A01 chaf6542 06 se fm indd

Partnering arrangement

Technical infrastructure integration

Examples

1  Total ownership (more than 

51% equity in company)

Technical issues in merging company 

systems

Purchase of Booker (distribution company) 

by Iceland (retailer). Since 1993 Cisco has 

made over 30 acquisitions (not all SCM 

related)

2  Investment stake (less than 

49% equity)

Technical issues in merging company 

systems

Cisco has also made over 40 investments 

in hardware and software suppliers

3  Strategic alliance

Collaboration tools and groupware for 

new product development

Cable and Wireless, Compaq and 

Microsoft new digital business solution 

called a‑Services

4   Profit‑  sharing  partnership

As above

Arrangement sometimes used for IS 

outsourcing

5   Long‑  term  contract

See above. Tools for managing 

service level agreements important

ISPs have performance and availability 

SLAs with penalty clauses

6  Preferred suppliers

Permanent EDI or Internet EDI links 

set up with preferred partners

Tesco Information Exchange

7  Competitive tendering

Tenders issued at intermediary or 

buyer’s website

 Buyer‑  arranged  auctions  (see  Chapter 2)

8   Short‑  term  contracts

As above

As above

9  Spot markets and auctions

Auctions at intermediary or buyer’s 

website

Business‑to‑business marketplaces, e.g. 

www.freemarkets.com (no longer available)

Table 6.4

Strategic options for partnerships

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Part 2  Strategy and applications

described as ‘Efficient, Fast and Tailored, with speed and adaptability necessary to drive suc-

cess’. However, only 45% of the participants agreed that supply chain is seen as a strategic 

asset in their company. The survey is useful since it reviews, for different industries, the 

geographical organisation for different supply chain functions. For example, in retail and 

consumer goods the pattern of global and local management of the supply chain is shown 

in Figure 6.16. In this sector, companies outsource about 7% of their planning, sourcing and 

enabling activities; only 30% of their manufacturing activities; and  10–  55% of their delivery 

activities. This industry has the highest number of inventory turns (18.2) amongst ‘leaders’ 

and a better delivery performance than companies in any other industry. ‘Laggards’ in this 

industry have an average number of industry turns of 3.3.

Figure 6.16

The balance between global, regional and local outsources of supply 

chain functions

Source: PwC (2013).

0

18

36

55

Demand planning

S&OP

Geographic organisation

for supply chain functions