Page 60 - Linkline Autumn 2015

‘Four Fundamentals’ of SCM
fundamental 1: Supply chain management objectives
Customer service, total supply chain investment cost and the service/ cost conundrum.
fundamental 2: SCM philosophy
Supply chain integration, internal chain integration and external chain integration.
fundamental 3: Managing the ows
Supply chain ows, managing material ows, managing money ows and managing information ows.
fundamental 4: Relationship management
Supply chain relationships, types of relationship, the impact of vertical disintegration and strategic partnering.
(Source: Adapted from Sweeney, 2007)
The progression of globalisation has had an impact on business by advancing the paradigm shift of using the supply chain as a strategic
tool in the leverage of business. The reality of contemporary business is that customers have become more discerning; greater choice and shorter lead times are expected and there is a continuous downward pressure on price. Without acknowledgement and indeed practice of the fundamental thinking of SCM modern businesses may struggle for survival.
Supply Chain Relationships
SCM improvements have been largely viewed from an operational standpoint; there has been less attention placed on organisational factors that may in uence supply chain performance such as inter-organisational relationships (Payne et al., 2005). This is also comparable with Christopher (2005), who draws attention to the rapidly emerging focus
in marketing and logistics on the creation of relationships with customers, so that customers do not feel it necessary to even consider alternative
Figure 1: Conceptual framework for effective relationship modelling
offers. Gattorna (1998) discussed typical bene ts of strong partnerships (relationships) in the supply chain as being:
Gattorna (1998) went further to say that success
or failure in the marketplace depends on the extent
to which the supply chain can be managed as an integrated network with shared strategic goals with competitive advantage determined by the strength
and the quality of the relationships between members of the network. On completion of an overview of the contemporary academic views of the role relationships play in SCM, signi cant areas were identi ed, namely: relationship marketing; interpersonal development of relationship management; relationship orientation; relationship trust; and, relationship learning. Subsequently, and primarily because of the scale and breath of the documented research available and also the author’s view that as a subject, relationships can only be mastered through practice at the coalface, it was decided to compile a framework (see Figure 1) based on this material and the experience gained in the industry.
This graphical representation af rms precisely the pertinent stages and options involved throughout
Industry practice appears to located around this stage
• Ongoing cost reductions;
• Quality improvements;
• Design cycle times 20% to 75% shorter than
those in traditional relationships;
• Increased operating exibility;
• More value for the customer;
• Enhanced leverage with technology; and,
• More powerful competitive strategies.
The CharTered InsTITuTe of LogIsTICs & TransporT 45
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