28 hps 2412 supply chain performance management keep

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Supply Chain Management: A Logistics Perspective
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Chapter 12 / Exercise 2
Supply Chain Management: A Logistics Perspective
Coyle/Langley
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Supply Chain Management: A Logistics Perspective
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Chapter 12 / Exercise 2
Supply Chain Management: A Logistics Perspective
Coyle/Langley
Expert Verified
HPS 2412 Supply Chain Performance Management Keep lines of communication open. This simple and most basic rule is also perhaps the most important. Invite your suppliers to your strategy meetings, let them tour your office, include them in busi- ness events and parties, and share information about new products and personnel. Likewise, you should be able to visit your suppliers’ offices and know the ins and outs of their business. Personalizing the relationship like this and getting to know one another creates a solid partnership. It’s also important to be honest and upfront with your suppliers about your needs so they can perform better and know what areas to improve in to keep you happy. 5.2.1. Advantages of closer buyer-seller relationship 1. Development of mutual trust: This is the foundation of all strong relation- ships. While seemingly intangible, trust refers to the belief to the character, ability, strength or truth of another party. It makes it possible for the example for the seller to share cost data with the buyer which can result in a joint effort to reduce supplier cost through mutual sharing of ideas. It cans also result in supplier working closely with purchaser early in the design of a new part. 2. Opportunity to evaluate which supplier should receive long term contracts. A long time contract provides and incentives for a supplier to invest in new plants and equipments which makes the supplier more efficient and results in lower costs for the purchaser. Long terms contracts can also lead to the joint development of technology, risk sharing and supplier capabilities. 3. Solving product quality problems: working together with the supplier enables teams from both sides to assess the source of the problems through sharing of ideas and by changing processes or improving them, the products can be of better quality leading to low costs for the buyer. 5.3. Collaborative buyer-seller relationships. Most purchasers and sellers now recognize a need for joint cooperation to achieve cost, quality, delivery and time improvements. During the 1980s progressive pur- chasers developed collaborative relationship or alliances with suppliers after elimi- nating poor or marginal suppliers from the supplier base. Collaboration is defined 29
HPS 2412 Supply Chain Performance Management as the process by which two or more parties adopt a high level of purposeful cor- poration to maintain a trading relationship over time. The relationship is bilateral; both parties have power to shape its nature and future direction over time. Mutual commitments to the future and a balanced power relationship are essential to the process. 5.3.1. Characteristics of successful collaborative buyer-supplier relationships 1. One or limited number of suppliers for each purchased item or family of items:- The suppliers often provide materials under long term contracts with agreed upon performance improvement targets.

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