Relationship Development and Management
Relationship Development and
Management
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Overview of Relationship Development and
Management
Development and management of internal logistics relationships
Development and management of supply chain relationships
Development And Management
Of Internal Logistics Relationships
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CONCEPTS:
1. Functional Aggregation
2. Shift from function to process
3. Virtual organization
4. Leading organization change
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Sample Historical View Of Dispersed And Fragmented
Logistics Responsibility
Figure 15.1 Traditional Organization of Logistically Related Functions
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Illustration Of High Functional Aggregation In Logistics
Organization
Figure 15.2 Logistics Functional Aggregation
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1
Functional Aggregation
is the combination of logistics functions into a single
managerial group
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Motivated by belief that grouping logistics into a single organization wouldIncrease likelihood of integrationImprove knowledge of how operational changes
impacts performance in other areas
Comprehensive aggregation in organizations is still rare, butTrend is towards strategic management of all
forms of inventory movement and storage for maximum benefit of the enterprise
Development of logistics information systems enabled functional integration of organizations
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2
From Function To Process
a) Process organization structure
b) Barriers to process integration
c) The great divide
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Illustration Of Process-orientated Supply Chain
Organization
Figure 15.4 Process Organization
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A)
Factors Enabling The Process Structure
Development of a highly involved work environment with self-directed teams
Improved productivity results found in organizations that started managing processes rather than function
Ability to rapidly share accurate information
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Challenges Of Managing From A Process Perspective
All effort must be focused on value added to the customer
All skills necessary to complete the work must be available to the process ownerCritical skills not shared
can disrupt workflow and create “bottlenecks”
Work performed by processes should stimulate synergism in the organization
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B)Barriers to process integration
Functional organization structureDepartment budgets
Measurement & reward systemsFunctional performance
Inventory useTraditional positioning
supports functional performance
Infocratic structureInformation content and flow
follow traditional functionsLimits to sharing knowledge
Functional experts hoard power
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C)The great divide
reflects an organizational gap in achieving end-to-end integration
Figure 15.3 The Great Divide: The Challenge of Managing across Functional Boundaries
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3
Virtual Organization
provides integrated performance but is not on the organization chart
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•How can an organization be structured so that it can manage a complex global logistics process without becoming too bureaucratic?
• Focus on work flow rather than structure
• Link remote teams through information networks
• Push authority down to teams
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Disaggregation As An Organizing Principle
Power of information technology facilitates performing and managing logistics work without combining functions into a formal organization unit
Belief that logistical functionality need not be grouped as a special organizationPerformance can still be
efficiently and effectively coordinated using information networks
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4
Leading Organizational Change
General types of changeStrategic change involves implementation of new
and improved ways to service customersModifications in a firm’s operational structureChanges in human resource and organization
structureCritical to avoid a quick-fix mentality about
changeConsider organization’s capacity to absorb new
operational practicesTypically less than most change managers estimate
Actual change takes longer than anticipated
Development And Management
Of Supply Chain Relationships
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Supply chain perspective places more emphasis on external relationships.
Multi-enterprise coordinated effort focused on supply chain efficiency improvement
Belief that cooperative behavior will reduce risk and greatly improve efficiency
Belief that opportunity exists to eliminate waste and work effort
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TOPICS:
1. Risk, power and leadership
2. Range of extended supply chain relationships
3. Supply chain integrative framework
4. Developing trust
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1Essential Concepts To
Understanding Dependency
A.RiskDisproportionate risk among channel members
Collaborative role of member is based on risk within a specific supply chain
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B.PowerRetailers have increased in power over the last decade
Powerful firms tend to link together into supply chain arrangements
Category dominance vs. brand power
C. LeadershipNo dominate model for how firms gain leadership responsibility
Greater commitment to the relationship when leaders use rewards and expertise to exercise power
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2
Range Of Extended Supply Chain Relationships
Figure 15.5 Relationship Classification Framework
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3Value Creation From Supply Chain Integration Is Focused On Flows
Figure 15.6 Supply Chain Flows
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Integrative framework showing supply chain flows, competencies and
context
Figure 15.7 Supply Chain Framework
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Relationship Of Capabilities To Competencies And Context Of The
Supply Chain
Table 15.1 Supply Chain Context, Competencies, and Supportive Capabilities
Set of capabilities that defines the Customer Integration competency
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Competencies Needed ForThe Operational Context
Operational context involves processes that facilitate order fulfillment and replenishmentCustomer integration builds on the activities that develop intimacy
Internal operations integration are joint activities within a firm that coordinate functions related to procurement, manufacture and customer accommodation
Supplier integration creates operational linkages with material and service providers
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Competencies Needed ForThe Planning And Control
ContextPlanning and control context involves
monitoring, controlling and facilitating overall supply chain performanceTechnology and planning integration involves the design, application and coordination of information
Measurement integration is the ability to monitor and benchmark functional and process performanceBoth within the firm and across the supply chain
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Competency Needed ForThe Behavioral Context
Behavioral context involves the quality of basic business relationships between supply chain partners
Relationship integration involves the commitment needed by people to build and develop successful long-term collaborative relationshipsManagers are often far more experienced in competition than they are in collaboration
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Initiating Relationships
Alliances are often initiated by the firm that was the customer in the relationship
The initiating firm should perform an in-depth assessment of its internal practices, policies and cultureWill key alliance contacts be empowered
to manage the relationship?Does alliance involve a number of
facilities that operate under different conditions, capabilities or competitive requirements?
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Implementing Relationships
Partners should haveCompatible culturesA common strategic visionSupportive operating philosophies
Start small to foster early winsAcknowledge early wins
To motivate key contacts To build confidence about alliance
performanceImplement the alliance in its simplest form
Fine tune arrangement when improvement will add substantial value
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Maintaining Relationships Is Dependent On
Three Key Activities
1. Mutual Strategic And Operational Goals
2. Two-way Performance Measurements
3. Formal And Informal Feedback Mechanisms
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4
Developing trust
Real collaboration requires meaningful trust
Power arrangements are often temporary and create resistance to deeper collaboration
How can trust be developed?
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Reliability And Character:Two Aspects Of Trust
Reliability-based trust is grounded in perception of actual behavior and operating performanceFirms perceived as incapable of delivering
as promised are perceived as unreliableUnreliable firms are unworthy of trust in a
relationship
Character-based trust is based on culture and philosophyPerception that partners are interested in
each other’s welfareTrusting partners believe that each other
will protect the other’s interest
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Building Trust In Relationships
Trust develops over time and repeated interactions among organizations
First step is to demonstrate reliability in its operations
Second step is a full and frank sharing of all information necessary for the effective functioning of the relationshipFirms that hoard information are not
likely to be trustedTrust can be maintained by sharing
explanations and business rationale for key decisions