Supply chain assignments
Respond to classmates discussion post (Joseph)
Strategic alliances are typical long-term partnerships that are goal orientated in which both the risk and rewards are shared between the two businesses (Simchi-Levi, Kaminsky, & Simchi-Levi, 2008). Simchi-Levi, Kaminsky, & Simchi-Levi (2008) consider third-party logistics (3PL), retailer-supplier partnerships (RSP), and distributor integration to be the most important strategic alliances throughout the supply chain. Before considering a partnership, an analysis must be conducted and it must be determined if the trade-offs are worth forming a partnership. Simchi-Levi, Kaminsky, & Simchi-Levi (2008) state that the following issues must be considered prior to forming a partnership.
Adding Value to Products: Partnerships with similar products lines that will improve time-to-market and distribution times could add value to both firms.
Improving Market Access: Better marketing and increase access to the markets allows manufactures to meet the demand of retailers and facilitate increased sales.
Strengthening Operations: Alliances allows businesses to utilize resources more effectively and efficiently which allows for lower systematic cost and cycle times.
Technological Strengths: The sharing of technology among businesses enhances the skills base for both partners operations.
Enhancing Strategic Growth: Businesses that pool their resources are more likely to overcome barriers and open up new opportunities.
Enhancing Organizational Skills: Partnerships force a businesses to learn about itself, making them more flexible creating opportunities for a new organizational culture.
Building Financial Strength: Partnerships allows for the cost and risked to be shared.
Analyzing all the issues and determining the trade-offs to form a strategic alliance with another business can lead to supply chain partners finding innovative ways to make collaboration work and be mutual beneficial to all parties involved (Myers, 2010). Myer (2010) states “close relationships can often make the difference between long-term sustainability of the business and short-run dissolution.” He also list the four major advantages of collaborative relationships. First, collaboration increases share of wallet. Buyer-supplier relationships are based on values and to be successful, that value must remain consistently delivered. Second, the longer the collaboration usually leads to lower cost. Longer periods of collaborations leads to routinized procedures over the span of the relationship. This leads to a more streamlined process which facilitates more efficient operations and lower cost. Third, the power of word of mouth. Alliances create trust and consumers tend to rely on a word of mouth referral from members in the supply chain. Finally, innovation through long-term collaboration. Long term supply chain relationships foster an environment that can overcome many problems and challenges in volatile markets.
Simchi-Levi, David; Kaminsky, Philip and Simchi-Levi, Edith (2008). Designing and managing the supply chain concepts, strategies and case studies. New York, New York. McGraw-Hill Companies, Inc.
Myers, Matthew (2010). Supply Chain Management Review: The many benefits of supply chain collaboration. Retrieved on July 03, 2017, from http://www.scmr.com/article/the_many_benefits_of_supply_chain_collaboration
Respond to classmates discussion post #2 (Marlene)
There are various ways through which strategic alliances can be created. One of the ways through which strategic alliances can be created is through distribution relationships. Distribution relationships enable an organization to obtain more customers using the help of a third party. They are formed using cross-promotion agreements. For instance, an insurance company can contact a bank and make an agreement to make an exclusive available to their customers on condition they include it in the subsequent bank statements issued (Wohlstetter, Smith, & Malloy, 2005). The bank benefits by offering a great deal to its customers whereas the insurance company gains from increased customer numbers.
Similarly, an organization can opt to establish an agreement with distributors to help in distributing their products. Different distributors can be used in different geographical locations to sell different products on behalf of the company. Another way of forming strategic alliances is through franchising. In franchising, an organization contracts with another business to utilize their business concept and in return they receive regular fees. Lastly, strategic alliances can be formed through product licensing and technology licensing (Holmberg, & Cummings, 2009). Technology licensing involves a contractual arrangement where intellectual property is licensed to another firm whereas product licensing is where an organization grants another one the rights to manufacture and sell a product within a given area.
The establishment of strategic alliances is a win for supply chain management due to various reasons. First, this alliances enable the sharing of useful knowledge on the market that can be useful to the management. Strategic alliances lower the costs of production and distribution especially in non-profit areas like research. It also allow firms to penetrate into new markets. Hence they are able to sell more products (Simchi-Levi, D., Simchi-Levi, E., & Kaminsky, 1999). Strategic alliances also enable the organization to access new technology and intellectual property that enables it to produce better quality products.
References
Holmberg, S. R., & Cummings, J. L. (2009). Building successful strategic alliances: strategic process and analytical tool for selecting partner industries and firms. Long range planning, 42(2), 164-193.
Simchi-Levi, D., Simchi-Levi, E., & Kaminsky, P. (1999). Designing and managing the supply chain: Concepts, strategies, and cases. New York: McGraw-Hill.
Wohlstetter, P., Smith, J., & Malloy, C. L. (2005). Strategic alliances in action: Toward a theory of evolution. Policy Studies Journal, 33(3), 419-442.