The Internet Encyclopedia (Volume 3)

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DEVELOPING ANDMAINTAININGSUPPLYNETWORKRELATIONSHIPS 405

Table 2Implications of a Supply Network Relationship

Network Relationship Implications and Issues

Adding value to products, services,

and processes

External relationships will add value to products, processes, and services.

Suppliers, customers, and other parties in a supply network offer an important

input into these issues. Time to market, modifications, service delivery time,

complementary product, and services offerings, etc., will all add perceived

value.

Improving access to the

marketplace

Network relationships offer increased market channel access and closeness to

the customer. Information will, in theory, flow along seamless and transparent

interfaces, reducing the distance between all organizations and the end

consumer.

Improving operations Close supply relationships improve operations by reducing costs and cycle times.

Resources can be shared and utilized more effectively.

Technological development Network relationships help to build a skill base and the better application of

technology.

Competitive growth The pooling of expertise and resources opens new market opportunities and

reduces the barriers to entry.

Skills Greater organizational learning can be achieved in a supply network relationship

(covering both internal and external influences).

Financial strength Income can be increased and financial costs shared using network relationships.

Further, investment risk can be reduced by shared exposure.

amplifications in demand, end consumer, information

flows, and external interdependence are brought into

sharp focus. Second, the establishment of network rela-

tionships is a strategic viewpoint that inevitably moves be-

yond mere tactical thinking. Long-term decision making

encourages the analysis of likely future-demand trends

and the effects on changes in the supply network struc-

ture. This will also have implications for decisions regard-

ing vital resources and the technologies necessary for the

future.

The Partnership Process

Empirical research by Christopher and J ̈uttner (2000) has

established that there are five key elements involved in a

supply network relationship. Managers in this study were

questioned as to the most important aspects of a relation-

ship and the findings are outlined below.

Partner Selection and Classification

The differences in degree of partnering relationships are

an issue in terms of the benefits to be gained, the re-

sources and investments that are necessary and the risk

involved. Relationship management is a situational ap-

proach and involves the development and maintenance

of a portfolio of relationships with different natures.

Thus, economic and strategic concerns are often bal-

anced with integration needs at the operational level of

the working relationship. Making the right selection to

embody the necessary relationship portfolio is a crucial

task.

Training of Boundary Spanners

Individuals, as boundary spanners, play a major role in

establishing and maintaining inter-organizational rela-

tionships. However, the collaborative skill and organiza-

tional structure necessary to support these roles must

be properly developed. This process needs to be actively

managed and will increasingly apply to all employees in

the enterprise.

Coordinating Interpersonal Relationships

How can the various interpersonal relationships at dif-

ferent organizational levels be coordinated to represent a

consistent corporate approach? Relationships based upon

multifaceted interface structures are extremely complex.

These relationships need to be managed and institution-

alized at the business or corporate level and not left to

the discretionary behavior of individuals. Consequently,

the commitment of senior management will have a sig-

nificant affect on the success of long-term relationships.

Further, having a strategic vision of such relationships is

a primary means to cascade the policy down through the

firm in a supportive culture.

External Support

Unfortunately, in many commercial sectors, business re-

lationships have been primarily adversarial. The devel-

opment of collaborative supply network approaches and

the solving of inter-firm problems require new planning

and implementation techniques. Appointing a relation-

ship promoter is an important step in this process. Suc-

cessful relationships are often developed under the aus-

pices of a committee system involving the most important

stakeholders in the relationship (internal and external to

the firm).

Relationship Monitoring

A successful relationship involves the management of

continual value-creating processes, underpinned by a

monitoring procedure. This will complement traditional