|Type of paper:||Literature review|
|Categories:||Business Business strategy|
Supply chain relationships in any organization are determined by the business environment. Research work by Ellram and Cooper (2014, pp. 9) emphasize that the necessity of supply chain relationships in a business environment is characterized by scarcity of resources, intense competition and even increased expectations of clients which prompt the nature of change of change that organization executives are opting for. Additionally, supply network relationships are also determined by supply chain integration. Supply chain integration (SCI) refers to the capacity of an organization to adequately integrate the internal processes and cooperate with suppliers, clients and even the organization partners (Ayoub et al. 2017, pp. 596). Supply chain strategies have got adverse help organizations to acquire unique skills and expertise of all involved partners in various ways of which include leveraging on competitive advantage. Through supply chain strategies organizations also gain cost advantages and improving their business and operational performance. The participation of clients as a new limit of gaining competitive advantage has been increasingly necessary and of value, therefore, customers withhold the most significant responsibility in supply network strategies. This is evident because customers are not only the buyers and users of products and services but are equally in engagement in value co-creation with entities.
Research studies by Bellamy et al. (2014, pp. 358) on supply chains regarding the dyadic relationship despite the substantial growth of multi-party structures consisting of the joint ventures, co-operative supply networks, as well as strategic alliances. This is more of an advancement of the approach by Johnsen (2011) in his study in which he focused on the strategies that companies could adapt to include the indirect suppliers in new product development which include the supply network delegation and supply network interventions. The findings of the study by Johnsen (2011) informed on the need for managers to delegate decisions to suppliers through the issue of approval lists and encouragement of communication and problem solving among the suppliers and exercising extreme caution in the adoption of the intervention strategy.
Taking into account the above background of supply network relationships, supply network strategies in regards to the aim of this study can be defined with reference to Purvis et al. (2016, pp. 580) as an array of interconnected supply chains which determines how a company initiates its relations with suppliers in order to become more effective and innovative. On the other hand, the supply network strategies refer to the process in which suppliers and different stakeholders interact through supply agreements and alliance agreements. In this case, the supply agreements involve contractual agreements formed between a buyer and a supplier concerning the provision of goods and services. Consequently, alliance agreements involve an elaborate collaboration or knowledge transfer leading to mutual gains between all involved parties. According to Cao and Zhang (2011, pp. 166) examples of supply network strategies include joint product development agreements, joint ventures, and technology exchanges. The sets of literature opine that assets sourced from accessing knowledge, resources and available information in supply network strategies are ideal for explaining the value harbored within the facets of an entity supply chain.
In business, supply network strategies are often established to motivate, create, grasp and satisfy the consumer needs and demands through the innovation of products, services as well as the linkage systems in a dynamic global environment (Bellamy et al. 2014, pp. 359). Consequently, the supply network strategies can be defined as the establishment, development and the maintenance of the successful interpersonal exchanges resulting from the negotiations and designing of the strategic businesses. Several studies in the area of supply chain management have deduced on the extent in which forms an increase in a focal firm social capital can significantly lead to an overall increase in the operational and strategic performance (Carey et al. 2011, pp. 278).
Consequently, Supply networks strategies are often categorized by their distinction and complexities incorporating different topologies, horizontal relations, multi-way exchanges, and rear loops (Bellamy et al. 2014, pp. 360). It also encompasses a more comprehensive and strategic outlook on resource procurement, management, expansion, as well as transformation. The complexities associated with the supply networks can also be well-defined by the nonlinear dynamic connections of the specific parts. Apparently, when different optimum strategies interact in a multifaceted supply network, the resultant nonlinear dynamics of universal behaviour can be unpredictable (Bellamy et al. 2014, pp. 361). Thus, the supply network strategies have emerged as the prevalent approach of doing business in the modern-day extremely dynamic, globalized markets.
Research studies by Tukamuhabwa et al. (2015, pp. 5599) show that there are three types of supply chain relationships including vertical, horizontal, and full collaboration. The vertical nature of the supply chain relationship is based on the traditional linkages between business in the supply chains such as the producers, retailers, and suppliers. The horizontal relationship comprises of the business arrangements among the firms that occupy the "opposite" positions in the supply network. On the other hand, the full collaboration relationships are the business engagements between organizations that hold both parallel and vertical settings in the supply chain (Tukamuhabwa et al. 2015, pp. 5599).
The literature on supply network strategies has focused on particular operational issues such as consumer services, efficiency, marketing advantages, and constancy. The alignment and the adaptation of the different objectives in the supply network strategies have emerged as a hard nut to crack for many entrepreneurs. The overall purpose of the supply network strategies may vary from one firm to another depending on their strategic plans and communication systems. However, the primary objective of the supply network strategies should be to unify all the participants. In addition, propriety knowledge sharing within the supply network strategies can be intense especially when new products are being introduced (Bellamy et al. 2014, pp. 365). As a result, knowledge seizure and information conveyance are significant where different firms partner to deliver both standard and processed outputs.
According to Zimmermann et al. (2016, pp.290), good supply network strategies are mutually beneficial to the principal suppliers and consumers. It ensures that both suppliers and the customers are connected in a manner that enables them to share information quickly. Besides, they can give direction to the strategic plans of the business to make sure that it runs its operations efficiently. Similarly, in the scholarly work by Moraitakis, Huo and Pfohl (2017) the advantage attainable through an optimal configuration of the supply chain is individually significant on the upstream side of the firm since the raw materials represent the most significant share of firms total costs. From a strategic point of view, the potentials for the cost reductions in longer-term supply relationships can be accounted to individual resources and capabilities of the respective suppliers. Hence, the resources and capabilities offer an entity supply base, and successful management of the integrated suppliers is perceived to be paramount strategic importance to an entity.
Consequently as noted by de Souza Miguel and Brito (2011, pp. 58) the key strategy to a successful unlock of the strategic potentials in an entity upstream supply chain is aligning the competing priorities in the entire supply chain base. In this case, for the sake of matching the supplier's resources and capabilities to an entity requirement depending on the market conditions. Fundamentally, the supply network strategies ensure that business stakeholders can work together to reduce costs and enhance the qualities of the products and services. Also, supply network strategies could entail linking information systems and conjointly leveraging the possibility for internet and other electronic connection. This implies that different than the information-related gains found in the supply-based relationships, past studies on inter-firm alliances have deduced the potential of forms leveraging on their alliance ties in improving the overall speed of information hence increasing the innovative output (Zimmermann et al. 2016, pp.292). Essentially, one way of approaching this is enriching their knowledge base from collaborative efforts contrary to lower knowledge acquisition as a result of overreliance on the equivalent but independent research and development investments.
Apparently, the supply networks have complexities that form their essential characteristics. These complications usually emerge from the number of participants. It is necessary to note that the supply networks are not mere collections of dyads and this can be exemplified in different ways. The supply network strategies emanate from the multifaceted adaptive supply network system which centers on the volatility of behaviours that result from the interactions of various independent, interconnected organizations. Also, there are challenges associated with the management of inter-organizational activities across the supply networks through control mechanisms and coordination. The control mechanisms that might have difficulties include planning and control systems, communication, authority relations, as well as the decisions and negotiation mechanisms. Another approach is adopting collaboration in combining complementary skills from distinct firms, enabling focal firms in benefiting from economies of specialization investment burdens for their internal development. Other than the direct network ties, the indirect ties are often acting as information conduits or channels facilitating access to knowledge spillovers, as entities actively transmit their knowledge and experience from each of their direct tiles to their interaction with focal firms.
The concept of strategic alignment is broadly embraced as a prerequisite for the success of any organization although its role in new product development (NDP) process and its performance is not adequately developed. Strategic alignment which is also often referred to as consistency or fit is an important concept in several aspects management because it includes the integration of additional business processes, purpose alignment, aspects of length of the agreement, the period of the association and even teamwork which inspires suppliers to share innovative ideas with their customers, often referred to as innovation push. According to Acur et al. (2012, pp.304) strategic alignment is described as a mechanism that can be used by an organization in an effort to envisage the association between the business processes and strategies. This arrangement enables the decision makers within the organization to consolidate significant insights based on the existing operations. Strategic alignment procedures also enable organization including small business to identify what matters most and establish a strategic plan that would help in achieving the organizational goals (Acur et al. 2012, pp.304).
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