Supply Chain Relationship

Management

Supply chain Relationship

Importance of SCR
Relationship management: Coordination, collabration and

information sharing between supply chain members

IT Design
SC network Design: Network structure nd business

processes
Relationship Dimesnsions: Scope, Criticality, : More

transactional relationship. More relational relationship

Supply Chain Relationship Matrix

Non Strategic Transaction
Contractual relationships
Partnership
Alliances

Based on Scope and Criticality, No. of Suppliers, managed

relationships(supplier management)

The Role of Trust

Trust based vs. Power based relationship
Trust based: Co-operative relationship(sharing objectives

of each other), managerial strategies to achieve coordination, elimination of duplication

Power based: Exploitation by stronger channel partner
Two views on how cooperation and trust can be brought
into any supply chain relationship.
Contractual based view: to ensure co-operation
Relationship based view
In long term supply chain relationship two phases are
there: Design (rules are established for relationship)and
Management(based on interactions)

Developing a trust based

relationship
Assessing the relationship (Mutual benefit,

based on equity)
Identifying Operational
Roles(interdependence of the parties,
sequential and reciprocal interdependence)
Creating effective contracts(anticipation for
future contingencies)
Designing effective conflict resolution
mechanism(proper communication of rules
and guidelines)

Managing a trust based

Relationship
Commitment
Clear method of communication
Performance visibility(transparent system for

evaluating actions)
Fairness(disclosure of decisions)

Managing conflict and dispute

resolution
Relationship conflict
Data conflicts
Interest conflict (wrong perception)
Structural conflicts(unequal control,

ownership, power authority)

Value conflicts(mostly for inter cultural
interactions)

Dispute resolution
procedure
Litigation (formal proceedings, abide by Law)-

for breaching contract or some fraudulent

practice
Arbitration
Mediation
Negotiation

Negotiation concepts, styles and

tactics
Leverage
Position vs Interest
Negotiators Dilemma(integrative and

distibutive opportunities)
Negotiation styles: Adversarial Negotiators,
Problem solving negotiator

Adversarial tactics
Extreme Openers- anchoring: anchoring effect
Few and small Concessions-Reciprocity: the

norm of reciprocity, rejection then retreat

Withholding information(Information
asymmetry)
Manipulating commitments(binding the
counterparty, binding yourself)

Problem solving tactics

Listening
Asking
Inventing
Referencing(with reference to objectives)

Relationship management practices

The KEIRETSU Supplier Partnering Model: STEPS:
1. Understand how your suppliers work
2. Turn supplier rivalry into opportunity
3. Supervise your suppliers
4. Develop supplier capabilities
5. Share information
6. Joint improvement
.Partnership agreements
.Diluting Power(dividing authority)

Global Supply chain management

The Global Environment
Global environment factors:

Economic, Cultural, Political, Demographic

Opportunities and barriers
Factors impacting Global Supply chain:
1. Market and Competition
2. Infrastructure
3. Politics and economy
4. Culture
5. Technology
6. cost

Global market challenges

The global consumer
Global vs local marketing
Cultural challenge

Dimensional differences of Culture:

1. Small vs large power distance
2. Individualism vs. Collectivism
3. Masculinity vs Femininity
4. Weak vs Strong uncertainty avoidance
5. High vs low context culture

Global Infrastructure Design:

Challenges
Labor
Transpotation
Suppliers
Role of technology: IT

Cost Consideration
Hidden cost
Non cost consideration

Political and economic

factors
Impact of exchange rate fluctuations
Regional trade agreements
Impact of non tariff barriers: Import quota,

trigger price mechanism, local content

requirements, technical standards and health
regulations

Forecasting

Forecasting Vs. Planning

Forecast drives a plan and plan is made in

response to forecast
It drives all business decisions
Planning requires organization of resources
Forecasting- the process of predicting future
events
Planning- the process of selecting actions in
anticipation of the forecast

Planning-Decisions
Scheduling existing resources
Determining future resource needs
Acquiring new resources
Demand management-the process of

influencing demand
Forecasting, planning and demand
management are interrelated

Impact on the organization

Impact on supply chain management

Channel partners forecasting their product

need according to immediate buyer , not the
final customer

Forecasting Process
Principles of Forecasting: (Degree of

uncertainty)
1. Forecasts are rarely perfect
2. Forecasts are more accurate for groups than
individual items
3. Forecasts are more accurate for shorter than
longer time horizons

Steps: Forecasting
Process
Decide what to forecast
Analyze appropriate data
Level or Horizontal(for mature stage)
Trend (when data exhibit in decreasing or increasing
over time)
. Seasonality(pattern that repeats itself)
. Cycles (pattern created by economic fluctuation)
Data= Pattern+ Random Variation
3. Select the forecasting model(based on historical data)
4. Generate the forecast
5. Monitor forecast accuracy
1.
2.
.
.

Factors in Method
Selection
Amount and type of available data
Degree of accuracy required
Length of forecast horizon
Patterns in the data

Types Of Forecasting
Methods
Quantitative(Mathematical Modeling, objective, capable

to handle large amount of data, more accurate)

1. Time series Model(Analysis of patterns in time series
data)
2. Casual Models (based on modeling relationship
between variables)
.Qualitative( Judgemental method , subjective, sales
force composite, Human biasEx: Intention survey, )
1. Executive opinion
2. Market research
3. Delphi method

Network and
System Design

Processes across supply

chain
Order management process
Payment procedure
Manufacturing
Supply of raw materials

Supply chain strategy

Two elements which supports the strategy:
Supply chain network design-processes within and across

firms
IT design-for data sharing, communication and

synchronization

Business process
It is a structured set of activities or steps with specified

outcomes.
Series of well coordinated activities
Design a particular output for customer
Every process has structural and resource constraints

(speed , availability of raw material, transportation problem

etc.)
Ex: customer service: product availability, due dates,

returns, billing

Managing supply chain processes

Supply chain-collection of processes
Two views: Transactional view-make processes more

efficient & effective(supply chain Network redesign,

standardization), Relationship view- between people and
organizations, coordinate activities.
Requires joint vision and partnership

Understanding Processes: Theory of

constraints (TOC)
Limiting factors which prevents you to achieve goal

System Constraints:
Equipment, people, processes, time, quality of work life, interpersonal

relation
Activities can be linked serially or parallel
Loss of time, money goods
Restructuring the supply chain is required

Solution:
1.

Identify the constraint

2.

Exploit the constraint

3.

Subordinate all other processes to above decision (align whole

system)

4.

Elevate constraint(increase capacity of constraint)

5.

Engage in continuous improvement

System variation
Variability in amount of output
It consumes resources, time, repetition of

activity
Solution:
1. Attempts to reduce such variation
2. Create buffers
3. Processes should be more flexible
4. Cross training should be given

Capacity Implications
Maximum amount of output that can be

achieved by a process
Units for capacity measurement can be size
and storage limit(Design and Effective
capacity)

Integration of supply chain

Processes
Stages of Integration-internal integration, integration

with supply chain members

Three stages:
1. Organizational functions are independent
2. Functions are integrated within the organization
3. Functions are integrated across the supply chain
Ex: Material flow: sourcing, operation, marketing,
distribution
Higher integration- less inventory
Vertical integration (coordination among all channel
partners)

Designing supply chain networks

Physical structure- No. of companies, structural dimensions of network,

no. of processes linked across SC

SCM
Designing segmented structures (custmization- market segmentation).

3 step approach:
1.

Identify key drivers of complexity (low price, time to market, volume

flexibility)

2.

Design differentiated supply chain segments to address complexities

3.

Create customized end to end blueprint for each supply chain

segment

ERP