Week 6

For week 6 of my COM425 module, I have been asked to analyse ProDirect’s  strategy for management of the upstream and downstream supply chain. 

The upstream supply chain is the transactions between an organisation and its suppliers and intermediaries.  This is known as buy-side e-commerce.  The downstream supply chain is the transactions between an organisation and its customers and intermediaries.  This is known as sell-side e-commerce.

The ProDirect website has a push to customer approach to supply chain management.  This is because the customers who are purchasing goods from the website do not have a say in how they are designed before they are manufactured and shipped to ProDirect’s warehouses.  ProDirect has a hint of a pull supply chain as the customer can customise football boots by having their name printed on the boot, this is however only a minor detail of the product and the customer can only choose the colours etc that are available.

I believe that the supply chain of ProDirect can be described as a virtual integration chain.  I believe this because they have a total reliance on linked third parties.  This is because the majority of the chain is undertaken outside of ProDirect.   The main one of these would be they do not manufacture the products.  They also require a close relationship with their suppliers as they frequently purchase goods from them.

I believe that ProDirect’s supply chain is as follows:

1.  Product is manufactured by Adidas, Nike etc.

2. ProDirect then purchase the product from manufactures.

3. ProDirect then store product in their warehouse.

4. Customer purchases the product from the website.

5. Once the customer’s details have been verified, the product is dispatched to the customer.

A value network is extremely important to ProDirect.  This is because if the network between ProDirect and its suppliers breaks down, this would seriously effect the business.  Also if the suppliers decide to raise their prices, ProDirect would in turn also have to raise its prices.

There is also evidence of efficiencies in the supply chain.  An example of this would be that ProDirect purchase the products from suppliers before they have been purchased by the customers.  This therefore speeds up the time between the customer ordering the product and it arriving.  They also use e-mail to contact the user about the product and send them information on new promotions, instead of sending letters.  This is not only cost effective, but the customer can get the information almost instantly.