Concentrated Clusters and Supply Chains Management

Topic: Concentrated Clusters and Supply Chains Management

How Concentrated Clusters Enhance the Management of Supply Chains and Improve Firm Performance

In simple terms, clusters are concentrations of interconnected companies that are positively linked geographically and also have the same industry to which they either produce or deliver services to. These companies or institutions in the same cluster are known for sharing infrastructure, technology and even the distribution or supplier networks. On the other hand, a supply chain involves having a concentrated network of factors that aid in the production of goods right from the very beginning where the raw facilities are used. In this regard, companies are not put to task of having to carry out heir production using raw materials right from their scratch but can easily get access to different forms of the raw materials that have already been manufactured by other companies (Perry, 2005). Supply chains on their own are very effective in ensuring that the production process is not only competent enough but also very fast so that more production takes less time to materialize.

The combination of the above two management strategies for a group of companies may only come in as double rewarding since the system is made to operate more automatically and in a more accelerated speed. By bringing in close (geographical proximity) companies that are related in terms of their output it means that one company may be producing the raw product fro the other company and the cycle goes on within a very limited geographical area. In return, the management of supply chains is bound to reap the benefits of close monitoring of systems which ensures that detection of any flaws in any of the companies within the cluster can be easily corrected due to the close proximity that is shared by the companies (Taylor, 2004).

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