Relationships with External Supply Chain Partners

Relationships with External Supply Chain Partners

Table 1: Coursework Statements and Descriptions.

Item Description
(Use this as a heading within your submission)
Statement or Instruction Weighting within essay
1 Business Environment Appraisal “Business environment appraisal methods successfully enable an organisation to understand their position in the commercial marketplace”. 20%
2 Financial Investment Appraisal “Using financial appraisal techniques is an accurate indicator for determining project success”. 20%
3 Project Supply Chain “When managing its supply chain for a product an organisation should make its highest priority the building of lasting relationships with external supply chain partners”. 20%
4 Contract Management, Procurement and Legal “Contract management and dispute resolution processes effectively protect the ability of businesses to maximise commercial opportunities”. 20%

3. Project Supply Chain

Supply chain management entails a vast range of activities conducted by a firm to ensure that the end product reaches the final consumer. It includes such events as the acquisition of raw materials from producers, transportation of raw materials to the company, the manufacturing process and the distribution of finished products to the final customer (Laeequddin et al., p. 54). There are many players within the supply chain of a company. In supply chain management, stakeholders may be classified as internal or external. Some examples of stakeholders include suppliers of raw materials and services, competitors, the community, the government imposing laws and regulations, distributors, brokers and customers. Specifically, external stakeholders like suppliers, customers and distributors are vital to the success of the firm. As such, when managing the supply chain for its products, a company should prioritize on establishing lasting relationships with its external supply chain partners.According to Yuen and Thai (2016, p. 32), it is critical for an organization to maintain high-communication, high-trust and mutually beneficial relationships with its key suppliers, customers, and other partners. Although some mega-merchants can dictate terms of services, prices, and processes to their key suppliers by threatening to shift to other suppliers, it is a fact that very few organizations are in a position to tell their suppliers to adhere to their prices or leave. In a perfect relationship, both consumers and suppliers are usually connected in a way that enables them to communicate easily and demand visible status and data.  For openers, this means communicating the direction of the strategic plan and demand. It also means linking information systems, promoting internet usage and enhancing the use of other electronic communication methods.
An organization should develop strong links with its customers to understand their directions and strategies, their needs for resilience and flexibility and their plan of events. The forecasting, collaborative planning, and replenishment process apply to both ways (Yuen and Thai, 2016, p. 34). Customers need to understand the capabilities and capacities of the company they are dealing with, just the way the company needs to understand their capabilities. An organization may improve its positioning in the supply chain flow by understanding both downstream and upstream business issues and the ultimate needs of the users or consumers in the market. One of the ways a firm can maintain strong ties with its eternal supply chain partners is through supply chain integration and collaboration.
As explained by Prajogo and Olhager (2012, p. 515) integration refers to the alignment and coordination of the supply chain using shared information systems. Through supply chain integration a company may select specific vendors and agree with them to supply particular inputs at a predetermined cost. Developing strong links with suppliers through supply chain integration enables an organization to achieve a timely, smooth and accurate flow of products, information, processes, and money to impart a maximum value to customers at affordable prices and minimum time. Specifically, developing strong links with suppliers through integration reduces transactional costs that may be unavoidable among vendors, partners or subsidiaries. Having an integrated or centralized supply chain system enables a company to eliminate frills that may delay the process and cause unnecessary costs. Concerning quality, connecting with supply chain partners allows a firm to ensure quality by enforcing a stringent compliance check that makes it difficult to pass along or approve faulty products.
Although different scholars have praised supply chain integration and collaboration for promoting convenience and reducing the cost of operations, the practice also has some limitations. First, integrating all suppliers may pose challenges to an organization trying to control every external and internal supply (Flynn, Huo and Zhao, 2010, p. 58). Ideally, suppliers may not comply with every norm and regulation. Regarding integrated supply chain management, a firm may try to enforce a generic model, which may needlessly compel all the suppliers to adhere to a similar standard. Also, supply chain integration may easily result in a complicated event whereby resources are shared and wasted unnecessarily. Not all the supplies may need every system. All the suppliers and departments should be allowed to operate according to their capabilities while overcoming their weaknesses.
Another limitation is that some vendors or suppliers may decide not to renew contracts if the supply chain integration terms do not suit their interests. Such an occurrence may impose adverse impacts on the supply and procurement costs as suppliers who may be willing to comply with the company’s regulations, and norms may charge steeper rates (Cao and Zhang, 2011, p. 165). In case the company experiences a collapse in its checks and balances system, and the company operates an integrated supply chain system, a single error may cause problems in the whole system.The benefits and limitations of maintaining a secure link with external supply chain partners depend on the company’s ability to operate an effective and efficient supply chain integration and collaboration system. When the supply chain integration is effective, an organization may reap long-term rewards. However, when the supply chain integration is inefficient, the company may face some limitations relating to needless complications, the demise of major suppliers and excessive regulations.

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