|Type of paper:||Essay|
|Categories:||Supply chain management|
Supply chain management refers to agreed techniques and practices that are essential for supply chains (Cooper, 2017). The term is mostly applied to describing a network of companies involving raw material suppliers, warehouses, manufacturers, logistics service providers, and retailers. These parties engage each other with an objective of replenishing the orders of end customers. The activities which supply chain performs are essential for every business process and are considered the core business process. It is an undeniable fact that supply chain strategies drive business process strategy.
According to Cooper (2017), the supply chain management practices are also essential determinants of the success of a business, more so the manufacturing industries. Effective supply chain management is crucial for a firm to maintain a sustainable competitive advantage. The concept also changes the conventional perception of firm competition into supply chain competition. It also ensures that there is collaboration between companies engaging in the supply chain if there are possibilities of developing competition within the supply chain and achieving supply chain management success. Many companies have not managed to establish productive collaborations in their supply chain networks (Lee, 2004). Hence, most supply chains are often disjointed and effective.
Even though competition is the main factor that deters supply chain collaboration, it is necessary since it improves the improbability level in downstream and upstream markets. Numerical results from theoretical models also support the differential consequences which indicate a high probability for quality misrepresentation from the supply side (Wu & Pangarkar, 2010). In modern days, it is not usual for businesses to sell their products and services to more than one buyer. Most producers allow manufacturers and customers capacity bookings. These capacity bookings take place before the actual transaction. As a result, buyers pay a certain price and access the option of obtaining them in the future. Supply chain management may offer suggestions about the available capacity by discussing booking and exercise prices (Lee, 2004). Business enterprises can set a specific amount. If they are not careful, it is possible to end up with an amount that is incapable of meeting the demand. Cooperation and collaborative relationships are essential in overcoming such challenges, especially the ones regarding supply information sharing.
Supply Chain Collaboration
Collaboration in supply chain management is essential across a variety of fields. Ramanathan and Gunasekaran (2014) assert thathe collaborative relationships help to build partnerships. Supplier collaboration allows companies to reduce possible hazards which may arise as a result of procurement. As a result, it will enable firms to achieve a competitive position by making sure that there is reduced transaction cost. A collaborative relationship also helps companies to manage risks through sharing. It also enables companies to access complementary resources. It enhances performance and profitability through the development of competitive advantage at the expense of time.
In conceptualizing collaboration for the supply chain, firms need to understand the idea of collaboration and its components. Ramanathan and Gunasekaran (2014) further explain that collaboration creates a conducive business environment for sharing information regarding business transactions and supply chain management. It also helps in the integration of cross-functional processes and facilitating setting up goals. Supply chain management collaboration is primarily concerned with the process and relationship aspects. Supply chain collaboration is also perceived differently from response time, cost reduction, resources, and innovation. These are important in synchronization of decisions, goal congruence, incentive alignment, cost reduction, and collaborative communication. They are critical components in supply chain collaboration.
The perception of supply chain collaboration depends on context. Some settings see supply chain collaboration to be a process between two supply network entities while others feel that the entities work together with a similar goal in mind. Others feel that supply chain collaboration represents the nature of the interaction between a partnership and the relationships in a business. Lee (2004) says that supply chain collaboration has other aspects which are important to those who wish to understand it. These include sharing information, aligning incentives and goal compatibility.
The components are the vital tenets of collaboration and are highly uncertain in network environments where the forecasting of procurement is difficult or impossible. Collaborative paradigm is also concerned with the business environment being composed of a connection of interdependent relationships. These interdependent relationships have their roots and fostering links which are connected to the strategic collaboration objective of mutual benefits.
There are possibilities of perceiving the mutual benefits as a relative terminology. For instance, there might be concerns on whether the relationship is complete transparency or whether it is mutually beneficial.
The Context of Collaboration
Some steps directly impact supply chain collaboration. The stages can be differentiated depending on the features of the business and flow of information. These features are the amount of shared data, the use of information technology in the management of supply chain information flows, and the amount of information shared. To summarize, the stages are silent, IT-intensive and communicative. The low levels of information flow characterize the silent stage while the communicative stage displays high levels of information characterized by high quality. The information technology stage can be compared to the communicative stage on the quality of data. The IT-intensive stage is the more advanced stage of supply chain information. The stage displays higher levels of operational performance since they help businesses to make use of the information gathered from its partners in its planning systems and its coordination. Planning systems also help in the creation and development of advanced forms of integration with the partners through the joint setting of goals and joint planning of activities.
All collaborations do not need to develop to the highest IT-intensive stage. IT-intensive collaborations are successful in environments which characterize innovativeness and high levels of interdependence among partners. Supply chain collaboration in innovative environments helps in developing conviction among the partners. Since they are based on belief and trust, IT supply chain applications cannot replace personal contact. Businesses can use IT-intensiveness to create additional operational improvements in the supply chain. The highest stage of collaboration also requires interdependence among partners.
Behavioral Factors of Collaboration
Applying sophisticated practices on the supply chain is possible. The practices include forecasting and replenishment, collaborative planning, vendor management, inventory, and efficient customer response. There are companies which focus on the implementation of the highlighted practices but do not focus on contribution to the success of the collaboration. Collaboration attributes are relational characteristics which include interdependence, trust, and coordination among the partners in the relationships. Communication behavior is concerned with the levels of sharing information and the quality of information shared while collaboration management refers to the management practices which a business implements with an objective of achieving superior performance.
The initial setbacks in the supply chain process are that almost all the activities take place in a sequential instead of synchronous manner. For instance, a fashion company can engage in product design by employing the latest technology such as CAD. The technology helps the fashion design company to save on time spent on designing and the unit time spent on transferring the manufacturing units through the use of email, fax, and phone as the primary methods of communication. Last minute changes in the process of communication may cause a challenge in implementing the entire plan.
Most businesses employ technological breakthroughs with a focus on intra-firm instead of inter-firm, which helps in keeping information more or less cataloged with less information made available to channel partners. It leads to making decisions based on past data.
Best Practices of Collaboration
Leadership is essential in supply chain management. Leadership helps in driving collaboration and improving results. The leaders should have experience and the ability to impact on other functions of an enterprise. Leadership also creates a collaboration culture and enhances collaboration tools, systems, and data. The external team structures are enhanced with an objective of facilitating collaboration through supply chain leadership. The leadership also facilitates effective sales operations planning.
It is important for supply chain leaders to communicate their expectations for collaboration to the broader organization. It is critical because it helps in forming one-on-one and group discussions through performance reviews and strategic plans. The message communicated should not be limited to the supply chain function. It should be demonstrated at the top level company meetings and incorporated into strategic decisions. Most managers assign resources with an objective of working on great projects for the entire system. The strategies employed usually have negligible impacts on their scorecards. As a result, leaders need to develop strong leadership skills and trust in their efforts to enhance collaboration in supply chain management. Trust in supply chain management is concerned with believing in suppliers and other business functions to earn their trust. Businesses also need to implement the right technologies to enable and support collaboration.
Data access enables suppliers, logistics, manufacturing, and procurement to work together to improve the quality of the material. All internal supply chain disciplines also need to access the same data. Examples of data which are essential to access are supplier's contract, supplier quality data, plant supplier quality data, logistics inventory and inventory, and service data.
Competitive Advantage of Supply Chain Management
Fredendall and Hill (2016) define competitiveness as a company's ability to design, create and market products which are better than those which competitors offer. It primarily considers the price and other qualities. Supply chain competitiveness consists mainly of the all-purpose competitive compensations from one supply chain on the other. It mostly consists of the competitiveness of the fundamentals of a company's supply chain; including its suppliers', manufacturers' and distributors' competitiveness. It is a relative and multi-dimensional concept which is concerned with the significance of the different criteria of competitiveness. These aspects change over time depending on the context of action. There are also frameworks which are essential in ensuring flexibility and integrating the required change to sustain utility of competitive advantage (Dyer & Singh, 1998). It is necessary for firms to accomplish their processes and resources more efficiently compared to their competitors.
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