CHAPTER 33

MANAGING SUPPLY CHAINS

 COST

QUALITY

Influences on RELIABILITY

the choice of
suppliers FREQUENCY

FLEXIBILITY

PAYMENT TERM
How to managi
ng the supply
chain efficie
ntly
-
 The Benefits of Supplier Relations
hip Management
Reduced costs-By cooperating in a mutually beneficial relationship with key suppliers, a company c
an strive for cost savings over the long term.
Good working relationships with suppliers will not only deliver cost savings, they will reduce ava
ilability problems, delays and quality issues - and that means a better service for the consumer.
Increased efficiency-Suppliers gain a more complete understanding of the businesses they serve, an
d this allows them to meet their needs more effectively. Delays in the supply chain will decrease,
and the flow of operations will greatly improve.
.
The Benefits of Supplier Relations
hip Management
Outsourcing certain activities

A successful supplier relationship management programme will often create a trusting part
nership between a buyer and a supplier. In some cases, this may result in many key activi
ties being transferred to the supplier on a permanent basis. This may include entrusting
a supplier with the management of inventory levels and some elements of customer service

Consolidation of the supply chain

As specific areas of both the supplier's and buyer's business work together, this allows
both parties to better understand the inner workings of the other. In some cases, both pa
rties will be able to adapt their own working practices and operations to better accommod
ate the other, and that can lead to further efficiencies and operational advantages.
 Walmart may be the most famous example of a company that has succe
eded primarily because of a well-developed and aligned supply chain str
ategy. Some of the company’s most notable strategy wins are as follows:

• Strategically removed links from the grocery supply chain

Mini Case • Pioneered the use of vendor-managed inventory

• Built strategic partnerships with vendors to drive down prices

Study: Wa • Developed a process of excellence in supply chain collaboration

lmart • Implemented cross-docking in its supply network to enable inventory re

ductions

• Established the strategic use of technology to gain supply chain efficienc

ies

All of the initiatives listed above support the company’s business strateg
y to be a leader in low-cost grocery retail, making Walmart a prime exam
ple of what enterprises can achieve when supply chain and overall busin
ess strategies are aligned.