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Chapter 5:
PARTNERSHIP &ALLIANCES IN SUPERMARKETSUPPLY NETWORK
5-1
FOOD SUPPLY CHAIN .DCA2023
BACHELOR IN CULINARY
ARTS
SHCA
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Key Concepts
A Transformation in Relationshis T!es of "#!er$S#lier Relationshis
Transa%tional Relationshis
Collaorati'e an( Allian%e Relationshis Collaorati'e Relationshis
S#l! Allian%es
The S#lier)s Perse%ti'e
*e'eloin+ an( Mana+in+ Collaorati'e
an( Allian%e Relationshis
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A Transformation in Relationships
The transformation from rea%ti'e an(me%hani%al #r%hasin+ to roa%ti'e
ro%#rement an( on to strate+i% S#l!
Chain Mana+ement e,#i'alents a similar
transformation in relationshis et-een#!ers an( s#liers
Prior to the ./01s most #r%hasin+
relationshis -ere rea%ti'e Intera%tion et-een 'en(or an(
#r%hasin+ res#lte( in o#t%omes -here
one2s +ain -o#l( e the other2s loss
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Problems with the Term Partner
*#rin+ the late ./012s an( earl! .//12s34artnershis5 e%ame o#lar
Imli%ations of the term 4artner5 -ere not
-ell #n(erstoo(
Le+al rolems an( %on%erns ine'ital! arose
While the term 4artnershi5 is still
relati'el! %ommon3 -e a'oi( #se of the
term referrin+ the terms 4%ollaorati'erelationshi5 an( 4strate+i% allian%e65
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Three Types of Buyer Supplier Relationships
Transa%tional7 Ps!%holo+!6 an intera%tion of an in(i'i(#al -ith one or
more other ersons3 ese%iall! as infl#en%e( ! their
ass#me( relational roles of arent3 %hil(3 or a(#lt6
Transa%tions3 the #lishe( re%or(s of the ro%ee(in+s3as aers rea(3 a((resses (eli'ere(3 or (is%#ssions3 at
the meetin+s of a learne( so%iet! or the li8e6
Collaorati'e7 Pro(#%e( or %on(#%te( ! t-o or
more arties -or8in+ to+ether6
Allian%e7 A #nion or asso%iation forme( for m#t#al
enefit3 ese%iall! et-een %o#ntries or
or+ani9ations6 5-5
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ontinuum of Buyer-Seller Relationships
Continuum !arietry" of Buyer#Seller
Relationships
:i+#re ;$.
CommunicationCompetitive Adv.ConnectednessContinuous Impr.Contributions to NPD
Difficulty of ExitDurationExpeditingFocusLevel of Integration
High pot. for problems Systematic approachLow HighIndependence InterdependenceLittle A focusFew Many ESI
Low ifficult high impactShort Long!eacti"e #roacti"e#rice $otal costLittle or none High or total
A%ti'it!
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ontinuum of Buyer-Seller Relationships
Continuum of Buyer#Seller Relationships
Number of uppliers!pen "oo#s$uality%elations
%esourceservice&ared Forecastsupply Disruptions'ec&nology Inflo(s'ype of Interaction
Many %ne or few&o 'esIncoming inspection esign (uality in systemInward loo)ing *oncern w+well being
Few low s)ill le"el #rofessionalMinimal ,reatly impro"ed&o 'es#ossible -nli)ely&o 'es$actical Strategic synergy
A%ti'it!
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Transactional Relationships Characteristics
An asen%e >la%8? of %on%ern One of a series of in(een(ent (eals
Costs3 (ata an( fore%asts are not share(
Pri%e is the fo%#s of the relationshi A minim#m of #r%hasin+ time an( ener+!
is re,#ire( to estalish ri%es
Transa%tional #r%hases len( themsel'esto e$ro%#rement
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A$%anta&es of Transactional Relationships
Relati'el! less #r%hasin+ time an( effort
are re,#ire( to estalish ri%e Lo-er s8ill le'els of ro%#rement
ersonnel are re,#ire(
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'isa$%anta&es of Transactional Relationships
Potential for %omm#ni%ation (iffi%#lties E@e(itin+ an( monitorin+ of in%omin+ ,#alit!
Infle@ile -hen fle@iilit! ma! e re,#ire(
Ten( to res#lt in more (eli'er! rolems
#alit! -ill e onl! as +oo( as re,#ire(
S#liers ro'i(e the minim#m ser'i%e re,#ire(
Less effe%ti'e erforman%e ! s#liers
C#stomers are s#Be%t to more s#l!(isr#tions
S#lier is not moti'ate( to in'est time an(
ener+! (e'eloment of #!er2s ro(#%ts
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Collaborati%e an$ Alliance Relationships
4D of CEO2s thin8 e@ternal %ollaoration
-ith #siness artners an( %#stomers is8e! to inno'ation5
Collaorati'e an( allian%e relationshis
ten( to res#lt in lo-er total %osts an(
imro'e erforman%e of the s#l! %hain
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Three Success (actors
Resear%hers Stanle! an( Pearson fo#n(that the three most imortant fa%tors in a
s#%%essf#l #!er$s#lier relationshi
are7
>.? t-o$-a! %omm#ni%ation3
>F? the s#lier)s resonsi'eness to s#l!
mana+ement)s nee(s3 an(
>G? %lear ro(#%t se%ifi%ations
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Collaborati%e Relationships
T!i%all! #se( for the ro%#rement of non$
%ommo(it! items an( ser'i%es
A %ollaorati'e relationshi fre,#entl! isan aroriate first ste on the roa( to a
strate+i% allian%e
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Collaborati%e Relationships
Collaorati'e relationshis ten( tofoster6
Lon+er term %ontra%ts
Re(#%tion of ris8 for s#liers
Re(#%in+ total %osts
Imro'ement of ro%esses
Imro'ement of ro(#%ts
In%rease( in'estment in R & *
In%rease( in'estment in trainin+
In%rease( in'estment in e,#iment
"etter fo%#s on %#stomer nee(s 5-14
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Supply Alliances
The f#n(amental (ifferen%e et-een
%ollaorati'e relationshis an( s#l!
allian%es is the resen%e of instit#tional
tr#st in allian%es
The fail#re to (e'elo an( mana+e
instit#tional tr#st is the rin%ile reason
that so man! s#l! allian%es fail
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Benefits of Supply Alliances
Lo-er total %osts6
Re(#%e( time to mar8et Imro'e( ,#alit!
Imro'e( te%hnolo+! flo- from s#liers
Imro'e( %ontin#it! of s#l!
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Alliance Attributes
Contin#o#s imro'ement
Inter(een(en%e an( %ommitment6
Atmoshere of %ooeration Informal interersonal %onne%tions
Internal infrastr#%t#res to enhan%e learnin+
Oenness in all areas of the relationshi
A li'in+ s!stem
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Alliance Attributes Continue$
A share( 'ision of the f#t#re
Ethi%s ta8e re%e(en%e o'er e@e(ien%!
A(atale in the fa%e of %han+e *esi+n of e@eriments an( s#lier
%ertifi%ation
Win$Win ne+otiations E@e%#ti'e le'el %ommitment
A'oi( terms that %o#l( ro'e (estr#%ti'e
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)hich Relationship is Appropriate*
What are the 4Strate+i% Elements of a Relationshi5
Are there man! relati'el! #n(ifferentiate( s#liers
ro'i(in+ -hat amo#nts to inter$%han+eale
%ommo(ities *oes the otential s#lier ossess e%onomi% o-er
-hi%h it is -illin+ to emlo! o'er its %#stomers
If there is re%o+nition ! oth arties of the otential
enefits of an allian%e3 #t a(e,#ate ,#alifie( h#manreso#r%es are not a'ailale at one or oth firms
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Strate&ic +lements of a Relationship
Is one s#lier hea( an( sho#l(ers ao'e the
rest in terms of the 'al#e it ro'i(esJ in%l#(in+
ri%e3 inno'ation3 ailit! to a(at to %han+in+
sit#ations3 %aa%it! to -or8 -ith !o#r team3 tas8
Boint ris8s3 et%
Are some s#liers 4strate+i%5 to !o#r #siness
Wo#l( !o#r %oman! enefit +reatl! if the
s#lier -ere more 4inte+rall! %onne%te(5 -ith!o#r %oman!
*o !o#r %#stomers re,#ire hi+h (e+rees of
fle@iilit! an( see( of resonsi'eness
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The Supplier,s Perspecti%e
S#lier2s -ant +oo( %#stomers Se'eral iss#es affe%t their assessment3
amon+ them are7
Cash :lo-
Oenness an( Aroa%hailit!
A'ailailit!
Professionalism
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Situations )herein Alliances may not be
Appropriate
Stailit! Pri%e olatilit! >instailit!?
*eman( olatilit! >instailit!?
Hi+h S-it%hin+ Li8elihoo( -ith Hi+h S-it%hin+ Costs
Caailit! No Partnershi
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Situations )herein Alliances may not be
Appropriate applicable"
Cometition Non$Cometiti'e Mar8et
S#lier *een(en%! Creation
Ne+le%te( Areas
S#liers See8in+ to Re(#%e Cometition
"enefits
No le'era+e >%ontrol? from Partnershi
No Har( Sa'in+s from Partnershi
Internal "#!$In
No Internal C#stomer "#!$In
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The Role of Power
Po-er is a toi% that ma8es eole#n%omfortale
Po-er is at the heart of all #sinessrelationshis
Po-er la!s a 8e! role in t-o imortants#%lasses of #!er$s#lierrelationshis7
Cati'e "#!er7 #!er is hel( hosta+e ! a
s#lier free to s-it%h to another %#stomer Cati'e S#lier7 ma8es in'estments in or(er
to se%#re a ortion of the #!er)s #siness3-ith no ass#ran%e of s#ffi%ient #siness to
re%o# the in'estment 5-24
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The Portfolio Approach
S#%%essf#l s#l! %hain mana+ement
re,#ires the effe%ti'e an( effi%ient
mana+ement of a ortfolio of relationshis
Three en'ironmental fa%tors to %onsi(er7
>.? the ro(#%t e@%han+e( an( its te%hnolo+!3
>F? the %ometiti'e %on(itions in the #stream
mar8et3 an( >G? the %aailities of the s#liers a'ailale
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-ew S.ills an$ Attitu$es Re/uire$
*e'eloin+ an( mana+in+ %ollaorati'e
an( allian%e relationshis re,#ire s#l!
rofessionals that ossess the follo-in+
s8ills an( attit#(es7
Re%o+ni9e the enefits of %ollaoration
Ailit! to i(entif!3 otain an( #se (ata
Ale to -or8 in %haos an( #n%ertaint! A+ile3 fle@ile3 an( hi+hl! a(ati'e
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+#Commerce an$ the Ri&ht Type of
Relationship
Ho- (oes "F" eCommer%e affe%t o#r
sele%tion of the )ri+ht) t!e of
relationshi4
Sele%tion m#st e a f#n%tion of the
re,#irement3 not of the Internet
"F" eCommer%e is an enaler
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+#Commerce Traps to A%oi$
Tra .7 il(in+ the i+
Ta8e an ar%hai%3 %#mersome ro%#rement
ro%ess an( 4-ei9e5 it
Tra F7 The Ma+i% ill
Loo8in+ for the one sol#tion that %an e #se(
to sol'e e'er! ro%#rement sit#ation
Tra G7 S#lier e,#alit! S#lier relationshis ran+e from
transa%tional to allian%es
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INSTITUTIONAL
TRUST
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Trust
Tr#st is one of the 8e! fa%tors that(ifferentiates the three %lasses ofrelationshis6
The simlest (efinition of tr#st is 4ein+
%onfi(ent that the other art! -ill (o -hatit sa!s it -ill (o65
Some le'el of tr#st m#st e resent in allthree t!es of relationshis
The le'el of tr#st in%reases -ith%ollaorati'e relationshis an( e%omesan essential %hara%teristi% -ith strate+i%allian%es
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Attributes 0 +lements of 1nstitutional Trust
*e'eloe( o'er time Internal tr#st is (e'eloe( efore e@ternal
tr#st
"ase( on in(i'i(#al an( instit#tional
inte+rit! It is +reater than in(i'i(#al tr#st6
Tr#st an( relationshi are 'ie-e( as
in'estments Partners ha'e a%%ess to other)s strate+i%
lans
Rele'ant %osts an( fore%asts are share(5-31
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Attributes 0 +lements of 1nstitutional Trust
When 8e! in(i'i(#als lea'e3 fin+errintsare left ehin( that hol( the relationshis
to+ether
Tr#st is 'isile
Informal a+reements are as +oo( as
-ritten
"oth arties are sensiti'e to the %#lt#ral
ri(+e
Relationshi is a(atale in the fa%e of
%han+e
"oth firms re%o+ni9e the inter(een(en%! 5-32
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Attributes 0 +lements of 1nstitutional Trust
Sharin+ information is a means of (e'eloin+
tr#st
Confli%t in the relationshi is oenl! a((resse(
Ri+hts3 (esires3 an( oinions are %onsi(ere(
:irms ha'e m#t#al +oals
A bank accountof tr#st is %reate(
Re%o+ni9es tr#st has (ifferent %#lt#ral meanin+s
"oth CEO)s ma8e a ersonal in'estment Senior mana+ers from oth firms %ommit
Ethi%al iss#es are freel! ro#+ht # -itho#t fear
An om#(sman is assi+ne( at oth firms5-33
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Actions to 'e%elop an$ 2ana&e Trust
An inter$firm team is aointe(
*is%#ssions %on(#%te( in an atmoshere ofrese%t
Inter$firm team re%ei'es +#i(an%e an( trainin+ inthe imlementation of ra%ti%es
Listenin+3 #n(erstan(in+3 time3 ener+! arein'este(
Senior lea(ers at oth firms a%t as %hamions
A %omm#ni%ation s!stem is (e'eloe(
A%tions to (e'elo an( meas#re tr#st are %reate(
Ris8s an( re-ar(s are a((resse( oenl!
Ne+otiation is #se( as a tr#st$#il(in+
oort#nit! 5-34
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Actions to 'e%elop an$ 2ana&e Trust
"oth firms -or8 to+ether on te%hnolo+! lans
Te%hni%al ersonnel from oth firms 'isit the
other
Contra%t#al relations are (esi+ne( to enhan%e
tr#st Contra%t relations fo%#s on %ontin#o#s
imro'ement
Team an( relationshi s8ills are (e'eloe( earl!
Coman! lea(ers %reate a formal relationshi
A %ontra%tin+ hilosoh! an( a le+al
infrastr#%t#re are (esi+ne( to the relationshi
Instit#tional tr#st is meas#re( an( mana+e( 5-35
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The Alliance 3ptions
Mer%hant s#lies the total ro(#%t6
Self$man#fa%t#re -ith 8e! ra- material
s#liers6
In$ho#se lant oerate( ! a s#lier6
5 36