Supply Chain Management

Chapter 14 : Cooperation and Coordination in a Supply Chain

Bullwhip Effect

Causes of the Bullwhip Effect Overcoming the Bullwhip Effect

Partnering in Supply Chain Management

Strategic Partnering Operational Partnering Environmental Pressures Inducing Partnering Prerequisites for Effective Partnering

Obstacles in Supply Chain Coordination

Incentive Obstacles Information Processing Obstacles
Operational Obstacles Pricing Obstacles Behavioral Obstacles

Managerial Levers to Achieve Coordination
Designing Effective Supply Chain Partnerships that Help Build Cooperation and Trust.

Chapter Summary

Cooperation is essential for the successful implementation of supply chain management. This cooperation is hampered when there is ineffective communication. The bullwhip effect occurs because of information distortion. This can be reduced by sharing information and knowledge with suppliers and customers in order to estimate demand more accurately.

It is also important to work with supply chain partners to eliminate the bullwhip effect. Technology can be utilized to speed up communication and to improve response times. Partnering has become very important for firms because of the increasing complexity and turbulence in the market. For partnering to be successful, there is need for trust, commitment and mutual support between the partners.

Further, the negative aspects of partnering like conflicts should be overcome by devising effective conflict resolution techniques. Hence it is very important for managers to understand the factors that affect coordination and identify the levers they can use to nurture effective coordination.

Coordination can be improved by aligning individual goals with the organizational goals, improving operational performance, improving pricing strategies, and building cooperation and trust. Before building partnerships, a manager should analyze the benefits and costs of the partnerships for all the parties involved, and the roles and tasks of each of the parties.

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