CASE STUDY

Driver: Do Not Let Tactics Overshadow Strategies

Company A is a snack food manufacturer. They significantly improved market share and profitability by coordinating demand, product, service and financial flows with retailer B. Company DD had a very similar opportunity although their product was very different. Company DD makes automotive parts. Rather than selling snack food to retailer B, they had the opportunity to accomplish the same SCM Drivers for the Retailer Bs automotive parts department. Retailer B sells, the more money Retailer B is making on zero investment in inventory. Because Company A took those 23 days out of the information cycle, their inventory levels through the entire system actually went down, even though now they own the inventory in the retailer B RDCs and retail stores. Because the demand affecting company A is not longer lumpy and unexpected, production costs also decreased. A strategic partnership orientation includes exclusivity and nonimitability. If the competitors of either firm replicate the relationships or similar cooperative arrangements are made between a partner and the major competitor of the other partner, the relationship cannot be strategic. A tactical partnering orientation seeks improvements in operational efficiency and effectiveness. Efficiency minimizes resource use to accomplish specific outcomes whereas effectiveness is the ability of the supply chain to deliver product or services in a manner that is acceptable to the users.

The relationship between the buyer and seller does not look beyond the scope of the individual purchase and, thus, does not address the level of operational coordination of tactical partnering nor the strategic coordination of strategic partnering. Partnering orientation implemented by information sharing, technological utilization, strategic interface teams, organizational issues, joint programmes, asset specificity and establishing joint performance measure.

Information sharing is the collection, creation, management and the communication of the information. Shared information varies from strategic to tactical in nature and from information about logistics activities to general market and customer information. Technology utilization includes the strategic partnership success often based on improving supply chain performance through such technology as EDI, bar coding, scanning, advance shipment notices and sales fore casting. Strategic interface teams is a team which approach has been argued as the standard means of making strategic decisions that are complex or large scale. If functional silos with internal organizational barriers exit within both buyer and supplier, it is unlikely organizational issues in a partnership will be solved. Joint programs include reducing supply chain inventories, new product development and portfolio management and the design of delivery systems. Assets specificity means many technology based partnering assets have little value in other partnerships and cannot be sold at any appreciable price. Establishment joint performance measures means because partners in a strategic planning and control through a strategic interface team, it is easier for partners to establish joint objectives and performance measures. Short term polices never overshadow the profitability accomplishment of a long term strategies. Setting and meeting quarterly goals is no more important than setting and meeting the long term goals of the supply chain.

CONCLUSION
Letting attention to short term tactics overshadow the accomplishment of long term strategies can hurt the profitability and competitive viability of a company or a supply chain as a whole. Short term polices never overshadow the profitability accomplishment of a long term strategies. Setting and meeting quarterly goals is no more important than setting and meeting the long term goals of the supply chain. These long term goals include the types of relationships to have with the various supply chain partners to achieve profitability and competitive advantage. Company A had to be willing to ride out the several month negative impact on the sales that resulted from burning off excess the supply chain inventory could be reached.