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STRUCTURAL

SEPARATION

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• In a competitive environment, single enterprisesacting alone cannot fully achieve all

management goals.

•Customer demands increasing and becomingmore 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.

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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.

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• 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 relationshipswith suppliers, customers as well as a number of 

other stakeholders.

 A network is

“a structure where a number of nodes are

re lated to each o ther by speci f ic th reads.” 

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• 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.

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“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.

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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 sellingchannel choices.

• Channel is responsible for serving customers

with flow of all information concerning products

and services

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Ordering Channel 

•  A chain of companies that consists of all theoperations concerning ordering activities as well

as decisions about ordering channel’s 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

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•  A chain of companies covering the decisions

and structures concerning payment, insurance,

and finance activities in the supply chain

Payment Channel 

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