Supply Chain Integration and Strategic Partnership

Supply chain refers to series of organizations that in the long run avail services and product to the customers (Mentzer, John, William, James, Soonhong, Nancy and Carlo 2001, 1-25). This curtails activities that foster production, distribution and supply, material recycling such as components, services and products. Thus, the supply chain creates utility linked to the product by its final consumers. For the accomplishment of the goal the company’s must integrate activities with customers and suppliers. Supply chain integration and strategic partnership is therefore necessary in order to make companies operate at relative cheap costs (Buurman, 2002). This was to create Mercedes-Benz trucks with their Chinese base. The Chinese model, which is a product of Chinese, sells globally because of a relatively low cost of commercial vehicles in the emerging markets such as Middle East thus saving on costs of labor and design for building new vehicles particularly for global market.

Accordingly, both Foton and Daimler AG stand a big chance of penetrating into new markets in the expanding economies by strategic partnership. Renault and Nissan strategic partnership Moreover, Renault and Nissan formed a partnership with an aim of expanding presence and sales in both Asian and US markets. This is example is an illustration of horizontal partnership involving competitors in one industry. This was due to the fact that Daewoo was much resilient on aggressive market expansion while GM concentrated on cutting its capacity of production (Fetzer and Thomas 2008, 289-308). Unfortunately, Korean labor was never cheap based on its fast-economic rate of growth plus the resilience of strong labor union, hence this caused a surprise increase in costs of Korean operations.

Coping with strategic partnership challenges Establishing strategic partnership is very beneficial and has numerous risks and challenges (Finch and Peter 2004, 183-196). Coping with such risks and challenges requires that firms entering strategic partnership to understand the nature of partnership formed, the role of each partner, and proper partnership management. The understanding should be cemented by outlining the definition of structure of the partnership and should follow a conceptual framework. On the other hand, secondary partners are companies providing resources, utility and knowledge in the supply chain. Figure 2: Supply chain performance drivers Secondary partners could be consulting firms, transportation firms, IT service providers, Third-party logistics companies, educational institutions, and online brokerage companies. However, the categories are not totally separationist, since a company can be both a secondary and/or primary partner in the supply chain.

One process being performing primary activities and the other being performing supportive activities. Though in all cases, there are no obvious differences that exist between supporting and primary chain partners, the categorization permits the definition of the furthest downstream and upstream components of supply chain level and identification of the point at which demand starts. Some companies move strategically by either opting for customer selectivity or supply base reduction, therefore the supply chain narrows down. Functional spin or outsourcing is also likely to change supply chain structural dimension through widening and lengthening the supply chain. Consideration of the characteristics of a supply chain connection is also essential. There is importance of connections in supply chain activities, since such connections are likely to lead to competitive advantages.

Full exploitation of such connections requires an organization to comprehend their unique characteristics of the connections. Further, different features of supply chain links influence the way a firm is likely to allocate their resources and planning involved in the supply chain. Hence, features of these links should be integrated into the process supply chain partnership. Successful strategic partnership involves formulating a mutual goal which is the first step of supply chain partnership. Setting a mutual goal requires the stakeholders to figure out driving forces (supply chain drivers) in support of supply chain linkages. Such drivers are, customers service initiatives, risk elements, information transaction, and monetary value. The final component of drivers is the risk elements. Again, from supply integration is risk mitigation.

Isolated supply chain would stretch beyond competency but through partnership it pools resources shared within the partnership. Without information synchronization, time compression and recognition of tension among supply chain, a supply chain can be a very risky. External risks are noted to be heavier than internal risks since less is known concerning external risks.  Supply chain logistics management. McGraw-Hill, 2002. Christopher, Martin. "The agile supply chain: competing in volatile markets. " Industrial marketing management 29, no. , Mona J. Fitzsimmons, and Sanjeev Bordoloi.  Service management: Operations, strategy, and information technology. New York, NY: McGraw-Hill, 2008. Froese, Fabian Jintae. " Management science 43, no. Manuj, Ila, and John T. Mentzer. "Global supply chain risk management. " Journal of business logistics 29, no. , and Ananth Raman. "Aligning incentives in supply chains. " Harvard business review 82, no.