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The Benefits of a Supply Network Perspective

Increasingly, especially in fast-moving consumer sectors, operations and their accompanying strategies must be viewed from a network relationship perspective. This has a number of strategic implications. The first is knowledge. Thinking at a network level encourages a broader perspective regarding the supply system. This builds strategic thinking beyond the firm itself and its immediate suppliers and customers.

The Partnership Process

Empirical research by Christopher and J ¨utter (2000) has established that there are five key elements involved in a supply network relationship. Managers in this study were questioned as to the most important aspects of a relationship and the findings are outlined below.

Partner Selection and Classification

The differences in degree of partnering relationships are an issue in terms of the benefits to be gained, the resources and investments that are necessary and the risk involved. Relationship management is a situational approach and involves the development and maintenance of a portfolio of relationships with different natures. Thus, economic and strategic concerns are often balanced with integration needs at the operational level of the working relationship. Making the right selection to embody the necessary relationship portfolio is a crucial task.

Coordinating Interpersonal Relationships

How can the various interpersonal relationships at different organizational levels be coordinated to represent a consistent corporate approach? Relationships based upon multifaceted interface structures are extremely complex. These relationships need to be managed and institutionalized at the business or corporate level and not left to the discretionary behavior of individuals. Consequently, the commitment of senior management will have a significant affect on the success of long-term relationships. Further, having a strategic vision of such relationships is a primary means to cascade the policy down through the firm in a supportive culture.

External Support

Unfortunately, in many commercial sectors, business relationships have been primarily adversarial. The development of collaborative supply network approaches and the solving of inter-firm problems require new planning and implementation techniques. Appointing a relationship promoter is an important step in this process. Successful relationships are often developed under the auspices of a committee system involving the most important stakeholders in the relationship (internal and external to the firm).

Relationship Monitoring

A successful relationship involves the management of continual value-creating processes, underpinned by a monitoring procedure. Value-assessment methods. Monitoring and feedback of relationship performance and process necessitates team participation and involves all individuals working on boundary spanning activities.

Last word

Having reviewed the nature of a supply network relationship, we can now establish a connection between the earlier debate regarding demand complexity and the need for flexible response, with the types of supply network relationships likely to be seen in the future as part of an operations strategy

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