Relationship MNGT and Development

Relationship Development and Management
Overview of Relationship Development and Management

Development and
management of internal logistics relationships

Development and
management of supply chain relationships

15-2
Development And Management Of
Internal Logistics Relationships
CONCEPTS:
1. Functional
Aggregation
2. Shift from function
to process
3. Virtual organization
4. Leading
organization change
15-4
Sample Historical View Of Dispersed And Fragmented Logistics Responsibility
Figure 15.1 Traditional Organization of Logistically Related Functions
15-5
Illustration Of High Functional Aggregation In Logistics Organization
Figure 15.2 Logistics Functional Aggregation
15-6
Functional Aggregation
is the combination of logistics functions into a single managerial group
15-7
Motivated by belief that grouping logistics
into a single organization would

Increase likelihood of integration Improve knowledge of how operational changes
impacts performance in other areas

Comprehensive aggregation in organizations
is still rare, but

Trend is towards strategic management of all
forms of inventory movement and storage for maximum benefit of the enterprise
Development of logistics information
systems enabled functional integration of organizations
15-8
From Function To Process

a) Process
organization structure b) Barriers to process integration c) The great divide
15-9
Illustration Of Process-orientated Supply Chain Organization
Figure 15.4 Process Organization
15-10
A)
Factors Enabling The Process Structure
Development of a highly involved work
environment with self-directed teams Improved productivity results found in organizations that started managing processes rather than function Ability to rapidly share accurate information
15-11
Challenges Of Managing From A Process Perspective

All effort must be focused on
value added to the customer All skills necessary to complete the work must be available to the process owner Critical skills not shared can disrupt workflow and create bottlenecks Work performed by processes should stimulate synergism in the
15-12
B) Barriers to process integration

Functional organization
structure Department budgets Measurement & reward systems Functional performance Inventory use Traditional positioning supports functional performance Infocratic structure Information content and flow follow traditional functions
15-13
C) The great divide

reflects an organizational gap in
achieving end-to-end integration
Figure 15.3 The Great Divide: The Challenge of Managing across Functional Boundaries
15-14
Virtual Organization
provides integrated
performance but is not on the organization chart
15-15
How can an
organization be structured so that it can manage a complex global logistics process without becoming too bureaucratic?
Focus on work flow
rather than structure Link remote teams through information networks

15-16
Disaggregation As An Organizing Principle

Power of information
technology facilitates performing and managing logistics work without combining functions into a formal organization unit
Belief that logistical
functionality need not be grouped as a special organization

Performance can still be
efficiently and effectively coordinated using
15-17
Leading Organizational Change

General types of change
Strategic change involves implementation of
new and improved ways to service customers Modifications in a firms operational structure Changes in human resource and organization structure
Critical to avoid a quick-fix mentality about
change Consider organizations capacity to absorb new operational practices

Typically less than most change managers
15-18
Development And Management Of
Supply Chain Relationships
Supply chain perspective places more emphasis on external relationships.

Multi-enterprise coordinated effort focused
on supply chain efficiency improvement Belief that cooperative behavior will reduce risk and greatly improve efficiency Belief that opportunity exists to eliminate waste and work effort
15-20
TOPICS:
1. Risk, power and
leadership 2. Range of extended supply chain relationships 3. Supply chain integrative framework 4. Developing trust
15-21
Essential Concepts To Understanding Dependency
A. Risk Disproportionate risk among channel members Collaborative role of member is based on risk within a specific supply chain
15-22
B. Power Retailers have increased in power over the last decade Powerful firms tend to link together into supply chain arrangements Category dominance vs. brand power
C. Leadership No dominate model for how firms gain leadership responsibility Greater commitment to the relationship when leaders use rewards and expertise to exercise power
15-23
Range Of Extended Supply Chain Relationships
Figure 15.5 Relationship Classification Framework
15-24
Value Creation From Supply Chain Integration Is Focused On Flows
Figure 15.6 Supply Chain Flows
15-25
Integrative framework showing supply chain flows, competencies and context
Figure 15.7 Supply Chain Framework
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Relationship Of Capabilities To Competencies And Context Of The Supply Chain

Table 15.1 Supply Chain Context, Competencies, and Supportive Capabilities
Set of capabilities that defines the Customer Integration competency
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Competencies Needed For
The Operational Context

Operational context involves processes that
facilitate order fulfillment and replenishment Customer integration builds on the activities that develop intimacy
Internal operations integration are joint
activities within a firm that coordinate functions related to procurement, manufacture and customer accommodation Supplier integration creates operational linkages with material and service providers
15-28
Competencies Needed For
The Planning And Control Context

Planning and control context involves
monitoring, controlling and facilitating overall supply chain performance Technology and planning integration involves the design, application and coordination of information Measurement integration is the ability to monitor and benchmark functional and process performance Both within the firm and across the supply chain
15-29
Competency Needed For
The Behavioral Context

Behavioral context involves the quality of
basic business relationships between supply chain partners

Relationship integration involves the
commitment needed by people to build and develop successful long-term collaborative relationships Managers are often far more experienced in competition than they are
15-30
Initiating Relationships
Alliances are often initiated by the firm that
was the customer in the relationship The initiating firm should perform an indepth assessment of its internal practices, policies and culture
Will key alliance contacts be empowered to
manage the relationship? Does alliance involve a number of facilities that operate under different conditions, capabilities or competitive requirements?
15-31
Implementing Relationships
Partners should have
Compatible cultures A common strategic vision Supportive operating philosophies
Start small to foster early wins

Acknowledge early wins To motivate key contacts To build confidence about alliance
performance
Implement the alliance in its simplest form
Fine tune arrangement when improvement
will add substantial value
15-32
Maintaining Relationships Is Dependent On
Three Key Activities

1. Mutual Strategic
And Operational Goals

2. Two-way
Performance Measurements
3. Formal And
Informal
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Developing trust
Real collaboration
requires meaningful trust Power arrangements are often temporary and create resistance to deeper collaboration How can trust be developed?
15-34
Reliability And Character:

Two Aspects Of Trust
Reliability-based trust is grounded in
perception of actual behavior and operating performance

Firms perceived as incapable of delivering as
promised are perceived as unreliable Unreliable firms are unworthy of trust in a relationship
Character-based trust is based on culture
and philosophy
Perception that partners are interested in
each others welfare Trusting partners believe that each other will protect the others interest
15-35
Building Trust In Relationships

Trust develops over time and
repeated interactions among organizations First step is to demonstrate reliability in its operations Second step is a full and frank sharing of all information necessary for the effective functioning of the relationship Firms that hoard information are not likely to be trusted Trust can be maintained by sharing
15-36

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Relationship Development and Management

Overview of Relationship Development and Management

management of internal logistics relationships

management of supply chain relationships

Development And Management Of

Internal Logistics Relationships

Sample Historical View Of Dispersed And Fragmented Logistics Responsibility

Figure 15.1 Traditional Organization of Logistically Related Functions

Illustration Of High Functional Aggregation In Logistics Organization

Figure 15.2 Logistics Functional Aggregation

Motivated by belief that grouping logistics

into a single organization would

impacts performance in other areas

is still rare, but

systems enabled functional integration of organizations

From Function To Process

organization structure b) Barriers to process integration c) The great divide

Illustration Of Process-orientated Supply Chain Organization

Figure 15.4 Process Organization

Factors Enabling The Process Structure

Development of a highly involved work

Challenges Of Managing From A Process Perspective

B) Barriers to process integration

C) The great divide

achieving end-to-end integration

performance but is not on the organization chart

rather than structure Link remote teams through information networks

Disaggregation As An Organizing Principle

functionality need not be grouped as a special organization

efficiently and effectively coordinated using

Leading Organizational Change

change Consider organizations capacity to absorb new operational practices

Development And Management Of

Supply Chain Relationships

Supply chain perspective places more emphasis on external relationships.

Essential Concepts To Understanding Dependency

Range Of Extended Supply Chain Relationships

Figure 15.5 Relationship Classification Framework

Value Creation From Supply Chain Integration Is Focused On Flows

Figure 15.6 Supply Chain Flows

Integrative framework showing supply chain flows, competencies and context

Figure 15.7 Supply Chain Framework

Relationship Of Capabilities To Competencies And Context Of The Supply Chain

Set of capabilities that defines the Customer Integration competency

Competencies Needed For

The Operational Context

Competencies Needed For

The Planning And Control Context

Competency Needed For

The Behavioral Context

basic business relationships between supply chain partners

Start small to foster early wins

will add substantial value

Maintaining Relationships Is Dependent On

Three Key Activities

And Operational Goals

Reliability And Character:

perception of actual behavior and operating performance