Critical Factors Affecting Supply Chain Management

Supply chain relationships play an important role in achieving the firm's goals. The coordination and integration of activities with suppliers and understanding of customer's needs results in greater benefits for companies. According to Fraza, supply chain management is directly related to relationship management, which includes suppliers and customers. Strategic supplier partnerships and customer relationships are main components in the supply chain management practices, leading to information sharing, which is one of the five pillars in achieving a solid supply chain relationship. Two sub-factors are considered in the model relationship with suppliers and customers.

Relationships with suppliers

Companies are inclined to work with different suppliers in different ways. It is important that the relationship with suppliers satisfies their company needs. Hines mentioned that in commodity products, it is common to find an adversarial relationship mainly based on price between buyer and supplier. This type of relationship with suppliers does not allow for cost reduction in the supply chain. It may be beneficial to network the supplier, to develop partnerships and alliances that will benefit both partners. This could be based on production, personal, and or symbolic networking, that will turn on strategic alliances, allowing the information sharing, risk sharing, obtaining mutual benefits and coordinating plans, permitting the improvement of the supply chain.

Relationships with customers

The global markets offer a variety of products of different quality and cost. As a result, companies are always competing and trying to reduce costs and improve quality. According to Burguess and Hoek, customers look for more choices, better service, higher quality, and faster delivery. The relationship with customers has turned a strategic issue for today's companies.