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Answer to question No.

- 1

Logistics is undergoing massive change. Perhaps the most difficult job of all is managing
change in the organisation. Whether the change is strategic, involving fundamental new
processes, operational or only in personnel, managers must develop new skills that allow
them to implement change without disrupting the focus of the organisation.
In addition to managing the internal organisation supply chain executives
are intimately involved in managing relationships among organizations. As the essence of
supply chain management lies in the ability to orchestrate collaborative relationship both
internally and with the supply chain partners. Furthermore, collaborative relationships
provide a mechanism to reduce operating expenses, enhance productivity, and meet
customer requirements. Successful integration requires cross-organisational programs to
facilitate operations, technology and planning and relationship management. Initiating ,
implementing and maintaining relationships with suppliers and customers are highly
dependent upon the existence of trust among those firms. While reliability is critical
aspect of trust, ultimate success in relationship management will depend upon evaluation
of character as firms make decisions concerning which supply chains they choose to
participate in.
The SCM is viewed as a system that links an enterprise with its customers and suppliers.
In the past , companies focused primarily on manufacturing and quality improvements
within their four walls; now their efforts extend beyond those walls to influence the entire
supply chain including only customer and suppliers.
Today's supply chain is complex web of suppliers, assemblers, shipping/logistics firms,
sales/ marketing channels, third party customer supports firms and other business partners
linked primarily through information networks and contractual relationships. Supply
chain management system enhance and manage the relationships. The supply chain has
three main links :
a) materials flow from suppliers and their "upstream" suppliers at all levels.
b) transformation of materials into semi finished and finished products - the
organisation own production processes.
c) distribution of products to customers and their "downstream" customers at all
levels.
collecting analyzing and distributing transactional information to all relevant parties,
SCM systems helps all the different entities in the supply chain work together more
effectively. SCM provide dynamic holistic views of organizations enabling the users to
drill down into detailed analyses of supply chain activities in a process.
SCM emphasizes the importance of intra - and inter - firm vertical relationship. This
relationships may be either -or long - term and vary in intensity from 'arm's length' to
high involvement.
It includes the whole chain, from commodity production ( at farm level in the case of
food) to the consumer or, in the case of a demand driven chain, from the consumer to
commodity production. am important success factor of the SCM is the optimization of the
interfaces between suppliers and buyers. SCM concepts can increase the efficiency,
effectiveness and customer satisfaction of supply chain activities. the usage of modern
and harmonized information technology can give supply chain partners a competitive
advantage because it can lead to an information and communication advantage.

Selecting a supplier of goods and services can be a complicated and


costly process, which should be carefully prepared and executed in
order to engage the most appropriate provider. It is however, only
part of the story. Once the contract has been awarded or the order
placed, it is essential to establish a mutually beneficial working
relationship between the supplier and customer, in order to
successfully deliver the service or goods.
Purchasing the goods or services is just the start of a procurement
process, which in many cases receives the majority of the focus. The
success of the process however can only be judged by how well the
service or goods meets the requirements of the stakeholders.
Good practice suggests that building a strong working relationship
between the supplier and customer ensures that over the life span of
the contract, the delivery of the goods or services will be superior to
those where relationships are not managed. As with any relationship,
the more effort involved with communicating and developing mutual
understanding, the better the outcome.
A continuous process on award of contract should be to clarify
expectations, which will assist with developing the service or
products. Agreeing Service Level Agreements (SLAs) and Key
Performance Indicators (KPIs) between the two parties is part of SCM
however establishing the nature of the relationship may be an
important part of this.
Establishing clear and robust terms and conditions of contract are a
key element of SCM, which will have a bearing on the management of
the supplier relationship. The contract between supplier and customer
should specify how the relationship will be managed. For example;
dispute resolution procedures, exit strategies and ownership of
intellectual property rights, should be explained.

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