Page 324 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 14: Supply Chain Logistics Administration

TRW has supplier development teams based on the principles of kaizen–continuous Notes
improvement – and the Toyota Production System. They teach suppliers about synchronous
manufacturing, eliminating batch-and-queue and other techniques, and suppliers are
included on TRW’s internal courses, which emphasize features such as team working and
single-piece flow. For Mollart and TRW’s other 21 core suppliers whose product changes
if the TRW platform changes and which account for 80 percent of spending, Llewellyn
says, “We are totally transparent. We open our books in front of them and vice versa.
I know their costs, cycle times. Everything and they know mine. Everyone has to be
extremely ethical in a relationship based on trust, but information has never been abused.
I want all my suppliers to be successful, to make a profit and to share in savings.”
Llewellyn continues, “We market test all the time. I need to know that I am dealing with
the right gun-driller on a total cost basis, but an existing supplier like Mollart will see the
results of genuine quotations. I can’t tell them how the other company does it, but we will
help them with value engineering and so on. I want to see people looking at process and
securing continuous improvement, not shaving margin to retain business.”

Source: Sam Tulip, “Marriage or Convenience,” Supply Management, May 27, 1999, pp. 36–7
Self Assessment

Fill in the blanks:
1. Relationships have traditionally been considered as ……………………
2. …………………… market-based assets are outcomes of the relationship between a firm
and key external stakeholders.
3. …………………… market-based assets are the types of knowledge a firm possesses about
the environment.

4. …………………… is developed by doing things jointly and in an aligned fashion over a
period of time.

14.2 Operational Performance

Supply chain management views the operative dimensions such as purchasing/supply
organization as the integrating mechanism in the internal and external exchanges of the firm.
Operations managers have to respond creatively to internal customers’ need on the one hand
and maintain a mutually profitable relationship with suppliers on the other. The internal
exchange function of purchasing emphasizes the interlocking relationship between input,
throughput and output of an organization.
The external exchange relationship between purchasing and supplier organizations is interactive
in nature. In business markets, both buyers and sellers are active in performing similar tasks
such as:
 To prepare specifications to requirement,

 Locate counterparts,
 Negotiate, and
 Attempt to control transactions.
Marketing strategies of suppliers shape purchasing strategies of buyers and vice-versa. Within
the context of interactive buyer – seller relationship, purchasing is more than buying as marketing
is more than selling.

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