Page 62 - Linkline Autumn 2015

• Outsourcing to SMEs by large businesses is common practice.
• There is a willingness to share consistent non-excessive pro t.
• There are obvious high levels of trust between collaborators.
• Joint learning and innovation is clear to see.
• Collaborative strategic partnering is evolving.
as a continuous drive for lower fuel consumption and the integration of innovative track and control systems on vehicles. It appears to be common practice to innovate services to bene t their customers’ supply chains. ‘Constantly looking for innovative savings’ was expressed
as ‘key to their businesses’. However there was little evidence for innovative thinking between the 3PLs and their customers in order to improve the overall ef ciency across the entire supply chain and not just their collaborative stage in the chain.
Innovation is also achieved through the relationship learning which is central to ‘Fundamental Four’, but it appears that the integration mentioned in ‘Fundamental Two’, supply chain philosophy, is poor between the subsystems, suggesting a concurrence with the concept that external integration through the various stages in the supply chain requires a different approach in developing relationships between suppliers and customers.
Recognition of SCM
The use, and indeed the understanding, of the term SCM among the 3PLs is not obvious. Again, as in ‘Fundamental Two’, supply
chain philosophy is poor between the subsystems, demonstrating a concurrence that external integration through the various stages in the supply chain requires a different approach in developing relationships between suppliers and customers.
Differing Perspectives on Outsourcing
Although the 3PLs businesses are based on being an outsourced partner and they felt sub-contracting the section of their transport business which served the warehousing customers ‘would yield a cost reduction for them’, there is a reluctance to do so. They felt that they had ‘always been let down when they subbed out work’ and also ‘it helped to keep competitors out.’ This demonstrates the lack of trust in the 3PLs own supply chains which needs to be present for superior supply chain performance.
Having analysed the ndings it became obvious that most of the fundamental elements of supply chain management theory existed: a win-win relationship orientation, obvious high levels of trust and learning and the early stages of joint strategic vision.
Industry Practice in contrast with Academic Theory.
This research suggests a relatively high alignment between industry practice and SCM theory. Supply chain performance is being achieved, but not superior performance.
The relationship framework (see Figure 1) can be used to graphically represent where the SME 3PLs businesses are along the path of establishing effective relationships to achieve superior supply chain and business performance.
Recognition of SME Business Challenges
It must be noted there is little in the academic literature to recognise the relentless pressure on these SME 3PLs to secure cash ow on a regular basis to ensure that nancial commitments are respected. The reality for many SMEs is the daily struggle to nd and juggle funds to pay employees, nance companies, fuel suppliers, the collector general and overdue creditors, never mind nd their own personal drawings. Thus, the owners nd themselves attempting to meet and ful l the basic
operational needs. As a result they are far from able to concentrate on such strategic needs as innovation.
Five Main Recommendations for Industry
The research described in this article suggests that industry may bene t from the following points:
• SME 3PLs may advance from understanding and recognising the validity of these academic perspectives and indeed use them as an aid to develop their strategic thinking.
• Without the right underpinning of the relationships in the supply chain, business
will be conducted in the form of short-term transactional exchanges. Clearly in the domain of an ineffective supply chain (see Figure 1) with little acceptance of a win-win pro t distribution, there is no trust or learning being developed, no joint strategic vision and poor supply chain performance.
• SME 3PL involvement in sectors which require higher levels of compliance such as food
or pharmaceutical automatically evolves learning, innovation and trust. This bene ts the 3PL enterprise by becoming more rooted in their customer’s supply chain.
• If de ning your customer service means never saying ‘no’ to your customer, then a “cost to serve conundrum” can result. The question must be asked what is the cost of never saying no? This requires trade-offs to be analysed.
• SMEs should encourage R&D into their customers’ entire supply chain. Their expertise and specialist knowledge as an outsourced service provider can be used in areas of problem solving, innovative thinking and the setting of inter-organisational key performance indicators for other links/ collaborators in the supply chain.
Conclusion
Supply chain performance in Irish SME 3PLs is being achieved as can be seen from the alignment of the academic views and contemporary industry practice con rmed by the 3PLS interviewed. However not superior performance.
The industry reality is supply chains cannot be viewed as seamless integrations as in ‘Fundamental Two’ supply chain philosophy. Ef ciencies are being found through innovation in individual links of the chain however there is no evidence to suggest that ef ciencies are being found based on a perspective across the entire supply chain. Further, little acknowledgement exists of an inef ciency in one link having a negative effect in another, and the chain
as a whole failing to achieve its true competitive potential.
It seems appropriate to nish this article with a valued quote from NITL’s MSc. in Supply Chain Management: ‘Working harder is no longer enough, working different is what will lead you
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