Sunday 23rd Jun 2019 - Logistics & Supply Chain

The relationship-driven supply chain

We are in danger of using the phrase supply chain to substitute for procurement or logistics. But these management areas are not the only provinces covered by the supply chain. With a total supply chain approach, inventory costs can fall while profit and service fulfillment rises.

But this prize can never be won by companies that stick with power-based, adversarial supply chains. Such companies often remain content with integrating to the first level only.

This may be appropriate and be seen as good business when the measure of success remains with profit for ‘me’ alone. But in a world of increased uncertainty, one wonders how long companies with established structures and holding such one-sided views will survive without re-structuring internally and finding new strengths externally. Releasing the strengths of collaboration and cooperation will only happen when such players also see the benefit.

Looking for more innovative ways to manage the supply chain may be something only a few companies are able to do. Moving to more collaborative approach involves winwins and involves trust. This is difficult for Western companies.

As Alan Waller says, the supply chain no longer lies with individual companies. We see global networks cutting across countries and organisations and players must work to a common agenda – the collaboration agenda.

The next level of supply chain development may well falter because of a narrow way of management thinking. There is a Welsh saying; ‘Adversity comes with learning in its hand.’ But it is painful to wait for adversity and its associated harsh lessons.

One thing is sure – what worked for many years will not work for many more. There is a real challenge to learn afresh and, in so doing, to change.

Stuart Emmett is a management consulant and Barry Crocker is a lecturer at the University of Salford

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