The relation between the supply chain network and Economies of scale & Economies of scope.

First let’s define what are the:

Economies of scale

Economies of scale refers to the accumulated volume in production and sales which occurs decreasing the cost price per unit, due to the experience curve and increased efficiency in a lot of factors such as production, marketing, and other factors. The global presence has a significant effect on extending the firm’s scale of operations through giving the firms a large capacity in its production as well as large asset base. From this point we can say that; through large scale, the firm could create a competitive advantage but in case if the firm convert the scale into economies of scale.

Economies of scope 

First let’s say the economies of scope happens, when the firm is serving in diverse marketplaces in the world, simply the global scope can’t take place in case the firm is serving a customers in just one country, customers should purchase a bunch of identical products and services across diverse countries and they can bring those products either from a horde of global suppliers or a single global supplier (international marketer) that are presents in all of the markets which the firm is already serving customers within. From this point we can conclude that compared with a horde of local suppliers and a single global supplier (marketer) can lead to increase the value for the global customer among the consistency in the product’s quality and features as well as in the services across countries, here we can conclude the importance of the integration between marketing and supply chain management within professional supply chain network across the countries. As well as the importance of local marketing talent.

. During the last decades the multinational firms could be succeeded by how they capture the economies of scale and & economies of scope, the supply chain network can help the companies to achieve this concept through:

1) Decreasing the operating cost per unit as well as spreading the fixed costs over larger volume due to experience curve effect.

2)Pooling global purchasing which support the firms and provide an opportunity to concentrate global purchasing power over suppliers, which lead to reducing the transaction cost & time.

. The challenging in capture the economies of scope within the global level lies on the quick response from the firm on the tension between tow factors: The need for central coordination of most elements on the marketing mix and the need for local autonomy in the actual delivery of products and services. The supply chain network guarantee poll of materials & info-flow and procedures, which ensure high quality and dynamic response and delivery.

The supply chain network is an effective linkage, which can:

 1)Extend organization learning to supply chain learning.

2)Extend market orientation to supply chain orientation (mediate the                      relationship between market orientation and financial issues that lead to marketing success.

    3) provide Intangible assets such as knowledge management, organization learning from accumulated experience gained also from economies of scale which lead to conduct economies of scope,  which enable the firms to enhance the market performance among different countries, so the supply chain network is helping the firms to increase all of those intangible assets to the internal and external customers.

4)  The best methods for capturing the voice of the customer in different firms embedded in different national and corporate cultures.

5) In the long term the supply chain network should provide service to the internal and external customers on what they already need by just mention their vision and mission only without mention their target market.