Partnerships in supply chains majorly help in overcoming the bullwhip effect which is a distribution channel phenomenon in which demand forecasts yield supply chain inefficiencies like excess inventories, slow response, and lost profits. And the reason for the occurrence of the bullwhip effect is the low competitive supply chains.

Failing to collaborate in a supply chain can result in the distortion of information along the supply chain. This further leads to costly inefficiencies. But companies and their suppliers can work together to create highly competitive supply chains and solve these issues. Considering the effort put in to create and sustain partnerships, clearly, a firm must focus on its trading partners that it considers most important in the long run.

And since we’re here to help you, here are some facts that tell you how your supply chains can benefit from partnerships.

– Increased Market Share
Mutual trust is crucial to reassuring firms that information shared with a partner will not be used against them. This is why a longer-term commitment to the partnership encourages parties to invest in further improvement of the joint supply chain to mutual advantage.
– Inventory Reductions
Free exchange of information (e.g., sharing cost and demand data) and coordinated decision making aims at reducing the inventory and any other inefficiencies inherent in less collaborative relationships.
– Improved Delivery Service
Modest partnerships lead to rapid improvements in logistics facilitated by candid information exchange and better coordination.
– Improved Quality
Through a more open, frequent, and accurate exchange of information, you can eliminate the worry of creating better quality products.
– Shorter Product Development Cycles
With convenient collaboration, product development cycles become easier and quicker.

We know, you’re probably wondering how to cultivate information exchange, build trust, create a longer-term commitment, overcome obstacles, or be assured that you’ll reap commercial value from these efforts, etc. You’re absolutely right to think this through. So, here’s what you’re going to do:

Step 1 – Establish mutually agreed processes and objectives.
Step 2 – Prepare thoroughly – Team selection, benefit-sharing agreements, analysis of opportunities, supply-chain mapping, setting performance standards, and allocation of required resources.
Step 3 – Integrate the joint supply-chain improvement project within the respective organizations — especially within the purchasing group of the affiliated business to reap commercial advantages.

Now that you know how partnerships play a role in improving supply chains, here are 6 practices in which you can retain successful supply chain partnerships:

1 – Address your IT issues first.
2 – Recognize challenges.
3 – Collaborate with complementary partners and empower the right people.
4 – Share dedicated infrastructure.
5 – Establish a robust, joint performance-management system.
6 – Collaborate for the long term.

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