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Session 7: Building Supply Chain Partnerships. Approach to Sustainable Supply Chain Management (SSCM): Overarching Framework. Framing the Issues. Preparing for Implementation . Assessing Impact. Session 4: Sustainable Supply Chains as a Lever of Competitive Advantage. - PowerPoint PPT Presentation
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Session 7: Building Supply Chain Partnerships
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Approach to Sustainable Supply Chain Management (SSCM): Overarching Framework
Framing the Issues Preparing for Implementation Assessing Impact
Session 1: From Sustainable Development
to Sustainable Supply Chains
Session 2: Governance of Supply Chains: From
Compliance to Voluntary Standards
Session 4: Sustainable Supply Chains as a Lever of Competitive Advantage
Session 5: Integrating Sustainability into the
Supply Chain
Session 6: Managing Stakeholder Relations
Session 7: Building Supply Chain Partnerships
Session 8: Measuring and Communicating on
Sustainable Supply Chain Performance
Session 3: Governance of Supply Chains: Introducing
International Labour Standards
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Session Objectives
Examine the value of partnerships in sustainable supply chains
Learn about the types of partnerships
Raise awareness on the centrality of trust in the initiation and maintenance of SC partnerships.
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Session Outline
Unit 7.1: Introduction Unit 7.2: Case Study Discussion Unit 7.3: Developing and Managing SC
Partnerships. Unit 7.4: Managing Risk Spots. Unit 7.5: Conclusion
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Unit 7.1: Introduction
Partnering is…“an attempt to build close, long-term links between organizations in a supply chain that remain distinct, but which choose to work closely together” (Boddy et al, 2000, p.1004).
It is important in both goods and service SCs
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Sample SC for Leather goods (Source: GTZ ValueLinks Manual, 2007, cited by Mayoux and Mackie (2008))
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Finger Pointing – “It’s the cows…”
Retailers and consumers: quality bad, price too high!
Manufacturers: “No es nuestra culpa!” (“not our fault!”)
Tanneries: it’s the mataderos (slaughterhouses)!
Slaughterhouses: the ranchers don’t care!
Ranchers: it’s the stupid cows!
Source: Herr & Muzira (2009), quoted from Fairbanks and Lindsay (1997)”
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Notebook Computer SC (Graves and Willems, 2005)
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SC for Tourism Servicestier2 supplierstier1 supplierstour operatorstravel
agentscustomers/tourists
(Rusko et al, 2009)
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Information and Service Flows in Tourism SCs (Zhang et al, 2009)
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Brainstorming and Class Discussion
In what ways does the tourism supply chain differ
from the typical supply chain for goods?
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Unit 7.2 – Discussion: Posada Amazonas Case
1) What prompted Holle to enter into a partnership when developing the business?
2) What competitive value does the partnership offer?
3) What problems did the partnership encounter?
4) As external consultant hired to advise Holle on the SC problems, what would you advice?
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Unit 7.3: Developing and Managing SC Partnerships
Why develop a partnership? Anticipation of mutual gains for partners (win/win):
• reduced financial risk, improved service quality, increased productivity, and reduced total costs
Positive outcomes for business:• Financial• Social
- Community goodwill- Fulfillment of business social responsibilities- Potential to contribute to achieve MDGs
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Which Millennium Development Goals did the Posada Amazonas Case promote?
Goal 1: Eradicate extreme poverty and hunger Goal 2: Achieve universal primary education Goal 3: Promote gender equality and empower
women Goal 4: Reduce child mortality rates Goal 5: Improve maternal health Goal 6: Combat HIV/AIDS, malaria, and other
diseases Goal 7: Ensure environmental sustainability Goal 8: Develop a global partnership for development
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Stages in the development of partnerships
Seek and choose a partner. Evaluate strategic fit. Implementation of operating procedures. Managing the relationship and evaluating
outcomes.(Austin, 2000)
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Key facilitating factor in partnership development
key factor TRUST“a shared belief that you can
depend on each other to achieve a common purpose” (Lewis, 1999)
Two levels of trust:– Interpersonal level
– Social level
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Trust in different Cultures (“Social Capital: Trust, networks and involvement in associations in 13
countries”, Fundación BBVA, 2006)
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Other facilitating factors in partnership development
Mutual needs of partners to be. Interpersonal connection. Ability to work together joint leadership. Disposition to share information. Willingness to invest resources in
collaboration. Belief that collaboration is an asset for both
and is sustainable in time.
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Types of Relationships in the Supply Chain(Emmett & Crocker, 2006)
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Comparison between Arm’s Length and Collaborative Relationships
These differ in the following dimensions Contracts with suppliersPrice/riskNegotiations Interpersonal relationshipsControl mechanisms
(Adapted from Emmett & Crocker, 2006)
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Advantages of Partnership over Arm’s Length Relationship
Common goals Power balance Risk sharing Shared gains/losses Joint expertise Greater chance of sustainability in some
industries(Emmett & Crocker, 2006)
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Choosing a Long-term partner
Technically sound and competent. Managerially competent. Adequately resourced and financially stable Reliable
(Adapted from Emmett & Crocker, 2006)
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Critical Factors for maintaining partnerships
Match in organizational and strategic objectives. Match in values or philosophies regarding the
management of the relationship. Availability of expected technical resources in the
partners. Willingness to share planning and performance
information. Continued belief on the mutual benefit of maintaining the
collaboration. Establishment of a measurement system to assess
partnership benefits.
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Unit 7.4: Managing Risk Spots
Partner selection deficits in due diligence• Choosing the wrong partner • Rejecting a potentially good partner
Design of the alliance• Power equilibrium• Conflict management
Manage the alliance• Poor communication/lack of transparency• Slackening of shared goals• Loss of trust
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Threats to collaboration
Opportunistic behaviorDeficits in communicationsLack of transparencyUnkept commitmentsFeelings of unfair playUnbalances in reciprocity
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Perceptions of Contractors/Suppliers
Factors contributing to failed collaborations Contractors’ response (rank)
Suppliers’ response (rank)
Poor communication 1 1Lack of top management support 2 10Lack of trust 3 4Lack of total quality commitment by supplier 4 18Poor upfront planning 5 5Lack of distinctive value-added quality/benefit 6 13Lack of strategic direction 7 3Lack of shared goals 8 2Ineffective mechanism for conflict resolution 9 7Lack of benefit/risk sharing 10 6Agreement does not support a partnership philosophy 11 9Partner organization lacks top support 12 8Changes in the market 13 16Supplier base too large 14 15Corporate culture differences 15 17Top management differences 16 14Lack of central pruchasing 17 12Low status of purchasing 18 11Distance barriers 19 19
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Unit 7.5: Conclusion
Partnerships should be an asset.Positive outcomes: financial and social. Partnerships need to be adequately
managed.There are facilitating factors as well as
barriers to developing and managing partnerships.
Trust is key in the emergence and growth of collaborative relationships.
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