Week 6
Using your chosen e-commerce company, analyse their strategy for management of the upstream and downstream supply chain.
Concepts that should be included, where appropriate, are as follows:
- Push vs pull supply models
- Vertical integration vs disintegration vs virtual integration
- Evidence of value networks
- Evidence of efficiencies in supply chain
Neopets are effectively providing a service to the customer. The service they provide is designed in house, at the neopets head quarters in USA. When a new service, or sub service, is available, all the Neopets customers (the users) can avail of it once it goes online.
In a similar way to how, say, PC World would have suppliers of components, and the component supplier would have parts suppliers, Neopets has a similar architecture within its system.
It does not source parts or components, but rather has in house designers continually working on and updating the servers and systems, in order to keep the service being provided, at the best it can be.
From the very basics, there would be a team of programming coders, all working for various Team Leaders. This could be compared to Suppliers working for Intermediaries. When this is all brought together, the service can be provided to the user.
Push v Pull
Neopets would use a mostly Push supply model. Although the users have some say in what services they would like to see implemented onto the website, it is ultimately up to the Neopets staff and team, as to what services they will provide. The coders will work within their own ability, and within technological limits. The customer will always want more, and better services, but they ultimately, the fact millions of users use the service that Neopets provides, is evidence enough to support the Push supply model at work.
Vertical Integration vs Vertical Disintegration vs Virtual Integration
Vertical Integration is the case where a business does most of the manufacturing (or coding) in house. Vertical Disintegration would be the opposite; the business would out source suppliers of manufacturing (or coding). Virtual Integration has the company relying totally on linked third parties.
I believe that Neopets is near 100% Vertical Integration. They employ a vast team of coders to build, work on, and maintain the service they provide.
They may on occasion however, employ outside sources in exceptional circumstances, such as sourcing new physical parts for the service; faster, more powerful servers, new software for the server, and other such things.
Evidence of value network
Value networks are a network of different resources which collaborate together to produce goods for a customer. Internal and External value networks exist. External would be a network of outside sources working together to provide a product for a company to pass onto customers, whereas an internal network would be a team of in house teams collaborating together to provide a product or service.
Neopets would obviously have an Internal Value Network, namely the team of coders that are employed to product and maintain the coding and servers used to provide the service to the customers.
Evidence of efficiencies in supply chain
Neopets would defiantly rate highly in efficiency, as 100% of the customers who come to, and use Neopets will be using the service that is being provided. Albeit, some users may only use some of the services, other users may use different areas. Though it can almost be guaranteed that 100% of the code being developed will be used by at least some of the 25 million + users.
Neopets can identify which areas are popular and require further development, and those which are less popular and require less man hours and resource dedication.
