Lecture Purchasing and supply chain management (3rd/e): Chapter 11 - W. C. Benton
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Chapter 11:
Supply Partnerships and
Supply Chain Power
Purchasing and Supply Chain Management
3rd edition
Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Purchasing and Supply Chain Management, 3rd edition, Copyright 2013, All
1
The WinWin Partnership Dyad
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Buyer and supplier share goals and risks through:
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Joint planning and control
•
A supply chain with increased information flow and enhanced
loyalty
The result for both firms:
•
Decreased uncertainty
•
Greater control of costs
•
Cycle times, inventory
•
Quality, customer satisfaction
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Partnership
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Definition:
A tailored business relationship for achieving a competitive
advantage based on:
•
•
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Mutual trust
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Openness
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Shared risk
•
Shared reward
Strategic partnerships receive benefits of joint ventures
and vertical integration without the ownership
commitment
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Benefits and Risks of Supplier Partnerships
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•
Benefits:
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Higher quality, and transaction costs
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Increased market stability
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Setup time reduction, improved processoriented layout
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Increased communication and goal congruence
Risks:
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Partner may not meet expectations
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Loss of partnership control
•
Complacency
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Large vs. Small Suppler Bases
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Benefits of a large competitive supplier base:
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Higher manufacturer bargaining power
•
•
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Lower costs, higher quality, reasonable delivery times, and special
exigencies
Shelters against supply interruptions
Benefits of a smaller supplier base:
•
Less adversarial attitudes
•
Lower switching costs
•
Decreased shipping errors
Quantity and relationshipbased discounts
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
•
Power of a Supply Chain Member
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Definition:
•
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The ability of one channel member (the source) to influence the
actions and intentions of another supply chain member (the
target)
Characteristics:
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A composite relationship–oriented variable
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Extremely complex in nature
•
Affects both the target and the source
•
Key factor in a supplier–buyer alliance
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Types of Power
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Mediated power sources
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Based on the source’s intention to bring about some action
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Includes reward, coercive, and legal legitimate power
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Represents the competitive, negative uses of power
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Traditionally preferred by organizations
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Types of Power (cont.)
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Nonmediated power sources
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Occur as a natural part of business transactions and do not
necessitate intention from the source
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The source may not even be aware
•
Includes expert, referent, and traditional legitimate power
•
Represents a more relational and positive use of power
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Critical Relationship Factors
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Dependence
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Commitment
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Trust
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Compliance
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Cooperation
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Conflict
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Satisfaction
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Performance
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Profitability
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Power, Cooperation, and Compliance
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Definitions:
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Compliance
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Cooperation
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Action without inherent desire
Action with implied internal agreement
Power attempts to force a target to comply with the
source’s desires.
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Mediated or coercive power: Compliance
•
Nonmediated power: Compliance and Cooperation
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Power and Conflict
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Conflict
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Competitive power sources
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When one supply chain member hinders goal attainment and
performance of another
Increase conflict
Positive use of power
•
Can reduce conflict
11
Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Power and Satisfaction
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Satisfaction
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The extent of contentment with the relationship
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Overriding factor in determining the future of a supply chain
partnership
Drivers of satisfaction
•
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Planning, mutuality, interdependence, and operational
information exchange
Without satisfaction, trust and commitment cannot exist.
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Power, Performance, and Profitability
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Performance
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Mediated power
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The ability to execute intentions and goals
Could reduce performance of the target
Nonmediated power
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Improve the target’s opinion of the source’s performance
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Questions?
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
