Supplier Relationship

Management in the Context of

Supply Chain Management

Keely L. Croxton, Ph.D.

Asst. Professor of Logistics
The Ohio State University
 What is Supply Chain Management?

According to The Global Supply Chain Forum

Supply chain management is the

integration of key business processes
from end user through original supplier
that provides products, services, and
information that add value for customers
and other stakeholders.

Source: Lambert, Douglas M., Martha C. Cooper and Janus D. Pagh, Supply Chain Management: Implementation Issues and Research
Opportunities, The International Journal of Logistics Management, Vol. 9, No. 2, 1998, p.2.
 Integrating Key Business Processes
Information Flow

Manufacturer
Tier 2 Tier 1 Consumer/
Supplier Supplier Logistics Customer End-Customer
Purchasing Marketing
PRODUCT FLOW
Production Finance
R&D
Supply Chain Management Processes

CUSTOMER RELATIONSHIP MANAGEMENT

CUSTOMER SERVICE MANAGEMENT

DEMAND MANAGEMENT

ORDER FULFILLMENT

MANUFACTURING FLOW MANAGEMENT

SUPPLIER RELATIONSHIP MANAGEMENT

PRODUCT DEVELOPMENT AND COMMERCIALIZATION

RETURNS MANAGEMENT

Source: Adapted from Douglas M. Lambert, Martha C. Cooper and Janus D. Pagh, "Supply Chain Management: Implementation Issues
and Research Opportunities, The International Journal of Logistics Management, Vol. 9, No. 2 (1998), p. 2.
 The Processes
Customer Relationship Management - provides the structure for how relationships with
customers are developed & maintained, including the PSAs between the firm & its customers.

Customer Service Management - provides the firms face to the customer, including
management of the PSAs, and provides a single source of customer information.

Demand Management provides the structure for balancing the customers requirements
with supply chain capabilities.

Order Fulfillment includes all activities necessary to define customer requirements,

design the logistics network, and fill customer orders.

Manufacturing Flow Management - includes all activities necessary to move products

through the plants & to obtain & manage manufacturing flexibility in the supply chain.

Supplier Relationship Management - provides the structure for how relationships with
suppliers are developed & maintained, including the PSAs between the firm & its suppliers.

Product Development and Commercialization provides the structure for developing

and bringing to market new products jointly with customers and suppliers.

Returns Management includes all activities related to returns, reverse logistics,

gatekeeping, & avoidance.
Source: Keely L. Croxton, Sebastin J. Garca-Dastugue, Douglas M. Lambert, and Dale S. Rogers, The Supply Chain
Management Processes, The International Journal of Logistics Management, Vol. 12, No. 2, 2001, p. 25.
 Why Integrate?
Because
there might be potential for competitive advantages,

competitors might already be working on it,

it should bring more stability to the relationship,

It should bring improvements to customer service, profits,

costs,
technology is driving businesses in that direction,

the world is becoming more global and business

practices are changing,
companies tend to focus on their core competencies,

when these systems have been implemented they

become an intangible asset.
Types of Inter-Company Business Process Links
Tier 3 to Tier 3 to
Initial Tier 2 Tier 1 Tier 1 Tier 2 Consumers/
suppliers Suppliers Suppliers Customers Customers End-customers

1 1
Tier 3 to n suppliers

2 2

Consumers/End-customers
n n
1 1
1
Initial Suppliers

2
n 2

1
3 1

Tier 3 to n customers
2 3
1 n
3 n
n 1
n n
2
1 1
n
n
n

Managed Process Links Focal Company

Monitor Process Links
Members of the Focal Companys Supply Chain
Not-Managed Process Links
Non-Member Process Links Non-members of the Focal Companys Supply Chain

Source: Douglas M. Lambert, Martha C. Cooper, and Janus D. Pagh, Supply Chain Management: Implementation Issues and Research Opportunities, The
International Journal of Logistics Management, Vol. 9, No. 2, 1998, p. 7.
 Supplier Relationship Management
Strategic Sub-Processes Process Interfaces Operational Sub-Processes

Review Corporate, Customer Relationship Differentiate Suppliers

Manufacturing Management
and Sourcing Strategies

Prepare the
Customer Service Supplier/Segment
Management Management Team
Identify Criteria
for Categorizing Suppliers
Internally Review the
Demand
Supplier/
Management
Supplier Segment

Provide Guidelines for the

Degree of Customization Identify Opportunities
Order Fulfillment
in the Product/Service with the Suppliers
Agreement

Develop Product/Service
Manufacturing Flow Agreement and
Management Communication Plan
Develop Framework of
Metrics
Implement the
Product Development Product/Service
& Commercialization Agreement
Develop Guidelines for
Sharing
Process Improvement Measure Performance and
Benefits Returns Generate Supplier
Management
with Suppliers Cost/Profitability Reports

Source: Keely L. Croxton, Sebastin J. Garca-Dastugue, Douglas M. Lambert, and Dale S. Rogers, The Supply Chain Management Processes, The International
Journal of Logistics Management, Vol. 12, No. 2, 2001, p. 25.
 Customer Relationship Management
Strategic Sub-Processes Process Interfaces Operational Sub-Processes

Review Corporate
Customer Service Differentiate Customers
and Marketing Strategy Management

Prepare the
Demand Account/Segment
Identify Criteria Management Management Team
for Categorizing
Customers
Internally Review the
Order Fulfillment Accounts

Provide Guidelines for the

Degree of Differentiation Manufacturing Flow Identify Opportunities
in the Product/Service Management with the Accounts
Agreement

Develop the
Supplier Relationship Product/Service
Management Agreement
Develop Framework for
Metrics
Implement the
Product Development
Product/service
& Commercialization Agreement

Develop Guidelines for

Measure Performance and
Sharing Process Returns
Generate Profitability
Improvement Benefits Management
Reports
with Customers

Source: Keely L. Croxton, Sebastin J. Garca-Dastugue, Douglas M. Lambert, and Dale S. Rogers, The Supply Chain Management Processes, The
International Journal of Logistics Management, Vol. 12, No. 2, 2001, p. 15.
 Types of Relationships

Partnerships

Arms Joint Vertical

Length Type I Type II Type III
Ventures Integration

The Global Supply Chain Forum, 2000

 Partnership - Definition

A partnership is a tailored business relationship

based on mutual trust, openness, shared risk and
shared rewards that results in business performance
greater than would be achieved by two firms working
together in the absence of partnership.

The Global Supply Chain Forum, 2000

 The Partnership Model

Drivers Facilitators
Decision to Supportive
Compelling create or environmental
reasons to adjust factors that
partner relationship enhance
partnership growth

Components
Drivers set Joint activities and processes
expectations that build and sustain the
of outcomes partnership
Feedback to:
l Components
l Drivers
Outcomes l Facilitators
The extent to which
performance meets
expectations

The Global Supply Chain Forum, 2000

Thank you!