should be noted procured using the electronic marketing. With the help of this feature the company should analyze the areas where the resources or the raw material are being sold at cheap prices due to which, they should procure the resources according. The enterprise resource planning system can be used in the organization to check the places from where the company can easily get information about the resources and procure them as well. Further, with the help of this process the organization can reduce the operational cost and increase the quality production for the organization as well (Hofmann, 2017).
Electronic transmission to warehouse: After procuring the resources, the organization should connect with the warehouse of the company in order to store the inputs and outputs for the future use. With the help of this aspect, while initiating the operations for the organization, the employees can directly intimate other employees present at the warehouse to send the raw material and the other employees can perform the action just after receiving the message in no time. This process decreases the time duration of the supply chain management process and increases the effectiveness of the organization as well. This process will enhance the communication in the internal process of the organization (Ross, 2016).
Online marketing and sales: Physical marketing and sales in the physical supply chain method only attracts customers that are physically connected to them. Introduction of the process of supply chain to electronic marketing gives new targets to the company to achieve. This process increases the target customers present in the market by the adding the online customers as well. The company can now with the use of this process attract the customer through social media marketing and initiate online sales as well. This aspect can develop the company and introduce it in the international online market as well (Ross, 2016).
Integration of infrastructure: Infrastructure is the best resource with the help of which the organization can effectively manage the activities of the company. If the infrastructure of the organization is not efficient then the company faces difficulty in managing all the activities and providing optimum level of satisfaction to the customers as well. By integrating information technology in this process, the organization can effectively create a web of all the resources in the organization with the help of which the organization easily make use of the resource it and procure it on time (Ebrahim, 2015).
Thus, the above mentioned are the stages in the process of development with the help of which an organization can effectively make of these strategies and attain satisfaction as well
The organization makes use of the V-model as a purpose of integrating technology in the environment. The below mentioned are the specifications of this model:
- Initially, the organization aims to identify the value creation and attempt to gain the competitive edge as well. With the help of the above mentioned view, the organization develops the resources and capabilities and attempt to fully use it so as to earn competitive edge. Competence in the market can only be earned with the help of e-marketing in the environment. The organization should make use of all the available resource and attempt to generate better level of output for the customers and the suppliers (Wang, Gunasekaran, Ngai, & Papadopoulos, 2016).
- Further the company should make use of the resources to develop a relationship in the environment. With the help of this process, the management should identify the key resources sand aim to use it effectively for the purpose of satisfying the suppliers and the customers.
- Now comes the part of integrating the business mode, under this process, the organization should initially develop and plan, then integrate the requirement of the resources accordingly. Afterwards, the organization should use the resources and the infrastructures to help the management to integrate, test and verify the system. After this process the organization should implement the system verification and validation. And lastly, the company should implement the function of operations and maintenance (Ross, 2015).
The process of virtual value chain brings efficiency, novelty, value and complementarity in the services of the hospitality industry. Transaction efficient is the primary value driver in the virtual value chain process. This aspect lowers the cost of medium of exchange between buyer and seller, the higher the value for the suppliers and customers in the market. Further, this aspect also helps the organization in increasing the demand of the products and services offered by the companies present in the hospitality industry. With the help of their process, the company can gain information about the target customers present in the market and evaluate the actual demand as well. Further, the value derived to the companies with the use of virtual value chain is discussed below:
Revenue from e-business: The hospitality industries have increased the amount of revenue with the use of this process in their system. Now the customers have started booking rooms from the organization online that initiate online sales along with physical sales. Also it should be noted that this process opened ways for the organization to earn well in the market (Heizer, 2016).
Comparing Average Room Rate (ARR) of online and offline channels: With the help of this process, the customers can easily compares the rates of the hotel room online and offline as well. Resulting to which they can effectively choose the best option suited for them. This process helps the customers to look at the products and services offered by the company in advance and gain many perks as well (Tatoglu, et. al., 2016).
Use of the Information Flow through the Virtual Value Chain: With the help of this process the company can easily gain information about the customers of the company. They do not need to fill the details about the existing customers again and again they have such information already stored in the cloud. This process also helps the company in profiling the customers in the target market. Also, the organization can initiate loyalty program for the repetitive customers of the organization in order to increase their satisfaction level (Valverde, & Saadé, 2015).
Thus, in the limelight of above mentioned events, it should be noted that it is very important for the organization to effectively initiate the supply chain management activities to help the organization to gain success in the target market. The above mentioned report adequately justified the requirements of the assessment. It discussed about the integration of supply chain, value chain and virtual value in the organization so as to receive satisfactory results. Further, it should be noted that the report explain the developmental stages of the process along with its examples and values derived in the hospitability industry. The report also explained the upcoming need and importance of the virtual value chain management system in the organizations
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