Strategic Relationships in the Organisations Supply Chain - Essay Example

The importance of undertaking a detailed analysis of the existing supply chain relationships (SWOT). Periodic review of supply chain relationships is quite important for every organization and keeps you updated with actual facts no matter what the situation looks like upfront. In many situations the relationship upfront with your supply chain partners look quite well off but when the actual facts are examined then the reality appears to be quite different. To analyze the existing supply chain relationship various methods are there which can be employed to find out how the partners in supply chain are performing and is the relationship only seems effective or is actually effective and beneficial for the organization. Either we can go in a stepwise manner and review performance of each supply chain component or we can view the who process as one unit and do its SWOT analysis through which we can easily find out the weak link in the entire process and then can work or finding a solution for that weakness. Now the main benefit that we’ll achieve through SWOT analysis is that we’ll have a full scale analysis of our supply chain process i.e. We’ll identify our core strengths which shall be quite helpful for us. Knowing our core strengths we can focus on those areas or components to further improve and excel which will not much take time and improve our efficiency. By knowing our weakness we’ll know what factors have been harming us and what steps are needed to be taken to eliminate the weakness or is the weakness due to such a weak link than we need to arrange alternate measure to fulfill the requirement on temporary basis. Next finding opportunities to established new and stronger relationships will help us grasp any such opportunity which shall be helpful in the longer run for the organization. Finally identification of threat will help us stay prepared for any troublesome or problematic situation which in normal circumstance would be disastrous for the organization and would have damage the organization’s image aswell as result in financial loss aswell. The importance of the existing relationships within the supply and the contribution these make to the organizations success. The process of management of various human, machine, technological and other resources and maintaining the relationships that the organization has its with supply chain stakeholders which include staff, employees, labor, supplier etc to ultimately develop end-product for the customer from mere raw materials through addition of value is called Supply Chain Management. SMTC. 2009. SMTC Glossary of Terms. [ONLINE] Looking at the definition of Supply chain management mentioned above it can be easily observed that supply chain management is a step wise process which involves various phases from start till the delivery of end product to the customer and transition between one phase to another requires interaction with various stakeholders. Each transition is quite critical as disturbance of the process at any stage can lead to failure of completion of the end product as desired by the customer or as desired for the customer. To protect and keep the supply chain process safe from such a disaster there should be smooth transition between each phase by having good relations between the supply chain stakeholders. The main advantage of having good relationships between people involved in each contributing and value adding stage of supply chain is quite necessary as it keeps the other linked and associated departments updated with the progress which keeps them an advantage of being prepared at for their tasks and responsibilities of value addition from their side beforehand. So all in all if each of the partners in the supply chain is concerned about smooth execution of the entire process then they would maintain good relationships amongst themselves and work as one unit for the success of the organization. An organization where every individually contributing phase of supply chain is well linked with other departments involved in the process and keeps the flow of information maintained by coordinating its timing detail and progress to its dependant phases is a one which is well connected information wise aswell as relationship wise. Such an organization is an ideal model of supply chain management as its ultimate goal is to have a satisfied customer by providing a product which fulfils every aspect of end-user requirement and most importantly by completing it within time. Determine the need for new relationships to optimize supply chain performance. The formation of new relationships in supply chain is quite critical and crucial for success of any supply chain and its performance. This fact can be established on the observation that companies, organizations, industries and corporations now a days have realized that they cannot survive in the business world standing alone without building relationship and partnerships. These relationship and alliances are very beneficial in the longer run for the partners mutually and cost effective aswell. Now in supply chain’ relationship formation and building happens with the stakeholders lying at the two extreme ends of the process i.e. the suppliers and customers. Now usually in supply chain new relationships are established with suppliers as mostly companies make their own designed products rather than taking orders from customers i.e. less companies are only manufacturing companies. To optimize supply chain performance such suppliers have to be selected who are capable enough to meet the organizational needs as per requirements in the longer run and the relationship is cost effective. Keeping this objective in mind supplier selection has to be done on certain defined criteria in an organized way. Selection through proper channel ensures a transparent selection of the most capable and trustful supplier as in each phase of selection the suppliers will be thoroughly scrutinized and their quotations will be aligned with requirements of the company and the budget the company can afford. Supplier selected to form a strategic and long term alliance will give extra benefits to our organization i.e. give bulk buying price discounts, lower shipment costs of raw materials, provide materials urgently due to certain emergency need on ad hoc basis. Also forming such a relationship with supply chain partner develops a sense of belonging within the partner i.e. supplier and he works jointly with the organization and helps it to achieve it goals by providing quality material and on time so that the company doesn’t suffer. Consulting with stakeholders to obtain their views of current and new relationships in the supply chain. Organization use various approaches to form strategies. The strategies are made for the benefit of the company in the longer run mainly using different types of approaches. One is which only involves opinions and plans of internal members of the organization are consulted to in strategies for relationship building. In this approach the organizational stakes are kept in mind i.e. what would better and beneficial for organization and how can the relationship be cost effective for the organization? This approach is organization centric and can be beneficial for the organization’s internal working and processes but in today’s world those organizations, industries and companies products are preferred who listen to every stakeholders opinion and each stakeholder’s opinion matter for them. The second view is which involves every stakeholder in the supply chain process, they are consulted and their opinion regarding the company’s relationship and their future plans regarding alliances and partnerships. This approach is quite fair and organizations that follow this approach are well reputed. The main benefit of this approach is that consulting stakeholders, getting their opinions and reviews especially the customers benefits the organization the most i.e. analyzing customer’s opinions we can conclude that how customer perceive our current relationship or future plans for eg. If the organization has hired a gasoline provider for transportation who doesn’t use environmental friendly material for its extraction but is cost effective for the organization so the customer will prompt and give a third party view of the situation and criticize this relationship and suggest selecting a supplier who uses environmental friendly methods. The importance of new relationships fitting into the organizations strategic objectives. Having a strategic fit between the new supply chain relationship established and company’s long term objectives is quite necessary for the success of the entire process. This indicates that if any new relation involves a partner or client who is new, amateur or is interested in their own benefit solely than this will create an imbalance in the supply chain and the smooth flow and processes will face hurdles in accomplishing their task because of the weak link and the worst consequence of this will be unsatisfied end users or customer base. When operating internationally organizations should be careful in getting through and conveying information to their supply chain partners and relationships in a proper manner. While placing and sending orders or sending a shipment or receiving it, proper documentation should be maintained so that both ends of operations have each other’s trust which is quite necessary initially for building strong ties in a new relationship. Next when both the partners develop trust over each other than a point is reached where the new partner accepts working in a comfortable environment and aligns his strategies with the company’s strategy and then both work for mutual benefit of each other so that the company and the new supplier make profits at both their ends. Also executives of multi-national companies give great importance to build strong relationships with their stakeholders professionally as well as on a personal level. Through this approach the executives can extract and make use of the stakeholder opinions and review these to gain understanding of the respective country’s business operational processes. Through this insight the company can formulate different interaction and communication strategies that best suit respective country. (Sustainable Supply Chain Management: Practical Ideas for Moving Towards Best Practice. 1st ed. .: Springer.) Review the relationship of technology, corporate & social responsibility on the organisations supply chain. Discussing technology first because it’s critical for any supply chain’s success or failure. As we all know that 20th century is the era of technology and electronics. Without usage of these latest technologies it is impossible to compete in todays business world. Organizations use various supply chain management systems. This technology provides supply chain with various attributes that were previously lacking and boosts or upgrades other functions simultaneously. It optimizes supply chain functions i.e. through added functions you have can get time required to complete certain function or you have inventory count etc. Connectivity is provided i.e. there is inter-departmental integration and data access is easier providing information in real time. Also through integration of departments a greater level of efficiency is improved and all the relevant information is available at hand which make decision making processes a lot easier. These systems record data over the periods and can later produce a forecast for material ordering. So these systems give companies the competitive edge in this competitive business world which each company desires. Now the most important thing to make note of while reviewing technology usage in supply chain is that technology only makes processes and tasks simple but ultimately its usage is dependent upon users and if technology is not used properly then it can’t produce the promised results. Human factor has been found responsible for mishap or entry of erroneous information or faced with a situation where the person incharge wasn’t able to take the right decision at the right time instead of technical error or software error being diagnosed as the cause of mishap or trouble. An organization cannot be socially responsible unless its partners involved in supply chain are socially responsible aswell. To be socially responsible organizations try to make partnerships with such suppliers who are socially responsible i.e. they keep the environment safety, social causes, awareness programs in mind and take improvement in all these areas as their responsibility and work for it. It’s something a company does ethically and in our case the company has to make sure that its supply chain partners do the same to maintain a reputable name in the business by being a socially responsible corporation. Organizations should make sure that there supply chain procedures don’t harm the environment in anyway i.e. it should be green production or in extreme cases when the production is of hazardous material where pollutants have to be expelled than they should locate their sites away from population. Companies instead of outsourcing their productions and manufacturing to reduce costs should focus on developing the their local economies and provide jobs to local labor thereby fulfilling their social responsibility. It should be made sure that industry standards are being followed while workers perform their duties on site and employee code of ethics should be provided to every individual employee of the company. References: SMTC. 2009. SMTC Glossary of Terms. [ONLINE] Available at:http://www.smtc.com/EN/Glossary/default.aspx. [Accessed .]. Balkan Cetinkaya, Richard Cuthbertson, Graham Ewer, Thorsten Klaas-Wissing, Wojciech Piotrowicz, Christoph Tyssen , ., 2011. Sustainable Supply Chain Management: Practical Ideas for Moving Towards Best Practice. 1st ed. .: Springer. China Sourcing News. 2007. Supply Chain Management And Corporate Social Responsibility. [ONLINE] Available at: http://www.chinasourcingnews.com/2007/12/10/4041-supply-chain-management-and-corporate-social-responsibility/. [Accessed .]. Supply performance. 2011. Supply Chain Relationship. [ONLINE] Available at:http://supplyperformance.wordpress.com/2011/01/11/supply-chain-relationships/. [Accessed .]. Nils Peters, ., 2010. Inter-organisational Design of Voluntary Sustainability Initiatives: Increasing the Legitimacy of Sustainability Strategies for Supply Chains. 1st ed. .: Gabler Verlag. John J. Coyle, C. John Langley, Brian Gibson, Robert A. Novack, Edward J. Bardi, ., 2008. Supply Chain Management: A Logistics Perspective . 1st ed. .: Cengage Learning. Read More