Research Paper on "How Can We Improve Supply Chain Relationships?"

Research Paper 10 pages (2879 words) Sources: 1+

[EXCERPT] . . . .

Supply Chain Management

Supply Chain Relationships

There has been a huge paradigm shift in the way that modern companies compete, and that is that they no longer just compete as autonomous entities, but rather as supply chains

This means that businesses are a part of an extremely competitive market and the success of any given company is dependent upon management's capability when it comes to integrating the businesses' intricate network of business relationships. Because there is major competition for customers, companies may need to change the way that their supply chain is operating and thus a change needs to come in the way that it is managed. For change to occur, communication is vital, and for communication to occur, people must be willing to work together. Supply chains are all about relationships that are trusting and loyal; without trust and loyalty in a supply chain, the company is pretty much doomed. Internal collaboration is imperative as is external collaboration with suppliers and customers. This paper will attempt to show the importance of relationships in supply chain management and how companies can nurture their relationships with both customers and suppliers.

The purpose of supply chain management and relationships is to build cooperation and trust and the recognition that, properly managed, the whole can be greater than the sum of its parts

. In order for supply chains to be managed successfully, it is vital that people work together -- both internally in an organization and as well as externally with suppliers and customers. Inventory is a very common component in every product supply chain and thus it requires joint management approaches. Supply chain management is about delivering products to its customers and satisfying the customers in the process so that loyalty can be established. The best supply chain management manages to improve customer satisfaction overall while also reducing overall costs

Today one of the most common ways to think of "supplier relationships" is as customer service; in fact, the two are used rather synonymously. Smart companies know that supplier relationships and customer satisfaction is vital to a successful business. When a company doesn't manage the relationships with its suppliers, business may start to fade - -and will most likely dry up eventually. Customer service is dominant in any business and customers need to be satisfied with a company's products if they are to stay loyal to a business. If customers are not fully satisfied, there is always another supplier who is willing to take the business and offer the customer service that customers both desire and deserve. Businesses need to start looking at customers as a great privilege rather than something that they deserve because they supply what a customer wants. There are many companies these days that supply what a company wants.

What can supply chain management and customers do to satisfy its customers? This questions needs to be asked and relationships in the supply chain are vital for understanding the customer's expectations.

To understand customer expectations and what supply chain management and customers can do to satisfy its customers, a definition of supply chain is required. What is a supply chain? Essentially, a supply chain is the process that "integrates, coordinates and controls the movement of goods, materials and information from a supplier through a series of intermediate customers to the final consumer

. The most important aspect of a supply chain is that it unites all activities between suppliers and customers to the consumer in a timely fashion. Supply chain management includes the management of buying/sourcing, making, moving and selling activities

When thinking about the relationships in supply chain management, one has to consider the many different types of relationships that exist. There are strategic relationships, tactic relationships, transactional relationships, internal relationships, and perhaps many more. There are as well relationships among the supply chain community

The supply chain universe can be thought of as clustered around three "estates," and perhaps comparable to pre-revolutionary France. They can be thought of as the First Estate, which would be the academic community (i.e., the clergy); the Second Estate, which is the consultants and software developers (i.e., the nobility); and the Third Estate, which are the working practitioners (i.e., the commoners), led then like now by the bourgeoisie of visible advocates. Then there is also a Fourth Estate that should be mentioned -- the press; however, the press does not play the same "watchdog role as its counterparts in the outside world"

All of the aforementioned relationships must be maintained in order for them to have some sort of balance. If there is too much power in any of the areas, then there is the risk of undermining the efficacy of the supply chain. Balance is crucial to the supply chain universe just as it is essential to the universe in which we live.

The relationships among companies and all levels of government -- federal, state, and local -- are necessary also. "Governmental and regulatory bodies can provide restrictions and incentives, regulations and freedom, and roadblocks and opportunities for individual companies"

. Governmental bodies can offer restrictions as well as incentives, regulations and freedom, and roadblocks and opportunities for individual businesses. They may also offer venues for teaching as well as research, and they can assist in creating the environments that incubate consultancies and technology development

The best supply relationships have a high level of trust and communication, mutually beneficial relationships with important suppliers and customers. While there are some big businesses that are able to ask what they want in terms of pricing and terms as well as processes by threatening to take away their business, there aren't very many of businesses that have the power or economic stability to be able to do that. For the majority of businesses, developing very strong and constructive relationships is important to a supply chain's success.

For a supply chain to have a successful business, the relationship should be a mutual one where information, data and visibility is easily exchanged. The ability to communicate demand events and the direction of strategic plans is vital. Linking information systems and as a team leveraging the potential for Internet and other electronic communications is also key. Working together to decrease costs and improve the quality of products while understanding capacities and capabilities is also important

When thinking about the customers, there needs to be knowledge of strategies, direction, event plans, and the requirements for flexibility. The whole process of collaborating works both ways in a supply chain; forecasting and replenishment needs to be considered from both sides. Customers need to know specifics about the supply chain -- like the capacities and capabilities of it. It is a business's job to educate its customers about what it can do for them. Understanding both the issues related to supply chain and customer can really help the relationship between the two.

A company cannot expect to have positive external relationships if their own business is not in order. If a business does not have open lines of communication then there is no way that it will be able to have open lines of communications with others outside of the business. In order for a supply chain to be successful, first it must look inward and fix whatever is going on internally. This can often be the source of many problems that hold businesses back from being as successful as they could be.

In the very early stages of supply chain development, companies often get rid of suppliers or customers that are inappropriate, because they do not have the capabilities to serve the company, or they are suited for the company, or they aren't interested in creating a more collaborative relationship. Thus, supply chain managers will want to focus on those relationships that are suited for their company. This may be considered as a strategic alliance. When one has a strategic alliance, information is share, assets are united for projects, and together joint improvements are sought. Strategic alliances can be very powerful and so they need to be discussed in terms of growing a business and bettering supply chain management aspects, because strategic alliances often have the ability to better supply chain management overall.

How does a company create a strategic alliance? Unfortunately, most companies do not have the ability to develop -- much less implement and maintain supply chain alliances. The whole problem is a way of thinking; in order to create new systems in a company, a company must change the way it sees their customers and their suppliers as well. Companies cannot have the goal of profiting as their number one goal; there must be the goal of maximizing the profits or success of all companies in the entire supply chain; this must be teamwork. There are many different elements that go into making a supply chain successful and these elements must all come together to create a final benefit for the customer. Trust-building is thus important as so many operational and tactical plans will be shares… READ MORE

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