Vertical partnership

The expanded roles of remaining participants (shaded areas) encompass new capabilities. These are often the result of horizontal and vertical partnerships as described in Section 17.5. By implication, several former members of the chain have exited, and perhaps have gone out of business... 

Figure 19.2 illustrates horizontal and vertical partnerships. Vertical partnerships reflect the trend toward consolidation in many supply chains to reduce the complications that go with too many participants and to make the supply chain faster in its response to changes. The evolving model of the supply chain described in Chapter 18 forecasts more growth of partnerships in the vertical direction. In these cases, fewer players perform more supply chain functions, capturing a greater share of supply chain value. 

Many vertical partnerships are based on tax exemption or reduction, but these elements have not been enough to sustain the investments accomplished in the chain, given the fact that the final price of the differentiated product is quite similar to the common meat (Pigatto et al, 1999 Bankuti and Machado Filho, 1999). The absence of global strategic planning by the chain participants is also one of the main causes of the failure of several affiances in Brazil (Pigatto et al, 1999 Perosa, 1999). 

The present study is characterised as exploratory, and its objective is to offer a picture that can make the deduction process easy of pertinent subjects in the investigation of a phenomenon (Tripodi et al, 1981). This kind of study has a descriptive character and phenomenon exploitation, in this case, two vertical partnerships in beef supply chain. 

The purpose of these vertical partnerships is the establishment of beef quality production, involving specific characteristics such as age, breed and carcass fat cover, as well as the quahty process accompHshed by all of the involved agents. However, there are no direct comparison of the two different alliances which also brings the issue of the different corporate cultures, structures and practices. The cases are presented and analysed individually, and further, implications based on their results are discussed. 

Table 2. Possible vertical partnership advantages and disadvantages questioned to beef producers.

It was established that the association would be responsible for the origin certification, accompanying the whole production process to the final product. In order to obtain conformity of the product, the companies opted for the vertical partnership alhance, valuing the closest relationship and benefiting the animals classified according to the established program standard. 

Bacteria and eukaryotes have many mutualistic associations, however a symbiotic partnership requires the bacteria to transfer to future host generations with fidelity. This requirement is generally met by either vertical or horizontal symbiont transfer. Vertical transfer is the direct transfer of symbionts to host offspring via the host s reproductive system, whereas horizontal transfer involves host s releasing cells into the environment, and subsequent host offspring infection by released bacteria. 

A partnership is not the same as a joint venture, which normally entails some degree of shared ownership across the two parties. Nor is it the same as vertical integration. Yet a well-managed partnership can provide benefits similar to those found in joint ventures or vertical integration. For instance, Pepsi, by acquiring restaurants such as Taco Bell, Pizza Hut, and KFC, ensured that Coca-Cola would never be served in these outlets. Coca-Cola has achieved a similar result without the cost of vertical integration through its partnership with McDonald s. 

Partnership classification A classification of partnerships has three dimensions purpose, direction, and choice. The purpose defines whether or not the partnership creates new space. Direction refers to the supply chain. Horizontal means partners are at the same echelon. Vertical is a partnership along the supply chain — probably between customer and supplier. Choice refers to the relative strength of each partner. A many-to-one means your company has many competitors and is seeking a partnership with a dominant partner. 

Add value downstream. By providing blends, ready-to-dilute formnlas, and innovative logistic solutions and inventory management, surfactant manufacturers will gain value in a spectrum of partnerships with customers that can approach virtual vertical integration (VVI). 

We view supply chain partnership initiatives as being of two fundamental types. The first is joining forces with another that has complementary, nonoverlapping skills. Both parties are relatively equal in terms of their contribution to the effort. It s like a marriage where "two live better than one" or "the whole is worth more than the sum of its parts." The direction for this type of partnership is "vertical" with respect to the flow of goods and services along the supply chain. Two companies combining research and development resources to develop a new product is an example. For example, one may develop a basic material the other may develop products made of the material. 

Figure 18.5 presents another scenario. In this case, a sphere (A) has been created that has end-to-end coverage centered on one of the products. This arrangement calls for potential partnerships along the supply chain from suppliers to the manufacturing operations to end-users. Partnerships would be expected to be vertical in nature. 

Interfirm collaboration can run from an arm s length transaction all the way to vertical integration. Interfirm collaboration can also include several points in between these two extremes including partnerships, strategic alliances, and joint ventures. The need... 

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