Supply Chains Relationships – The Critical Success Factor

In recent times the importance of supply chains to the well-being of society has become more evident. It is common for people to just talk about ‘logistics and transport’ which is all about the distribution of goods by land, sea and air. However, this is just one function in the supply chain which aims to satisfy demand i.e. getting the right product/service to the right customer at the right time, at the right quality, at the right cost. This system has become super-efficient with global reach thanks very much to technology such as automated demand and capacity planning. The down-side is increasing vulnerability to disruption where small dislocations will become magnified along the chains. It also breeds an ‘automated mind-set’ which is fixated on the current way of operating and cannot easily adapt.

An often forgotten key supply chain management success factor is the business relationship between the players from end to end. Relationships underpin innovation, resilience and profitability. Frequent discussions about performance, improvement, problem solving and opportunities are the lubrication that keeps the wheels turning smoothly. Working in a joint enterprise gives rise to activities that achieve aims and objectives that could not be realised in isolation and will generate competitive edge. Without effective team-working, interactions become fire-fighting, performance improvement is limited and overall supply chain efficiency is reduced.

Normally relationships between supply chain partners will build over time. The good ones will result from deliberate management because they are determined to be at the top of their customer‘s or supplier’s list. A relationship operating model provides a systematic planning and management structure that enables them to meet their targets and reap the benefits of collaboration.