Directv’s Supply Chain

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The second step in the Supply Chain Maturity Framework majorly focuses on enhancing the effectiveness of the physical distribution (Rao et al, 2006). Since the customer demand for new connections is too high, DirecTV has given high priority to demand management. DirecTV with the help of the Supply Chain Maturity Framework has ensured that the organization’s dominant logistical culture will not inhibit the progress of the organization in maintaining trust and relationships with the suppliers and by taking help from the suppliers in meeting the demands of the customers.

Redesigning the inter-organizational processes is the third and most important step in the Supply Chain Maturity Framework. This step majorly emphasizes on involving selected suppliers in core management activities such as planning, organizing, demand forecasting and sales sessions (Kouvelis et al, 2006). The involvement of suppliers in the decision making process helps the organization to close the gaps between the demand and supply. The fourth step in the framework is to convert the supply chain into value chain wherein all the allied partners work towards the same strategic goal. With the help of the costing methods such as Activity Based Costing and performance management tools such as Balanced Scorecard, organizations like DirecTV can easily align the business activities to the vision and mission. Using latest technologies that share information among the allied partners would play a major role at this juncture.

The fifth and final stage is a level which can be achieved only when the organization holds control on the collaboration throughout the network and use the strategic information effectively. If this stage is achieved, organization would become highly accurate in its order prediction and reduce the cycle time. DirecTV with the help of Computer Science Corporation has made use of Supply Chain Maturity Framework to achieve the fifth stage.

Reduced Number of Suppliers in the Network

There are several reasons behind DirecTV reducing the number of suppliers in the network. First, the reduction in the suppliers will give an opportunity for the organization to reduce the headcount in the procurement department. Since the activities such as procurement, accounts payable and negotiation involve in dealing with the suppliers, the reduction in number of the suppliers has given a room for proportional decrease in the headcount and thus the resulting personal costs too (Rao et al, 2006). Moreover, the reduction is number of suppliers has also helped the procurements professionals of DirecTV to act more strategically during the procurement process.

Second, the reduction in number of suppliers had given DirecTV an opportunity to do more volume of business with specified suppliers and gain giant discounts from them. Yes, the restructuring process has helped the DirecTV to procure the raw materials at very cheaper prices from the suppliers. Third, when the organization is operating in the United States, it should file 1099 form for every supplier from whom products or services worth of $600 or more are procured per year. When the number of suppliers is reduced, the amount of paper work that DirecTV outsources on annual basis to third parties has been significantly reduced. Apparently, this process helped the organization to nullify the additional costs associated with the small-scale suppliers.

Increased Partner Collaboration

Today, the success of any organization is dependent upon its ability to effective manage the direct and indirect relationships with the other entities in the network. Before restructuring the supply chain, DirecTV has operated with the intention of controlling the business networks rather than making them to participate in the growth process. The reengineering process of supply chain has ensured that DirecTV shifts its focus from controlling the business networks in creating a platform wherein the partners would be more flexible and adaptable to the quick changes that take place with the organization due to dynamic external business environment.

According to Hakansson and Ford (2002), a network is considered as a set of relationships between the entities or firms. The supply chain collaboration refers to coaction wherein two or more organizations work together in order to create competitive advantage and to reap higher profits (Rao et al, 2006). The primary motto of the collaboration is to meet the customer demands with lower costs through joint efforts. If one organization wants to take control over the networked organizations and wants to reap the benefits all over alone, such as networks will not be succeeded in today’s environment where supplier bargaining power is high. After refurbishment of the supply chain, DirecTV has been using its dominant power in a right manner; the aspects such as reward power, coercive power and legitimate authority are helping DirecTV to effectively use its dominancy position in evolution of the strong supplier network.

Reverse Logistics Process and Refurbished Hardware

Reverse logistics refers to the reuse of products and materials. It is also defined as a process wherein the product will move from its consumption point to the manufacturing origin (Hakansson and Ford, 2002). During this process, the refurbishing professionals will try to capture the value of the product and dispose it for right purpose. DirecTV has been effectively using reverse logistics process to refurbish the hardware.

DirecTV is a large volume business which would always be in need to latest technologies and robust technologies. In fact, the organization spends millions of dollars on procuring the hardware, including set-top boxes, servers, amplifiers and computers. The organization had to allocate huge money on procuring new hardware and discarding the old hardware. During the restructuring the supply chain process, DirecTV has started redeploying the refurbished hardware in order to save on millions of dollars in differed purchases.

DirecTV has been realizing a wide-range of benefits from the refurbished hardware. The benefits including cost reduction, quality improvement, sustainability and flexibility. Organizations like DirecTV can procure the IT hardware equipment at a mere fraction of price of Original Equipment Manufacturers; this would give an opportunity for the organizations to hold extra hardware to deploy on projects and disaster recovery processes. For volume-based businesses like DirecTV, refurbished hardware not only enhances the buying power but also leads to substantial cost savings.

Since refurbishment is a rigorous process wherein certified techniques