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Supply Chain Partners essential for effective Business
Nov 2008
In a competitive global market place businesses don't compete, their supply chains do, goes a saying. In a knowledge economy, effective sharing of knowledge makes businesses function more effectively. According to a recent study, transfer of knowledge between supply chain partners across borders helps make the participating parties benefit and prosper through mutual cooperation.
Exchange of valuable information between buyers and sellers is at the crux of effective supply chain management. Efficient supply chains lead to better quality output and thus greater customer satisfaction.
Knowledge sharing triggers a chain reaction which starts with interpretation and integration of knowledge that inflences relationship-specific behaviour of companies. Within the supply chain there are three specific dimensions of knowledge sharing activities. Information sharing takes place when companies share important data about sales, customer needs, market structures and demand level. Secondly joint sense making takes place when supply chain partners work closely to solve operational problems, analyse and discuss strategic issues and facilitate communication about the relationship. Thirdly, knowledge integration occurs when both sides develop relation-specific memories providing each party with a common understanding of routines and procedures governing the partnership. Each of these dimensions provides distinct benefits to buyers and suppliers.
According to a study, several businesses are skeptical about such collaborative knowledge sharing owing to various reasons. Information sharing may lead to leaking out of strategic business secrets. Getting too close with their collaborative partners can lead to loss of control in the relationship. It is even feared to lead to loss of revenue and competitive edge. Further businesses also see the likelihood of getting messed up into unproductive relationships which can further prevent them from forging strategically important relationships with other partners.
Thus knowledge sharing between supply chain partners can be both fruitful as well as threatening. The major stuff of information shared by companies comprises of data on inventory levels; sales; production schedules and prices. Other more valuable chunks of information are know-how, managerial and communication skills. Inter-organisational knowledge sharing can prove to be a fruitful exercise only when it is a joint activity between supply chain partners in which every party strives to create more value together than what they would be able to create individually. Parties must ensure that only the right kind of knowledge moves between them.
Today's demand-driven supply chains have further necessitated the quick transfer of knowledge from the buyers to the suppliers. Cut-throat competition and fast changing consumer demands have led the supply chain managers to adapt their operations to customer demand patterns. Thus knowledge that buyers share with suppliers becomes valuable as suppliers are farther away from the from the point of sale as compared to buyers. Here it becomes pertinent that the share of benefits between buyers and suppliers is equitable. Long-term co-operation between buyers and suppliers can be assured only when managers do not see relative gains as more important than absolute gains. A company may not benefit as much from the partnership as compared to other firm. However in absolute terms its performance is bound to improve.
Today's managers with an international work experience are better equipped to understand the nuances of different cultures and hence to exploit the benefits of a cross- cultural exchange process which can be beneficial for both the engaged parties.
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