create a more responsive and flexible stance towards customers and
consumers. In today’s marketplace, where time has become a criti-
cal success factor, the ability to move quickly in response to volatile
demand is vital.
The achievement of a closely integrated supply chain ultimately,
however, will depend upon the recognition by all the parties
involved of the need to work on the basis of collaboration and to
seek out ‘win–win’ strategies.
Creating win–win relationships in the supply chain
The benefits of cooperation rather than conflict in buyer–supplier
relationships have been set out in some detail by Axelrod^10 amongst
others. He demonstrates that cooperation can provide greater
payoffs to both parties than can be achieved through the more tra-
ditional ‘win–lose’ scenario.
In the same work Axelrod describes the well-known example of
‘The Prisoners’ Dilemma’, in which two outlaws are captured and
can only escape a severe punishment by trusting each other not to
confess. Because they are both offered lighter sentences if they
convict the other (and knowing also that the other is inherently
untrustworthy) the likelihood is that they will both confess and both
be punished! Whilst this may be an over-simplification of relation-
ships in a supply chain, it graphically highlights the issues.
Lewis^11 has studied in depth a number of companies who have
strong partnerships with suppliers – companies like Marks &
Spencer, Chrysler and Motorola – and has identified that typical
benefits include:
● On-going cost reductionsthat can double those possible through market
transactions.
● Quality improvementsthat exceed what individual firms can possibly do
alone.
● Design cycle times20 to 75 per cent shorter than those in traditional
relationships.
● Increased operating flexibility, which in some firms has yielded an eco-
nomic lot size of one – the ultimate in flexible manufacturing.
The supplier and alliance market domain 171