Physical and Digital Integration Strategies of Electronic Device Supply Chains and Their Applicability to ETO Supply Chains

Background

Research in operations management, marketing and supply chain management has predominantly studied the relationships between upstream manufacturers and downstream retailers in supply chains for physical goods (Chellappa & Shivendu, 2003; Padmanabhan & Png, 1997). Physical goods are so defined because they obey physical laws. They possess mass and occupy volume. Over time, they can break down and degrade. It is not possible to create products without first sourcing appropriate materials. Energy (which also needs to be sourced) is expended in transformation and transportation. It could be said, therefore, that a large proportion of SCM has to do with overcoming the constraints imposed by physics on the products under consideration.

However, with the rise of information and communication technology (ICT), not all products can be longer considered physical in the traditional sense of word. An increasingly important class of products, described variously as digital products, virtual goods or information goods (Shapiro & Varian, 1999) has emerged that cannot be considered physical in the traditional sense of the word. Surprisingly, little is known about digital product supply chains, where products such as software, movies, music and newspapers are created, stored and delivered in a digital form over a network (Chellappa, 2000).

The chapter begins with giving n outline of ETO. It then goes on to investigate the properties of physical products and examines how these properties influence the supply chain. It then contrasts physical products with digital products such as software. The chapter ends by outlining some innovative integration strategies and how they can be employed in an ETO context.