“In every chain of
reasoning, the evidence of the last conclusion can be no greater than that of
the weakest link of the chain, whatever may be the strength of the rest.”
We can describe the above quote in supply chain management
context as: “effectiveness, efficiency
and other resource qualities of a supply chain can only be as good as the
weakest link in the chain”. Let’s look at this in more detail.
In collaborative supply chains weakest firm in the chain can cause chain of reactions which can cascade upstream or downstream in the chain. Within the AEC (Architecture, Engineering and Construction) industry it is generally advocated that supply chain management should be in the form of partnering and long-term collaborative arrangements with key and strategic suppliers/buyers. Strength of these collaborative and partnering relationships is said to have an effect on each other's business, however, in a wider context, performance of all members involved contribute to the overall performance of the entire supply chain. Therefore performance of collaborative supply chains is no longer affected by a single firm, so what happens in one relationship will always affect all connected relationships, sometimes marginally, but often substantially.
In collaborative supply chains weakest firm in the chain can cause chain of reactions which can cascade upstream or downstream in the chain. Within the AEC (Architecture, Engineering and Construction) industry it is generally advocated that supply chain management should be in the form of partnering and long-term collaborative arrangements with key and strategic suppliers/buyers. Strength of these collaborative and partnering relationships is said to have an effect on each other's business, however, in a wider context, performance of all members involved contribute to the overall performance of the entire supply chain. Therefore performance of collaborative supply chains is no longer affected by a single firm, so what happens in one relationship will always affect all connected relationships, sometimes marginally, but often substantially.
We can depict supply chains as engines of a machine (see Figure below), where each firm is depicted as a gear working in combination with
other firms (gears) towards a common goal (collaborating). Therefore, if we assume that each
gear is rigid and connected to one another in a tight form, consequently the
performance of the faulty gear will affect the performance of whole system.
Furthermore, it can also be argued that the size of the gear will determine the
level of impact on the system. For example, where a contractor experiences
problems with its internal operations, this will have a serious impact on
relationships which are dependent on those operations.
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In view of
the above, it can be argued that supplier relationship management within the AEC industry must be
extended beyond dyadic relationships to manage, monitor and coordinate wider network of supply
firms. Greater efficiency and effectiveness can be obtained by improving these connections in supply chains so that all firms benefit from the extended supply chain relationships. Research shows that there are three principles which must be adopted to achieve this supply chain synergy: trust, partnering and collaboration. I will talk about each of these three relationship attributes in more detail in my future posts.
