Session 7: Building Supply Chain Partnerships

1. Session 7: Building Supply Chain Partnerships

2. Approach to Sustainable Supply Chain Management (SSCM): Overarching Framework Framing the Issues Preparing for Implementation Assessing Impact Session 4: Sustainable Supply Chains as a Lever of Competitive Advantage Session 1: From Sustainable Development to Sustainable Supply Chains Session 5: Integrating Sustainability into the Supply Chain Session 8:Measuring and Communicating on Sustainable Supply Chain Performance Session 2: Governance of Supply Chains: From Compliance to Voluntary Standards Session 6: Managing Stakeholder Relations Session 7: Building Supply Chain Partnerships Session 3: Governance of Supply Chains: Introducing International Labour Standards

3. Session Objectives Examine the value of partnerships in sustainable supply chains Learn about the types of partnerships Raise awareness on the centrality of trust in the initiation and maintenance of SC partnerships.

4. Session Outline • Unit 7.1: Introduction • Unit 7.2: Case Study Discussion • Unit 7.3: Developing and Managing SC Partnerships. • Unit 7.4: Managing Risk Spots. • Unit 7.5: Conclusion

5. Unit 7.1: Introduction Partnering is… “an attempt to build close, long-term links between organizations in a supply chain that remain distinct, but which choose to work closely together” (Boddy et al, 2000, p.1004). It is important in both goods and service SCs

6. Sample SC for Leather goods(Source: GTZ ValueLinks Manual, 2007, cited by Mayoux and Mackie (2008))

7. Finger Pointing – “It’s the cows…” • Retailers and consumers: quality bad, price too high! • Manufacturers: “No es nuestra culpa!” (“not our fault!”) • Tanneries: it’s the mataderos (slaughterhouses)! • Slaughterhouses: the ranchers don’t care! • Ranchers: it’s the stupid cows! Source: Herr & Muzira (2009), quoted from Fairbanks and Lindsay (1997)”

8. Notebook Computer SC (Graves and Willems, 2005)

9. SC for Tourism Servicestier2 supplierstier1 supplierstour operatorstravel agentscustomers/tourists (Rusko et al, 2009)

10. Information and Service Flows in Tourism SCs(Zhang et al, 2009)

11. Brainstorming and Class Discussion In what ways does the tourism supply chain differ from the typical supply chain for goods?

12. Unit 7.2 – Discussion: Posada Amazonas Case What prompted Holle to enter into a partnership when developing the business? What competitive value does the partnership offer? What problems did the partnership encounter? As external consultant hired to advise Holle on the SC problems, what would you advice?

13. Unit 7.3: Developing and Managing SC Partnerships Why develop a partnership? • Anticipation of mutual gains for partners (win/win): • reduced financial risk, improved service quality, increased productivity, and reduced total costs • Positive outcomes for business: • Financial • Social • Community goodwill • Fulfillment of business social responsibilities • Potential to contribute to achieve MDGs

14. Which Millennium Development Goals did the Posada Amazonas Case promote? • Goal 1: Eradicate extreme poverty and hunger • Goal 2: Achieve universal primary education • Goal 3: Promote gender equality and empower women • Goal 4: Reduce child mortality rates • Goal 5: Improve maternal health • Goal 6: Combat HIV/AIDS, malaria, and other diseases • Goal 7: Ensure environmental sustainability • Goal 8: Develop a global partnership for development

15. Stages in the development of partnerships • Seek and choose a partner. • Evaluate strategic fit. • Implementation of operating procedures. • Managing the relationship and evaluating outcomes. (Austin, 2000)

16. Key facilitating factor in partnership development key factor  TRUST “a shared belief that you can depend on each other to achieve a common purpose” (Lewis, 1999) Two levels of trust: • Interpersonal level • Social level

17. Trust in different Cultures(“Social Capital: Trust, networks and involvement in associations in 13 countries”, Fundación BBVA, 2006)

18. Other facilitating factors in partnership development • Mutual needs of partners to be. • Interpersonal connection. • Ability to work together  joint leadership. • Disposition to share information. • Willingness to invest resources in collaboration. • Belief that collaboration is an asset for both and is sustainable in time.

19. Types of Relationships in the Supply Chain(Emmett & Crocker, 2006)

20. Comparison between Arm’s Length and Collaborative Relationships These differ in the following dimensions • Contracts with suppliers • Price/risk • Negotiations • Interpersonal relationships • Control mechanisms (Adapted from Emmett & Crocker, 2006)

21. Advantages of Partnership over Arm’s Length Relationship • Common goals • Power balance • Risk sharing • Shared gains/losses • Joint expertise • Greater chance of sustainability in some industries (Emmett & Crocker, 2006)

22. Choosing a Long-term partner • Technically sound and competent. • Managerially competent. • Adequately resourced and financially stable • Reliable (Adapted from Emmett & Crocker, 2006)

23. Critical Factors for maintaining partnerships • Match in organizational and strategic objectives. • Match in values or philosophies regarding the management of the relationship. • Availability of expected technical resources in the partners. • Willingness to share planning and performance information. • Continued belief on the mutual benefit of maintaining the collaboration. • Establishment of a measurement system to assess partnership benefits.

24. Unit 7.4: Managing Risk Spots • Partner selection deficits in due diligence • Choosing the wrong partner • Rejecting a potentially good partner • Design of the alliance • Power equilibrium • Conflict management • Manage the alliance • Poor communication/lack of transparency • Slackening of shared goals • Loss of trust

25. Threats to collaboration • Opportunistic behavior • Deficits in communications • Lack of transparency • Unkept commitments • Feelings of unfair play • Unbalances in reciprocity

26. Perceptions of Contractors/Suppliers

27. Unit 7.5: Conclusion • Partnerships should be an asset. • Positive outcomes: financial and social. • Partnerships need to be adequately managed. • There are facilitating factors as well as barriers to developing and managing partnerships. • Trust is key in the emergence and growth of collaborative relationships.