chapter 4 answers to study questions
ANSWERS TO STUDY QUESTIONS
What are the basic types of supply chain relationships, and how do they differ?
Answer: Generally, there are two types of logistics relationships. The first is what may
be termed vertical relationships; these refer to the traditional linkages between firms in
the supply chain such as retailers, distributors, manufacturers, and parts and materials
suppliers. These firms relate to one another in the ways that buyers and sellers do in all
industries, and significant attention is directed toward making sure that these relation-
ships help to achieve individual firm and supply chain objectives. Logistics service
providers are involved on a day-to-day basis as they serve their customers in this
traditional, vertical form of relationship.
The second type of logistics relationship is horizontal in nature and includes those
business agreements between firms that have “parallel” or cooperating positions in the
logistics process. To be precise, a horizontal relationship may be thought of as a service
agreement between two or more independent logistics provider firms based on trust,
cooperation, shared risk, and investments, and following mutually agreeable goals.
Each firm is expected to contribute to the specific logistics services in which it
specializes, and each exercises control of those tasks while striving to integrate its
services with those of the other logistics providers. Thus, these parties have parallel or
equal relationships in the logistics process and likely need to work together in
appropriate and useful ways to see that the customer’s logistics objectives are met.
How would you distinguish between a vendor, a partner, and a strategic alliance?
What conditions would favor the use of each?
The range of relationship types extends from that of a vendor to that of a
strategic alliance. In the context of the more traditional “vertical” context, a vendor is
represented simply by a seller or provider of a product or service, such that there is little
or no integration or collaboration with the buyer or purchaser. In essence, the
relationship with a vendor is “transactional,” and parties to a vendor relationship are said
to be at “arm’s length” (i.e., at a significant distance). While this form of relationship
suggests a relatively low or nonexistent level of involvement between the parties, there
are certain types of transactions for which this option is desirable, such as one-time or
even multiple purchases of standard products and/or services.
Alternatively, the relationship suggested by a strategic alliance is one in which two or
more business organizations cooperate and willingly modify their business objectives
and practices to help achieve long-term goals and objectives. The strategic alliance by
definition is more strategic in nature and is highly relational in terms of the firms
involved. This form of relationship typically benefits the involved parties by reducing