Relationships in supply chains

A supply chain consists of various t5q)es of organisation, among which numerous network connections are formed. Through their involvement in the management of material goods and information flows, the links in the chain participate in the development of supplier-buyer connections. Connections between suppliers and buyers constitute a repetitive sequence in supply chains and, as such, can be deemed essential. Each business unit operating in the supply chain is a supplier and a buyer at the same time. This applies to suppliers of raw materials and retailers alike. 

When describing the relationship between a supplier and buyer, one should refer to the 3C paradigm, which covers the three possible types of market coordination in a supply chain cooperation, competition, and control. Each aspect of coordination is characterised by specific indicators, e.g. the main relation, the dominant type of management relation, the degree of independence, the resources contributed to the relation, and a sentimental feeling. For instance, the main relation and the attitude for cooperation are, respectively, collaboration and partnership. 

Results of research carried out by the Aberdeen Group show that the main reasons for building collaboration between companies are increasing prices of materials and logistics costs the growing demands of customers the lack of visibility in supply chains and increasing business complexity. On the other hand, one of the basic measures 

Customers are one of the major values for any company. Hence, the basic objectives of supply chain management include the improvement of both external and internal customer service. To maintain and develop their relationships with purchasers, companies use different strategies. Some of them attempt to establish partnership relationships and trust, and to complete projects together with purchasers, while others set up exit barriers for customers or entrance barriers for competitors (Swiatowiec 2006, p. 139). 

Relationships in a supply chain should be identified in both the B2B and the B2C markets. They are governed by different responsibilities, as the behaviours of institutional and individual customers are dissimilar. To meet the strict requirements of both markets, companies more often focus on suppliers, who play a vital role in adding customer value (Helander and Moller 2007). Building supplier relationships is aimed at boosting the effectiveness and efficiency of flow processes in the supply chain by reducing costs, shortening cycles (e.g. production, order completion) or lessening the probability of disruptions that may cause delays and the failure to complete customers orders in line with their expectations. 

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The identification of the level of social capital in the supply chain s environment may determine the choice of how to configure the chain, expected expenditures and the effects of its operation. At this level of aggregation, social capital is a significant background for supply chain management. Thus, the impact of the level of social capital in-group and individualistic cultures on the dominant relationships in supply chains is presented in Table 7.3. 

Table 9.8 Questionnaire determining the level of customer relationship in supply chains...

Thousands of activities arc performed and coordinated within a company, and every company is by nature in some way involved in supply chain relationships with other companies (Bowersox 1997b Stigler 1951 Coase 1937). When two companies build a relationship, certain of their intemtil activities will be linked and managed between the two companies (Hakansson and Snehota 1995). Since both companies have linked some internal activities with other members of their supply cheiin, a link between two companies is thus a link in what might be conceived as a supply cheiin network. For example, the internal activities of a manufacturer are linked with and can affect the interned activities of a distributor, which in turn are linked with and can have an effect on the interned activities of a retailer. Ultimately, the internal activities of the retailer are linked with and can affect the activities of the end customer. 

This tool works very well in supply chain managemertt when members from companies get together and a problem is presented. What can come from this type of exercise is a strorrger relationship and new and creative ways of working together. 1 have seen this applied to product lines as well, where ideas for new products are the topic of the brainstorming sessiom... 

Affinity diagrams can be used in supply chain management to help determine methods that may be used to help improve a supplier s performance. This is a tool that will put similar ideas together to see where some relationships might lie. As the groups are developed, new ideas may be generated and then analyzed as to how they can be used to help the supplier. 

Information technology can be used to help improve the processes involved in supply chain management. There are many different types of software packages available and the best one for a specific application needs to be evaluated for each company. There is no one-size-fits-all approach that will work well. When purchasing and implementing a software package, the support of top management is a must. The resources for successful implementation must be allocated. Software can enhance the efficiency of processes but the personal relationships need to be mairrtained. 

Emmett S, Crocker B (2006) The relationship driven-supply chain creating a culture of collaboration throughout the chain. Gower, Aldershot Filho A, Andrade J, Oliveira M (2010) A safety culture maturity model for petrochemical companies in Brazil. Saf Sci 48 615-624... 

Svensson, G. (2002). A typology of vulnerability scenarios towards suppliers and customers in supply chains based upon perceived time and relationship dependencies./wterwaftoua/Jowrwa/ ofPhysical Distribution Logistics Management, 32(3/4), 168-187. 

Subramani, M. (2004). How do suppliers benefit from information technology use in supply chain relationships MIS Quarterly, 25(1), 45-73. 

The core tenet in developing flexible supply chains is the practice of collaboration. Supply chain collaboration is the confluence of all parties in the supply chain acting in unison towards common objectives. Collaborative partners share information, knowledge, risk, and profits (Men-tzer et al., 2000) based on a foundation of trust and commitment to one another. Ultimately, as organizations move beyond mere operational-level exchanges toward collaboration, supply chains become more competitive (McLaren, Head, Yuan, 2002). Supply chain collaboration does not happen on its own, Mentzer et al. (2000) found that certain conditions or enablers must be in place for partners to forge a collaborative union and share in the benefits ofthe effort. Specifically, the authors found that collaborative relationship required partners in supply chains to ... 

The aim of this study has been to demonstrate factors and individual levels that are critical to the outcome of relationships where supply chain members are involved in collaboration. The case study in this collaboration enabled an in-depth insight into its characteristics, such as technological capability and competence of supplier, suppliers level of independency or interdependency, and openness of processes in line with confidentiality. The case study also introduced a three-stage approach, wherein to achieve a smooth transition towards collaboration, the transition should include the three levels from the SCM level to SBU level to individual level and strive to create a common aim /strategic goal at each level. 

Supply-Chain Council (see) A nonprofit association of companies interested in supply chain management (SCM). The Council was incorporated in June 1997 as a not-for-profit trade association. The Council offers members an opportunity to improve the effectiveness of supply chain relationships from the customer s customer to the supplier s supplier. Its primary mission is to develop and maintain its Supply-Chain Operations Reference Model, or SCOR. 

It is not unusual for the actual shipment date to be a few days different from the original promised shipment date due to uncertainty in supply chain processes. However, this unreliability might not be acceptable to relationship-based customers. Therefore, Dell offers a special service through Dell Premier accounts at premier.dell.com for business and public sector customers. The service not only provides reports and tools to assist purchasing, asset management, and product support, but also allows customers to hook up their ERP/EDI systems with Dell s to perform real-time computer systems procurement. Through Premier accounts, Dell commits to more responsive and reliable order promising and fulfillment solutions for its relationship-based customers with support from advanced IT systems (see Kraemer and Dedrick 2001). 

In summary, there is a direct and significant relationship between supply chain inventory metrics and a company s financial metrics. An increase in inventory turns has a cascading effect on the other inventory and financial measures as follows ... 

The monitoring results are evaluated and decisions concerning necessary changes in the supply chain configuration are made. These decisions are based on an assessment of the current supply chain situation (Bowersox et al. 2012). The situation assessment includes internal review of supply chain structure and performance, assessment of market and competition, evaluation of the relationship between supply chain partners, and assessment of technological factors. This situation assessment is further refined during the initialization step. 

Fig. 7.2 Relationship management framework in supply chain management, after Stuart (1997)...

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