Chapter 11 is entitled “Supply partnerships and supply chain power.” The intense coordination necessary for effective supply chain integration necessitates a reduced supplier base; where manufacturers were once producing products with thousands of suppliers, successful firms are now manufacturing better products with fewer suppliers.
Chapter11: SupplyPartnershipsand SupplyChainPower PurchasingandSupplyChainManagement 3rdedition PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. PurchasingandSupplyChainManagement,3rdedition,Copyright2013,All TheWinưWinPartnershipDyad ã • Buyer and supplier share goals and risks through: • Joint planning and control • A supply chain with increased information flow and enhanced loyalty The result for both firms: • Decreased uncertainty • Greater control of costs • Cycle times, inventory • Quality, customer satisfaction Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved. Partnership • Definition: A tailored business relationship for achieving a competitive advantage based on: • • • Mutual trust • Openness • Sharedrisk ã Sharedreward Strategicpartnershipsreceivebenefitsofjointventures andverticalintegrationwithouttheownership commitment PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. BenefitsandRisksofSupplierPartnerships ã • Benefits: • Higher quality, and transaction costs • Increased market stability • Setup time reduction, improved processoriented layout • Increased communication and goal congruence Risks: ã Partnermaynotmeetexpectations ã Lossofpartnershipcontrol ã Complacency PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. Largevs.SmallSupplerBases • Benefits of a large competitive supplier base: • Higher manufacturer bargaining power • • • Lower costs, higher quality, reasonable delivery times, and special exigencies Shelters against supply interruptions Benefitsofasmallersupplierbase: ã Lessadversarialattitudes ã Lowerswitchingcosts ã Decreasedshippingerrors Quantityandrelationshipưbaseddiscounts PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. • Power of a Supply Chain Member • Definition: • • The ability of one channel member (the source) to influence the actions and intentions of another supply chain member (the target) Characteristics: • A composite relationship–oriented variable • Extremely complex in nature • Affects both the target and the source • Key factor in a supplier–buyer alliance Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved. Types of Power • Mediated power sources • Based on the source’s intention to bring about some action • Includes reward, coercive, and legal legitimate power • Represents the competitive, negative uses of power • Traditionallypreferredbyorganizations PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. TypesofPower(cont.) ã Nonưmediatedpowersources ã Occurasanaturalpartofbusinesstransactionsanddonot necessitateintentionfromthesource ã Thesourcemaynotevenbeaware ã Includesexpert,referent,andtraditionallegitimatepower ã Representsamorerelationalandpositiveuseofpower PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. CriticalRelationshipFactors ã Dependence • Commitment • Trust • Compliance • Cooperation • Conflict • Satisfaction • Performance • Profitability Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved. Power, Cooperation, and Compliance • Definitions: • Compliance • • Cooperation • • Action without inherent desire Action with implied internal agreement Powerattemptstoforceatargettocomplywiththe sourcesdesires ã Mediatedorcoercivepower:Compliance ã Nonưmediatedpower:ComplianceandCooperation 10 PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. PowerandConflict ã Conflict • • Competitive power sources • • When one supply chain member hinders goal attainment and performance of another Increase conflict Positive use of power • Can reduce conflict 11 Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved. Power and Satisfaction • • Satisfaction • The extent of contentment with the relationship • Overriding factor in determining the future of a supply chain partnership Drivers of satisfaction • • Planning, mutuality, interdependence, and operational information exchange Without satisfaction, trust and commitment cannot exist 12 PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. Power,Performance,andProfitability ã Performance ã ã Mediatedpower ã ã Theabilitytoexecuteintentionsandgoals Couldreduceperformanceofthetarget Nonưmediatedpower ã Improvethetargetsopinionofthesourcesperformance 13 PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. Questions? 14 PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. ... Improve the target’s opinion of the source’s performance 13 Purchasing? ?and? ?Supply? ?Chain? ?Management, 3rd edition, Copyright © 2013,? ?W.? ?C.? ?Benton? ?Jr., All rights reserved. Questions? 14 Purchasing? ?and? ?Supply? ?Chain? ?Management, 3rd edition, Copyright © 2013,? ?W.? ?C.? ?Benton? ?Jr., All rights reserved. ... When one? ?supply? ?chain? ?member hinders goal attainment? ?and? ? performance of another Increaseconflict Positiveuseofpower ã Canreduceconflict 11 PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved.... Nonưmediatedpower:ComplianceandCooperation 10 PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. Power? ?and? ?Conflict • Conflict • • Competitive power sources • • When one? ?supply? ?chain? ?member hinders goal attainment? ?and? ?