Intended learning outcomes: Produce an overview on the social competency of a company. Present target area strategies for an intensive cooperation in the partnership relationship, describe tasks and investment areas, and disclose possible supply chain risks entailed.
In any case, a partnership relationship must be designed as long term. In contrast to relationships that are buyer-dominated or supplier-dominated, in a balancedpartnership relationship, the intensity of the cooperation can be significantly greater. For successful partnerships, an enabler objective within the target area of flexibility stands in the foreground. We propose calling this the social competency of a company. This could make sense because of the definition of a company as a sociotechnical system (see the introduction to Chapter 19).
The social competency of a company comprises the flexibility to enter as a partner in supply chains and to link others in a supply chain.
This demands a high degree of social competency, particularly of the leading partner in the supply chain. For many companies, acquiring social competency requires some changes in behavior. Similar to the way that individuals develop social competency for a balanced partnership, a company must develop, first, the ability to play a part in cooperation with others, and, second, the ability to engage others as partners in a trustworthy way, that is, without using coercion.
Related to the entrepreneurial objectives, strategies arise between the producer as buyer and the producer’s suppliers as shown in Figure 2.3.1.1. They are complementary to the strategies shown in Figure 2.2.2.2.
Fig. 2.3.1.1 Target area strategies for an intensive cooperation in the partnership relationship.
In buyer’s markets, the demand for short product innovation times (time to market) has come to the fore. Cross-company product and process development with partners can be advantageous. When product development becomes more costly, entrepreneurial risk may in this way be more widely distributed. Reducing the time for R&D and production demands more intensive cooperation with partners — and this at all levels of the supply chain (see [Fish97]). This means that partners have insight into the participating companies. One absolute prerequisite is the long-term formation of trust.
Figure 2.3.1.2 groups the tasks in which both supplier and buyer invest in different areas, namely, supply chain structure, supply chain organization, and the required information technology.
Fig. 2.3.1.2 Tasks and investment areas for intensive cooperation in the partnership relationship.
To support the requirements, specific SCM software has been developed. See also Section 9.2.4. Good communication paths are necessary, both technical (phone, fax, ISDN, EDI, transponders [e.g., an RFID sensor]) and personal (regular meetings at all hierarchical levels).
Intensive cooperation in the partnership relationship tends to entail the following supply chain risks — in addition to those of the customer-supplier partnership (see Section 2.2.2), which must be in total smaller than the advantages mentioned.
- Abuse of the knowledge gained from cooperation with partners to enter into business relationships with their competitors.
- Investment by partners that — due to too brief cooperation periods — is not profitable.
- Dependence on a system or modular supplier, because of the very close link, can prove to be excessively strong, but dual sourcing cannot be considered.
- Local sourcing can result in higher prices, suboptimal product quality, and a lack of quantitative capacity flexibility.
Course section 2.3: Subsections and their intended learning outcomes
2.3 Designing a Strategic Partnership Relationship
Intended learning outcomes: Present target area strategies for intensive cooperation. Explain the Advanced Logistics Partnership (ALP) model with concepts such as building trust, working out collaborative processes in the supply chain, avoiding the bullwhip effect. Describe the virtual enterprise and other forms of coordination among companies.
2.3.1 Target Area Strategies for Intensive Cooperation
Intended learning outcomes: Produce an overview on the social competency of a company. Present target area strategies for an intensive cooperation in the partnership relationship, describe tasks and investment areas, and disclose possible supply chain risks entailed.
2.3.2 The Advanced Logistics Partnership (ALP) Model, a Framework for Implementation of Intensive Cooperation in the Supply Chain
Intended learning outcomes: Produce an overview on the ALP model: a framework for implementation of an intensive cooperation in the supply chain.
2.3.3 Top Management Level: Building Trust and Establishing Principal Relationships
Intended learning outcomes: Present trust-building measures in partnership relationships. Disclose the reasons for (1) creating the required conditions in your own company first, (2) – where possible – placing emphasis on local networks (local sourcing), and (3) not exploiting strengths in your company’s negotiating position.
2.3.4 Middle Management Level: Working Out Collaborative Processes in the Supply Chain
Intended learning outcomes: Present cooperative processes in the supply chain. Produce an overview on Collaborative processes in participative design/engineering. Describe contract issues for a partnership relationship.
2.3.5 Operational Management Level: Collaborative Planning, Forecasting, and Replenishment (CPFR)
Intended learning outcomes: Produce an overview on collaborative planning, forecasting, and replenishment (CPFR). Describe vendor-managed inventory (VMI) and continuous replenishment planning (CRP). Identify planning & control tasks for a partnership relationship.
2.3.5b Avoiding the Bullwhip Effect (Forrester Effect)
Intended learning outcomes: Explain the bullwhip effect. Identify the point of sale (POS) and the quick response program (QRP).
2.3.6 Managing a Strategic Partnership Relationship — A Practical Application
Intended learning outcomes: Present the ALP phases in the case of a high-tech Swiss machine tool manufacturer with a world market presence who wanted to introduce an intensive partnership relationship with suppliers of important assemblies.
2.3.7 The Virtual Enterprise and Other Forms of Coordination among Companies
Intended learning outcomes: Produce an overview on the virtual enterprise and underlying long-term network of potential partners. Present target area strategies for a virtual enterprise and disclose possible supply chain risks entailed. Describe some other forms of cooperation in relation to the virtual enterprise.
