Directv’s Supply Chain

DIRECTV’S SUPPLY CHAIN

Introduction

Supply chain management has become one of the core business practices for any organization in this contemporary business environment. The significance of effective supply chain management has increased over a period of time for broadcasting and satellite services organizations with the objectives such as saving costs, reducing the manual efforts enabled by process changes, streamlining the information availability and increasing the supply chain velocity time. Since the digital television market is getting saturated with the overcrowded competitors, the need for organizations to develop new business model that enhance the agility of the supply chain has significantly increased. This small research paper majorly emphasizes on elaborating about how the reengineering or restructuring the supply chain has helped DirecTV, an American direct broadcast satellite service provider, to meet the organizational objectives and to meet the demands of customers for an ever-greater variety of products and services.

DIRECTV

DirecTV is an American broadcast satellite service provider headquartered at EL Segundo, California. The organization has started satellite services in 1994 targeting the households of the United States. After launching the DirecTV programming services, the organization has entered into agreement with Digital Equipment Corporation to procure the hardware, Matrixx Marketing to provide customer care services and DBS systems to create billing software (DirecTV, 2013). In 2004, Howard Hughes, the founder of the organization, has announced his intent to focus majorly on the satellite television service provision and rolled it out as a separate entity that provide satellite services to the household customers. DirecTV has employed approximately 27,000 employees with net income of $2.859 million in 2013 (DirecTV, 2013).

Supply Chain Management

Supply Chain Management is a process of streamlining the supply-side activities in order to order to take control over production, shipment and distribution (Cooper et al, 1997). An impeccable supply chain management process would enhance the quality of the production environment and help the organization to gain the competitive advantage. The supply chain management, in a nut shell, looks after the flow of goods within the organization. The flow normally refers to the movement of raw materials from storage area to work-in-progress area to inventory of the finished goods to distribution to the inter-linked networks that reach the end customers. The effective supply chain management would help the organization to reduce the ownership of the raw materials and distribution channels and to enhance the trust and collaboration with the supply chain partners.  The globalization, information technology and outsourcing practices have been helping the organizations to successfully operate supply chain networks with the help of the technology enablers such as Dell and Hewlett Packard.

The changes that took place in the 21st century have significantly contributed to the development of the stronger supply chain networks in the market. In olden days, organizations were afraid of getting into collaboration with other companies because such process was quoted as a time consuming and high-cost oriented one. Today, organizations are free of such apprehensions because the latest technologies and communication tools are helping them to effectively manage the collaborations at significantly lower transaction costs. As Lambert (2004) identified, the successful supply chain management demands organizations to integration of all the functions with the operational environment so that the movement of goods is transparent to all the departments.

Restructuring the Supply Chain Management

A numerous of factors will trigger the need for reengineering or restructuring the supply chain management activities. Some of these factors include growth-driven economy, globalization and internationalization, changes in the customer dynamics which alter the customer segmentations, huge production costs and poor profitability levels (Cooper et al, 1997). The reengineering of the supply chain management is a process of developing a clear roadmap to integrate the supply chain network and designing systems for internal planning, creating a framework for collaboration with the supply chain partners and implementing reverse logistics process (Hakansson and Ford, 2002). Some of the major benefits that an organization gains through restructuring the supply chain are reduction the operational and personal costs, enhancement of the process quality, streamline the information/communication flow and enhancement of the customer service.

Organization that plan to restructure the supply chain needs to have critical understanding on four important things. They are forces and factors that push the organization for restructuring, the purpose of the paradigm shift that the organization wants to bring by restructuring the supply chain, the successful implementation process and a clear view to the future that the organization is envisaging. Lack of anything mentioned above not only leads to poor supply chain restructuring but also triggers great resistance from the employees (Dixon et al, 1990).

How restructuring the Supply Chain has helped DirecTV to meet its growth objectives and satisfy consumer demands?

DirecTV was one of the very few organizations that have witnessed explosive growth during last few years. The organization with its poor operational environment and disorganized supply chain processes found it very difficult to handle the explosive growth rates and increasing subscriber base. In order to handle the explosive growth rates and meet the consumer demands, DirecTV has embarked up on a large-scale multi-year supply chain restructuring project. DirecTV has carried out below mentioned activities while executing supply chain restructuring project that helped in meeting the growth objectives through below mentioned ways.

Implementation of Supply Chain Maturity Framework

Supplier Chain Maturity Framework developed by Computer Sciences Corporation has been effectively implemented at the operational environment of DirecTV. At DirecTV, during the first step of the framework, the priority was given to the integration of the functional areas which are directly connected with the supply chain. In order to integrate the functional departments, DirecTV has implemented SAP Enterprise Application Suite, also known as Enterprise Resource Planning (ERP). ERP is an enterprise level application that streamlines the information and communication flow with the operational environment of the organization by integrating the functional departments such as production, inventory, marketing, sales, finance and human resources (Vilpola, 2008). The implementation of the ERP application has helped DirecTV to overcome the inefficiencies such as poor inter-organizational integration, barriers to businesses, poor communication/information flow within the value chain.