Liza Sinyak

UNIT 4. The importance of good supplier relationships

BEFORE YOU READ
Discuss these questions
1. In your view, what are the three most frequent causes of difficulties in supply
chains?
2. I think that the three most frequent causes of difficulties in supply chains are:
1. Delivery delays
2. Deficit of resources
3. Fluctuations in demand
3. Do you think it is better to manage the sourcing of components and materials
internally (in house) or through external suppliers? Is it the same for all types of products and
materials?
I think that it is better to the sourcing of components and materials internally, because you
control all the supply chains yourself and it is more likely that the goods will be delivered, since
you will monitor the materials yourself, and the suppliers may not deliver them.
4. Many companies use "just-in-time management", a system which has material and
parts arriving just before they are needed.
a) Why has it become so popular?
First of all, because of the success of Japanese manufacturers. JIT clearly demonstrated the
ability to simultaneously improve quality, reduce costs, and reduce delivery times.
b) What are the risks for the supply chain?
One major disadvantage of this inventory management system is that it could lead to
potential supply chain disruptions. For instance, if one of the suppliers fails to deliver the raw
materials as per the schedule, this will install the production, resulting in late delivery, or even
order cancellation.
Another disadvantage of JIT is that the manufacturers have no margin to make errors. Any
wrong move, such as in predicting the demand, instructing the supplier, would lead to significant
losses.
One more drawback of JIT is that the company is unable to meet any unexpected order
from a customer. Also, it could result in lower profits, in case the cost of raw material rises as the
company won’t have time to renegotiate with the current supplier or look for another supplier.
c) What can be done to minimise them?
a) perhaps because you immediately know how much of what material is required, that is,
the minimum amount of waste.
b) work with trusted suppliers.

READING
A. Understanding the main points.
Read the article on the opposite page and answer these questions.
1. What action did Apple take that caused such a lot of disagreement in the computer
world?
 They changed from IBM to Intel as their supplier of microprocessors, which was a huge
and risky decislon.
2. According to the writer, what are the three most frequent sources of problems in
the supply chain?
Cost, quality and being on time (timeliness).
3. What two trends have made it even more important for companies to avoid delays
with supplies?
The increasing use of just-in-time management and faster respuIDe times demanded by
customers.
4. In order to produce high-quality products, what must companies look for in their
suppliers?
A commitment (strong belief and effort) to quality.
5. The writer mentions two strategies that companies can choose for sourcing
materials and components. What are they?
Sourcing in-house (internally) or through its own subsidiaries, or using external supply
companies.
6. When companies source components through supplier companies, what should
they do to increase the chances of success?
They should build strong partnerships with their suppliers.
B. Understanding details.
Read paragraphs D-G of the article again and answer these questions.
1. What are the potential consequences for companies when there are short delays in the
supply of critical components?
This can cause other delays in the production process, and delays have the potential to
reduce profits.
2. According to the writer, what are the potential benefits for a company that can respond
to customer needs faster than its competitors?
It can expect to be more profitable (twice as profitable) and expect to grow more quickly
(three times more quickly).
3. What are the consequences for companies that fail to source good-quality components
and have them delivered on time?
Their own products will be late getting onto the market and have faults (defects). As a
consequence of delays and product defects, companies can also lose any price advantage they
had.
4. According to Hakan Hakansson, what three qualities are important for making
partnerships between companies and their suppliers work?
Commitment from both the customers and the suppliers. Suppliers and customers being
open with each other. Trust between customers and their suppliers.

VOCABULARY
А
1. controversy g) a strong disagreement
2. transition h) a change from one situation to another
3. continuity f) always being ofthe same standard
4. consistency e) continuing over time without interrupts or problems
5. timeliness c) happening at exactly the right time
6. knock-on delays j) when a delay causes several other delays, one after the other
7. defects b) faults or imperfections
8. subsidiary i) a company owned by a larger company
9. partnerships a) relationships between companies who work together
10. commitment d) strong belief and willingness to do something
В.
 1. whole (paragraph B) - entire
2. are connected with (paragraph C) - relate to
3. very important (paragraph C) - extremely important, critical
4. extensive (paragraph D) - widespread
5. react (paragraph D) - respond
6. obtain (paragraph E) - source
7. owned completely (paragraph F) - wholly owned
8. honest and not secretive (paragraph G) - open
9. work (paragraph G) – function
2. Find two expressions in Exercise A that are used to talk about timing. (knock-on delays,
timeliness)
3. Find three other expressions in paragraphs D and E of the article that refer to timing.
(just-in-time, timely, on time, late to market)
4. Think of at least two other words or phrases you use describe a delivery that was late.
(Delayed Delivery, knock-on delays, Delayed by ...; ... behind schedule; ... late; a ... delay)

С.
Because our main supplier failed to deliver on time, there were serious knock-on delays at
each stage of the manufacturing process. The result was that the new Rimo X9 was late to
market. In company like ours, timeliness is of critical importance, so we must take action. Unless
they can guarantee more timely deliveries in future, we will need to find an alternative supplier.
WORD PARTNERSHIPS
D.
1. serious g) risks
2. strong c) relationships/partnerships
3. entire e) business
4. widespread f) use
5. short/knock-on b) delays
6. critical/good-quality h) components
7. high d) quality
8. wholly owned a) subsidiary
Е.
1. Late deliveries of materials and components can cause knock-on delays at each stage of
the production process.
2. Companies will be more profitable if they are able to respond to customer needs
quickly.
3. Companies that only source components and materials from one supplier are putting
themselves at risk.
4. building good relationships with your suppliers is critical for ensuring consistent
supplies.
5. Nearly 25 per cent of the products in the last delivery have defects.
F.
1. twice as profitable as
2. three times more quickly