Supply Chain Alliances: Rhetoric and Reality

Stanley E. Fawcett, Gregory M. Magnan and Matthew McCarter ()
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Stanley E. Fawcett: Brigham Young U
Gregory M. Magnan: Seattle U

Working Papers from University of Illinois at Urbana-Champaign, College of Business

Abstract: Supply chain management implies an increased reliance on closer buyer/supplier relationships. This study used a multi-method (survey and interview) approach to determine the nature of alliance management in modern supply chains. One point regarding the present status of alliance management in today's supply chain world is clear--truly synergistic relationships are very rare. When asked to indicate the percent of their supply chain relationships that are true alliances, two responses were commonly heard. First, several managers quickly asked, "What do you mean by alliance?" This response revealed the fact that the word alliance is used to signify a wide range of relationship types. Second, many managers indicated a rather large percentage of relationships operate on an alliance basis. The interviewer then followed-up by defining an alliance as a collaborative or synergistic relationship that adds value above and beyond what is achievable through simple long-term contracts. When the definition of alliance was clarified and the emphasis was on "cooperatively working together" or "symbiotic relationships," the managers inevitably adjusted their percentage dramatically downward. The end result was that the vast majority of the participants suggest that "synergistic working relationships" represent only a very small fraction of all supply chain relationships--typically 5 percent or less. Managers generally concurred that the distance between "preferred" supplier and "synergistic" alliance is quite large. A dozen alliance management tools and techniques emerged as somewhat important to absolutely essential to the development of synergistic alliance relationships.

Date: 2005
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