Supplier Relationship Management Process: System, Tools and Types of Collaboration - AIMS UK
Summary
TLDRThis script discusses the importance of supply chain relationships, highlighting two types: vertical and horizontal. Vertical relationships are traditional linkages between firms like retailers, distributors, and manufacturers. Horizontal relationships involve independent logistics providers working together based on trust and shared goals. The script outlines steps for forming logistics relationships and emphasizes three types of collaboration: vertical, horizontal, and full. It also introduces seven laws of collaborative logistics that foster successful partnerships.
Takeaways
- π Supply chain relationships are crucial for achieving coordination and integration among partners.
- π There are two types of logistics relationships: vertical and horizontal.
- π’ Vertical relationships are traditional linkages between firms in the supply chain like retailers, distributors, manufacturers, and suppliers.
- π€ Horizontal relationships involve service agreements between independent logistics providers based on trust and shared goals.
- π The intensity of involvement in relationships ranges from transactional vendors to strategic alliances.
- π A strategic assessment is the first step in forming a logistics relationship, identifying needs and strategies.
- π The decision to form a relationship is based on core competencies and the assessment of drivers and facilitators.
- π€ Evaluating alternatives is key to selecting the most appropriate type of relationship.
- π₯ Partner selection is critical and should consider the credentials of potential candidates.
- π The operating model of a relationship includes activities, processes, and priorities for building and sustaining the partnership.
- π Implementation and continuous improvement are essential for the success and evolution of the relationship.
- π Three types of collaboration are vertical, horizontal, and full collaboration, with full collaboration leading to the most significant efficiency gains.
- π The seven laws of collaborative logistics guide the creation of successful partnerships.
Q & A
What is the significance of developing meaningful relationships in the supply chain?
-Developing meaningful relationships in the supply chain is significant as it helps to achieve coordination and integration among partners, which is a high priority for firms to achieve individual and collective supply chain objectives.
What are the two types of logistics relationships mentioned in the script?
-The two types of logistics relationships are vertical and horizontal. Vertical relationships refer to the traditional linkages between firms in the supply chain, while horizontal relationships involve service agreements between independent logistics providers based on trust and cooperation.
Can you explain the concept of vertical relationships in supply chain logistics?
-Vertical relationships in supply chain logistics refer to the traditional linkages between firms such as retailers, distributors, manufacturers, and material suppliers. These relationships are transactional and involve buyers and sellers in ways that are common across all industries.
What characterizes horizontal relationships in logistics?
-Horizontal relationships in logistics are characterized by service agreements between two or more independent logistics provider firms. They are based on trust, cooperation, shared risk, and investments, with the aim of following mutually agreeable goals.
What is the difference between a vendor relationship and a strategic alliance in the context of supply chain logistics?
-A vendor relationship is transactional with little or no collaboration, representing a low level of involvement between the parties. In contrast, a strategic alliance involves cooperation where business organizations willingly modify their practices to achieve long-term goals, implying a high level of relational involvement.
What is the first step in forming a logistics relationship according to the script?
-The first step in forming a logistics relationship is performing a strategic assessment, which involves becoming fully aware of the manufacturer's logistics and supply chain needs and the overall strategies that will guide its operations.
What factors are considered when deciding to form a relationship with a logistics service provider?
-When deciding to form a relationship with a logistics service provider, a careful assessment of the company's core competency is considered, along with the evaluation of apparent levels of drivers and facilitators that suggest the most appropriate type of relationship.
How should a logistics or supply chain partner be selected?
-A logistics or supply chain partner should be selected following very close consideration of the credentials of the most likely candidates, ensuring they align with the company's strategic goals and operational needs.
What components are included in the structure of an operating model for a logistics relationship?
-The structure of an operating model for a logistics relationship includes activities, processes, and priorities such as planning, joint operating controls, communication, risk and reward sharing, trust, commitment, contract style, and financial investment.
Why is continuous improvement important in the implementation of a logistics relationship?
-Continuous improvement is important in the implementation of a logistics relationship because the future success of the relationship is directly linked to the ability of the involved organizations to achieve ongoing and breakthrough improvements.
What are the seven immutable laws of collaborative logistics mentioned in the script?
-The seven immutable laws of collaborative logistics are: real and recognized benefits to all members, dynamic creation, measurement, and evolution of partnerships, co-buyer & co-supplier relationships, flexibility and security, collaboration across all stages of business process, integration, open integration with other services, and collaboration around essential logistics flows.
Outlines
π Understanding Supply Chain Relationships
The first paragraph discusses the importance of supply chain relationships and the focus on working closely with various partners, including customers, suppliers, and logistics providers. It differentiates between two types of logistics relationships: vertical and horizontal. Vertical relationships are traditional linkages between firms like retailers, distributors, manufacturers, and suppliers. Horizontal relationships involve agreements between independent logistics providers based on trust and shared goals. The paragraph also outlines the progression from transactional vendor relationships to strategic alliances, highlighting the benefits and challenges of each. It introduces a process model for forming logistics relationships, beginning with strategic assessment and decision-making, followed by partner selection and structuring the relationship.
π Steps in Forming Logistics Relationships
The second paragraph continues the discussion on forming logistics relationships by detailing the steps involved. It emphasizes the importance of selecting partners carefully and structuring an operating model that includes planning, communication, and risk-sharing. The paragraph also discusses the implementation and continuous improvement of relationships, which is crucial for future success. Furthermore, it introduces three types of collaboration: vertical, horizontal, and full collaboration, explaining how each contributes to the efficiency of the supply chain. The paragraph concludes with the seven laws of collaborative logistics, which guide the creation of successful collaborative relationships by ensuring benefits for all members, flexibility, and integration across business processes.
Mindmap
Keywords
π‘Supply Chain
π‘Logistics Relationships
π‘Vertical Relationships
π‘Horizontal Relationships
π‘Strategic Alliance
π‘Partnership
π‘Strategic Assessment
π‘Implementation
π‘Collaboration
π‘Laws of Collaborative Logistics
π‘Continuous Improvement
Highlights
Firms are focusing more on working closely with supply chain partners, including customers, suppliers, and logistics providers.
Developing meaningful relationships throughout the supply chain has become a high priority for firms.
Two types of logistics relationships are identified: vertical and horizontal.
Vertical relationships are traditional linkages between firms in the supply chain, such as between retailers, distributors, manufacturers, and suppliers.
Horizontal relationships are service agreements between two or more independent logistics providers, built on trust, cooperation, and shared risk.
Vendor relationships are transactional with little collaboration, and are described as being 'at arm's length.'
Strategic alliances are highly relational and involve cooperation between two or more business organizations to achieve long-term goals.
Partnerships, which involve a high level of collaboration, produce more desirable results for all parties than individual efforts.
The process of forming a logistics relationship begins with a strategic assessment, which includes identifying logistics needs and business goals.
Careful assessment of a companyβs core competencies is important when deciding to form a relationship with an external logistics provider.
Drivers and facilitators in the relationship determine whether it should be transactional or collaborative.
Selecting logistics partners requires careful consideration of their credentials and compatibility.
The structure of a logistics relationship includes planning, joint controls, communication, trust, and risk-sharing.
Three main types of collaboration exist: vertical (buyer and seller), horizontal (competitors or same supply chain stage), and full collaboration (combining both).
Full collaboration, which combines both vertical and horizontal collaboration, leads to the most significant efficiency gains.
Transcripts
supply chain relationships firms have
directed significant attention toward
working more closely with supply chain
partners including not only customers
and suppliers but also various types of
logistics suppliers to achieve
coordination and integration among
partners development of meaningful
relationships through the supply chain
has become a high priority there are two
types of logistics relationships
vertical and logical vertical
relationships refer to the traditional
linkages between firms in the supply
chain such as retailers distributors
manufacturers and parts of materials
suppliers
these firms relate to one another in the
ways that buyers and sellers do in all
industries and significant attention is
directed toward making sure that these
relationships help to achieve individual
firm and supply chain objectives
horizontal relationship may be thought
of as a service agreement between two or
more independent logistics provider
firms based on trust
cooperation shared risk and investments
and following mutually agreeable goals
these companies belong to the same
supply chain stage and normally produce
or trade the same product
intensity of involvement as suggested by
the figure the range of relationship
types extends from that of a vendor to
strategic alliance in context of
traditional vertical context a vendor is
represented by a seller or provider of a
product or service and there is little
or no collaboration with the buyer or
purchaser a relationship with the vendor
is transactional and parties to a vendor
relationship are said to be at arm's
length that is at a significant distance
this form of relationship suggests a
relatively low or non-existent level of
involvement between the parties an arm's
length relationship is appropriate for
certain types of transactions for
example one time or multiple purchases
of standard products or services
alternatively the in relationships
suggested by a strategic alliance two or
more business organizations cooperate
and willingly modify their business
objectives and practices to help achieve
long term goals and objectives strategic
alliance is highly relational in terms
of the firms involved this form of
relationship typically benefits partners
by reducing uncertainty improving
communication increasing loyalty and
establishing common vision alternatively
the challenges strategic alliance
include the fact that it implies heavy
resource commitments by the
participating organizations and high
switching costs leaning toward the
strategic alliance a partnership
represents a customized business
relationship that produces results for
all parties that are more acceptable
than would be achieved individually
partnerships are frequently described as
being collaborative
forming a supply chain relationship the
figure outlines the steps in a process
model to form a logistics relationship
let us assume a model for a
manufacturing firm as it forms a
relationship with a supplier of logistic
services for example a transport firm
where Houseman etc step one perform
strategic assessment this first stage
involves the process by which the
manufacturer becomes fully aware of its
logistics and supply chain needs and the
overall strategies that will guide its
operations a logistics audit at this
stage may bring following useful
information business goals and
objectives needs assessment from
customer to supplier environmental
factors and industry trends
identification of gaps between current
and desired performance
step2 decision to form relationship at
this stage a decision is made to form a
relationship for example in a
manufacturing firm when the decision
relates to using an external provider of
logistics services such as the trucking
firm or Express logistics provider then
careful assessment of company's core
competency is considered step 3
evaluates alternatives apparent levels
of drivers and facilitators may suggest
the most appropriate type of
relationship to consider if neither the
drivers nor the facilitators seem to be
present then recommendation relationship
is transactional alternatively when all
parties to the relationship share common
drivers and when the facilitating
factors are present then relationship is
justified step 4
select partners selection of a logistics
or supply chain partner should be made
only following very close consideration
of the credentials of the most likely
candidates
Step five structure operating model
structure of the relationship refers to
the activities processes and priorities
that will be used to build and sustain
their relationship components of the
operating model may include planning
joint operating controls communication
risk and reward sharing trust and
commitment contract style and financial
investment
step 6 implementation and continuous
improvement the implementation process
may be relatively short or it may be
extended over a longer period of time
future success of the relationship will
be a direct function of the ability of
the involved organizations to achieve
both continuous and breakthrough
improvement
types of collaboration the three
important types of collaboration are
vertical horizontal and full vertical
collaboration refers to collaboration
typically among buyers and sellers in
the supply chain this refers to the
traditional linkages between firms in
the supply chain such as retailers
distributors manufacturers and parts and
materials suppliers horizontal
collaboration refers to a relationship
that is buyer to buyer and/or seller to
seller and in some cases even between
competitors essentially this type of
collaboration refers to business
arrangement between firms that have
parallel or cooperating positions in the
logistics or supply chain process full
collaboration is the dynamic combination
of both vertical and horizontal
collaborations only with full
collaboration do dramatic efficiency
gains begin to occur with full
collaboration it is intended that
benefits accrue to all members of the
collaboration
laws of collaborative logistics there
are seven immutable laws of
collaborative logistics that suggest
housing most effectively creates
successful collaborative relationships
real and recognized benefits to all
members dynamic creation measurement and
evolution of collaborative partnerships
co buyer & co supplier relationships
flexibility and security collaboration
across all stages of business process
integration open integration with other
services and collaboration around
essential logistics flows
you
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