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194 CHAPTER 5 • PuRCHAsing And suPPly sTRATEgy
upstream in the supply chain. Qualitative distortions can occur through mispercep-
tions in the way market requirements are transmitted up a supply chain and the way in
which operations performance is viewed down the supply chain. It can also be caused
by mismatches between what is perceived as required by customers and suppliers and
the performance that is perceived as being given to customers.

How do we manage suppliers over time?
Operations attempt to overcome the worst effects of distortions in the supply chain,
usually by one of three methods: coordination, differentiation and reconfiguration.
Coordination attempts to line up the activities of operations in a supply chain through
information sharing, channel alignment and changes in operational efficiency. Differ-
entiation involves adopting different supply chain management strategies for different
types of market. Reconfiguration involves changing the scope and shape of a supply
chain. This may mean attempting to merge or reorder the activities in a supply chain,
so as to reduce complexity or response times in the network. Increasingly, technology
is having the effect of disintermediating operations in supply chains.

How do we manage supply chain risks?
Increased dependency on suppliers increases exposure to risk. Social, political, geo-
graphic and many other factors all produce significant disruptions for supply chains
and can produce major losses for companies. There are several categories of purchasing
and supply risks, such as supply disruptions, supply delays, systems breakdown, fore-
cast inaccuracy, procurement problems and so on. Supply risk management uses three
dynamic dimensions: robustness (reducing the likelihood of risks having an impact),
reduction and rapidity (reducing the recovery time).

Further reading

Barney, J.B. (1999) ‘How a firm’s capabilities affect its boundary decisions’, Sloan Management
Review, Spring.
Brandenburger, A.M. and Nalebuff, B.J. (1996) Co-opetition. New York: Doubleday.
Chopra, S. and Meindl, P. (2015) Supply Chain Management, 6th Edition. Harlow, UK: Pearson
Education.
Christopher, M., (2016) Logistics and Supply Chain Management: Creating Value – Adding
Networks, 5th Edition. Harlow, UK: Financial Times/Prentice Hall.
Cohen, S. and Roussel, J. (2004) Strategic Supply Chain: The Five Disciplines for Top Performance.
New York: McGraw-Hill.
Grant D. B. and Trautrims Alexander (2015) Sustainable Logistics and Supply Chain Manage-
ment (Revised Edition). London, UK: Kogan Page.
Friedman, T. (2006) The World is Flat: A Brief History of the Globalised World in the Twenty-first
Century. London: Penguin.
Handley, S.M. and Benton Jr, W.C. (2009) ‘Unlocking the business outsourcing process
model’, Journal of Operations Management, 27, pp. 344–361.
Harvard Business School (2006) Harvard Business Review on Supply Chain Management.
Boston, MA: Harvard Business School Press.
Hines, T. (2013) Supply Chain Strategies: Demand Driven and Customer Focused. London:
Routledge.
Lysons, K. and Farrington, B. (2016) Purchasing and Supply Chain Management, 9th Edition,
Harlow, UK: Pearson.

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