Strategic alliances happen in a variety of markets with different combinations of suppliers and customers; however, the most typical supplier-consumer alliance involves just a one supplier and one customer. To get a better idea, take a look at the relationship between Wal-Mart and Proctor & Gamble, "which have worked together to establish long-term EDI linkages, shared forecasts, and pricing agreements"
. There are alliances that can come about between two horizontal suppliers in an industry, like the relationship between Dell and Microsoft -- "organizations that collaborate to ensure that the technology road map for Dell computers (in terms of memory, speed, etc.) will be aligned with Microsoft's software requirements"
. Last of all, a vertical supplier-supplier alliance may include various party members, like trucking companies that have to work with railroads ocean freighters in order to make sure that proper time of delivers for multi-modal shipments is maintained
The concept of strategic alliances makes perfect sense, but the big question remains: how does one form or initiate a strategic alliance? When and how should they occur? There are some supply chains that don't need to put forth effort or commitment when it comes to managing an alliance, which seems unfair, but there isn't some magical equation to know if, how, when, where and why one should form a strategic alliance. Unfortunately, many strategic alliances occur after a company is already very successful and it forges or makes a strategic alliance with a successful company as well -- such as the case with Wal-Mart and Proctor & Gamble.
Strategic alliances can improve many different aspects of a supply chain's functioning. For example, management of supply-channel conflict; on-time product delivery; quick response to problems and complaints; a much better consistency in parts, supplies and other products; detailed agreement when it comes to handling the products' problems as well as any complaints about a specific product; better supply chain productivity; specific product volume commitments; contacts that are committed to your business's account; increased supplier loyalty; quick responses to requests for quotes and/or pricing issues; privacy when it comes to shared business strategies.
Strategic alliances can be very beneficial for supply chains, but even if a company doesn't have a strategic alliance, there are still some very important steps a company can take in order to strengthen their supply chain. Collaborative relationships cannot be over-emphasized. Collaborative relationships make it possible for companies to strengthen their competitive positions by focusing joint efforts on improving areas that are of mutual concern -- like quality, productivity, delivery and customer satisfaction
. These four areas are crucial and the better the relationships between these entities, the better it will be overall for the company as customers will be satisfied.
Trust and commitment are a direct result of the behavior of all person's involved. The level of trust and commitment between a customer and a supplier in a partnership can be compromised when one of the two is places in an uneconomical position. "For example, a seller may delay deliveries when it can sell its products on the spot market in excess of the stipulated contract price, or a buyer may rely on the spot market to obtain lower prices than those specified in an agreement"
. This means that any collaborative relationship naturally possesses the possibility of certain performance issues, which can be very problematic if they affect mutual expectations reinforcing the commitments of the partners
Any changes in environment can impact the expectations or perceptions of performance. The environment, it should be noted, is generally made up of these factors: external elements such as economic, climatic, social, technological, government, competition; demand base; supply base; buying organization; selling organization; and, the partnership itself
Some of the external factors may include a recession, recovery from a recession, inflation or deflation, interest rates, tax rates, surpluses and deficits. Climatic factors involve weather changes, natural disasters, environment issues, etc. Social factors may include personal values as well as shifts in viewpoints; new product or process advancements in technology is another factor to consider. Government changes like a change in wage and price controls, equal employment opportunities and disability legislation is another environment. Competitive environments like new competition is another factor that must be brought up for considerations as well
To improve supply chain management one has to know that there is really no way of changing the competitive landscape, but there are ways of improving and changing -- for the better...
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