A01 chaf6542 06 se fm indd

  1 

Focus on core competencies.

  2 

Reduce their number of suppliers.

  3 

Develop strong partnership relationships built on shared information and trust with the 

remaining suppliers.

Stuart and McCutcheon (2000) suggest that this approach may not suit all needs and the type 

of relationship required will be dependent on the ultimate objective. When reviewing part‑

nerships, companies need to decide the options for the extent of their control of the supply 

chain process. Table 6.4 presents some strategic options for partnerships in order of increas‑

ing control and ownership over the process by the organisation. Option 1 is total insourc‑

ing of a particular process while 2 to 9 give varying degrees of outsourcing. There is also a 

continuum between collaborative partnerships where risks are shared (options 1 to 5) and 

competitive sourcing where market competition is used to achieve the best combination of 

price and value. Note that although an organisation may lose control of the process through 

outsourcing, a contractual arrangement will still enable them to exert a strong control over 

the outputs of the process.

From Table 6.4 it can be seen that as the depth of relationship between partners increases, 

the volume and complexity of information exchange requirements will increase. For a  long‑ 

 term arrangement information exchange can include:

● 

 Short‑  term  orders.

● 

Medium‑to‑ long‑  term  capacity  commitments.

● 

 Long‑  term financial or contractual agreement.

● 

Product design, including specifications.

● 

Performance monitoring, standard of product and service quality.

● 

Logistics.

For a  short‑  term relationship simple information on transactions only, such as the EDI pur‑

chase order example in Chapter 3, is all that is required.

Stuart and McCutcheon (2000) present a more simplified set of partnership choices. They 

suggest that the partnering option chosen should be dependent on the core objective. If this 

is cost reduction, then a relationship with competitive tension is required (equivalent to 

options 6 to 9 in Table 6.4). Alternatively, if the core objective is  value‑  added benefits such as 

improved delivery speed, additional design features or the need for customisation, then the 

Activity 6.3

An e‑SCM performance management framework

Purpose

To highlight the benefits of e‑SCM and how improvements in performance and opera‑

tional management of e‑SCM can be achieved.