Talking About Supply Chain Management
LaFauci: I agree with Toolan and Tenthoff. It is apparent that participants in supply chains are very reluctant to embrace solutions that include ongoing fees in the form of "tolls" placed upon transactions. This is contrary to the notion of supply chains as cost-effective and mutually beneficial to participants. It is critical to build trust between participants, establish a clear understanding of program goals and provide benefit to all participants.
BTM: Business trading partners frequently approach negotiations and transactions with an underlying "distrust," or sense of adversarial relations. How can supply chain management improve this situation?
Tenthoff: Establish baseline information used for discussion and define data needed in negotiations. If we can manage our businesses based upon mutually agreed-upon data, we will develop mutual trust.
Toolan: I agree with Tenthoff. If there is common information that both the customer and supplier are looking at, then each can analyze it in ways that help gain a win-win negotiation.The key, however, is understanding how to analyze these transactions and understanding where your demand and profitability are. This kind of activity goes beyond normal business-to-business communication and requires a combination of technology and business acumen.
LaFauci: Trust in business negotiations frequently relates to perceived fairness and equality between participants. Supply chain solutions level the playing field by standardizing the content and timing of business events. When perceptions are changed, based on equity in supply chain management, mutual trust will strengthen.
BTM: Improvements in the supply chain management should lead to a reduction in operating costs. Is it realistic, however, to expect that savings would be equitably shared between buyers and sellers in each transaction? If so, how do you see this happening?
Tenthoff: Yes, savings can and should be mutually shared. This does not however mean that they will be equal. E-commerce can certainly reduce administration costs on both sides, but the actual savings will depend upon many factors.