The paper was presented at the Polish Logistics Congress “Logistics 2004 – Logistics networks in the integrated European market”. Poznań, May 19-21, 2004.
The creation and development of networks for production and supply are rooted in the global economy and help overcome time and spatial distances. This development causes specific changes and poses new challenges for enterprises, the task of which is to identify them quickly and respond just as quickly, allowing for commercial success. In this article, using the example of logistics, an outline of the network concept will be discussed along with tools helpful in its implementation.
Today’s product markets are characterized by products that rotate quickly, have a short life cycle, and are highly competitive, while markets are a global phenomenon and it is difficult to separate them from one another. For an enterprise, this means the necessity of expanding the product range. To meet the dynamics of competitiveness, one should consider expanding operations and product distribution to more markets, increasing the diversity of products or the range of services offered, and deeper market penetration. The efficiency and innovativeness of an enterprise are the most important factors that motivate it to stand out from other suppliers.
The need for dynamic and flexible management becomes clearly apparent when we look at Germany’s competitiveness in terms of location. In ELA studies from 1996, 45% of the surveyed enterprises rated Germany’s location as “good” or even “very good”. Four years later, only 21% of the same enterprises still held this view, which was caused by a continuous recession with a downward trend. Observed globalization trends lead to the conclusion that there is one path for increasing business efficiency – the eastern direction, and above all: Poland, Hungary, the Baltic states, and especially China. The development of global networks seems to be an increasingly widespread strategy, in which the need to combine several enterprises from different levels of the value chain into one effective business is understood. This type of network is called a horizontal network. A vertical network consists of enterprises with the same depth of supply and production within one branch of industry.
The goals that these two types of networks strive for do not differ from each other – faster reaction to market and technology changes, reduction of the amortization period of invested capital, faster search for markets for products and, most importantly, earlier visible economic success of products and services. The road to success leads through networks and the skillful use of the advantages flowing from their concepts, which determine success or failure. These advantages are: gaining time by shortening the product development period, access to markets and resources; cost reduction in the development, production, and logistics process; specialized advantage through the use of the know-how of suppliers, freight forwarders, and other service providers.
Creating a network is not a sufficient factor to reap the benefits (at least theoretically) of its advantages. It requires development and very often enormous powers of persuasion so that all partners in the network truly understand each other as partners, feel like important elements of the network, and are capable of sharing both profits and contributions to the final product. This entails a readiness for cooperation in the scope of information, communication, and process transparency among all network participants. Not only in the area of logistics do networks contribute to overcoming spatial and time distances during the development of a product or service. One can easily observe the transformation of the value chain into a value-added network. This development also affects other related aspects, such as information and communication technologies, changes in organizational structure, or the tendencies of enterprises to focus on their core competencies. It is difficult to state unequivocally which of the development processes is the cause of the changes, because several dynamic factors run in parallel, which accelerate and form each other through mutual interaction. We will use the example of logistics to demonstrate the development of the network and the definition of the related requirements for each partner.
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