SUPPLY CHAIN MANAGEMENT: THE POWER OF PARTNERSHIP

What makes strategic alliances in the supply chain successful? What is the impact of trust and commitment? And how are the alliances managed?

In fact, interdependence, trust, commitment and coordination (the main attributes of an alliance) emerged as the key factors in determining success. The conclusion is therefore that building trust and coordinating activities are the cornerstones of a successful chain alliance. Managers need to ensure that their employees understand that an alliance arrangement offers their company significant benefits.

Trust and supply chain partnership

Supply chain partnership (SCP) theory says that companies involved in frequent and long-term transactions are often offered incentives to not engage in opportunistic behaviour, over time encouraging them to create trust. Each companies use different approaches to manage their suppliers, one way is the establishment of alliances and partnerships.

Similarly, increasing pressure for better performance in aspects like cost reduction and product development leads companies to focuses on supply chain partners and supply.

COOPERATION THROUGH TRUST.

Trust, is defined as a general expectancy held by a channel member that the word of the other can be relied upon. That is, one party has confidence in an exchange partner’s reliability and integrity. Trust, as a means of engendering cooperation between allying partners, receives support in the literature.

Trust may lead directly to cooperation, or indirectly through development of commitment, which then leads to cooperation. A partner committed to the relationship will cooperate with another because of a desire to make the relationship work. In interfirm relationships, commitment and trust are seen to have strong positive relationships with cooperation in industrial marketing; the concepts of trust and commitment are used as mechanisms to enhance relationship marketing, which refers to unique value-added partnerships for which the buyer may be willing to pay a price.

Given that trust and commitment lead to the desired outcome of supply chain cooperation, we examine what can be trust and commitment in a supply chain.

New ways of information sharing, as well as sharing of information usually not shared between partners, can be vital in attaining supply chain cooperation.

Trust is shared values. Shared values are the extent to which partners have beliefs in common about what behaviours, goals, and policies are important or unimportant, appropriate or inappropriate, and right or wrong. Thus, shared values lead to trust and commitment and, in turn, cooperation.

In a supply channel of the type proposed in this article, channel members are likely to share common economic goals.

Conflict Resolution

When the benefits of channel—member cooperationare shared among the members, no formal action is necessaryto redistribute benefits, since all members are betteroff through their cooperation. However, if the benefitsare unequally distributed, and an individual member mayor may not be better off economically, then some mechanismis needed to balance the benefits among the membership. Ensuring cooperation in a supply chain when a formalmechanism is not present or is not to be used requiresother mechanisms that are less direct and obvious.

At least two major and distinct informal mechanisms,power and trust, can be used to generate cooperation in asupply chain. These mechanisms are usually regarded asalternatives to each other. Power is a central concept becauseits mere existence is thought to condition others. Power is also seen as a central tenet in achieving cooperation.