Supply Chain Management –MGMT614 VU

LECTURE 5
SUPPLIER RELATIONSHIP MANAGEMENT
Rationale and Logic
This lecture covers the following distinct modules.
Module 1: Need for Supplier Relationship
Module 2: Sourcing & SRM
Module 3: Achieving SRM
Module 4: Collaboration
Module 5: 3PL and 4PL enterprises
Module 6: Relationship between Retailers and Enterprises
The first module Need for Supplier Relationship develops the cognitive domain both from the perspective
of supplier as well as the enterprise. The second module “Sourcing & SRM” identified sourcing limitations
and potential sourcing failures.
The third module “Achieving SRM” identifies the SRM capability. A solid SRM capability is founded on six
building blocks namely segmenting the supply base; securing Enterprise Champion or Management
Sponsorship; Systems, including processes, systems development, implementation, documentation and
governance; using technology effectively; up skilling your people; and measuring both hard and soft benefits.
The third module also focuses on the detailed requirement of “sustaining supplier relationship management”.
Virtual University Students are suggested to pay special attention to the following 7 steps as it would help
them develop a sustainable supplier relationship management for their enterprise.
1. Focus SRM efforts on suppliers where there is greatest potential to create value and reduce risk.
2. Treat all suppliers with a high degree of professionalism and respect.
3. Invest in understanding suppliers better.
4. Invest in helping suppliers understand your company better.
5. Actively build and sustain trust with suppliers.
6. Invite supplier feedback on your own company’s performance and track benefits to suppliers
7. Invite and be open to supplier ideas and suggestions
The fourth module focuses on the concept of Collaboration. It discusses meaning, its types (horizontal &
vertical) and the range of Collaboration types (transactional, Collaborative and Strategic).
The fifth module high lights the importance of both the 3PL and 4 PL Enterprises. This module should help
the Virtual University understand the opportunities in Pakistan.
The final sixth module underpins the critical relationship between Retailers and Enterprises.
The lecture then ends with a summary and a conclusion.
MODULE 1: NEED FOR SUPPLIER RELATIONSHIP
Success in today’s global marketplace requires new strategies, and new capabilities. Enterprises are under
increasing pressure to reduce supply costs even as they need to leverage suppliers to drive innovation.
Meanwhile, the risks to consumer safety and corporate reputation of poorly managed supply chains are
increasingly.
This volatile and dynamic environment creates new challenges, but also new opportunities. In response,
procurement and supply chain organizations need to improve cross-functional collaboration within their own
companies, develop and pursue innovative negotiation strategies, and lead efforts to build and sustain
collaborative partnerships with key suppliers. Strategic Sourcing has in the past done the same
MODULE 2: SOURCING & SUPPLIER RELATIONSHIP

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This module provides a vision into how after identifying a potential source; the supply chain manager can
transform this into a meaningful long term strategic supplier relationship.
Despite the significant savings many companies have realized through strategic sourcing over the past two
decades. The limitations of this discipline of strategic sourcing have become increasingly apparent. Strategic
sourcing, in practice, has led to an enormous focus on interactions with suppliers up to the point of signing
new contracts.
Strategic Sourcing does not tell how to effectively manage the complex and critical interactions between
customers and suppliers as they work together to execute against agreements.
Supplier relationship management (SRM) can deliver powerful business benefits. For companies to realize
those benefits, though, SRM needs to be comprehensively understood and expertly implemented.
The core principles and change management practices offered here can guide that process and deliver on the
promise, where sourcing failed to deliver. In other words, sourcing being a static concept is inadequate to
handle the dynamic business needs associated with supply chain which are fulfilled by supplier relationship
management (SRM).
MODULE 3: ACHIEVING & SUSTAINING SRM
This module is pertinent to Supply Chain Managers who want to embark on the quest of achieving Supplier
Relationship Management as well as sustaining it thereafter.
Supply Chain experts are of the view that a solid SRM capability is founded more or less on six building
blocks:
A. Segmenting the supply base;
B. Securing Enterprise Champion or Management Sponsorship;
C. Systems, including processes, methodologies, systems development, implementation,
documentation and governance;
D. Using technology effectively;
E. Up grading /up skilling your people or human resource; and
F. Measuring both hard and soft benefits, related to hard and soft infrastructure.
These building blocks would help us understand not only sustainable SRM, collaboration but also forms the
basis for 3 PL and 4 PL firms, discussed separately in other modules. Let us now consider these building
blocks of knowledge one by one.
A. Segmenting the Supply Base: By categorizing suppliers into different tiers, an enterprise can know
where to focus its relationship-building efforts. These tiers cover suppliers who are tactical, approved,
preferred and strategic. In the past, volume of spend was seen as the main, if not the only, criterion for ranking
suppliers, but business criticality of products/services is ranked top now, with volume second and supplier
capabilities third. The segmentation process needs to be conducted jointly with other functions and lines of
business to seek a consensus about the suppliers to concentrate on, and it needs to be reviewed at least
annually to maintain its relevance. Discussions also need to take place with selected suppliers to ensure both
sides view the relationship as strategic. Enterprises often face a challenge as to how to handle suppliers from
different tiers? Senior management normally hires consultants to ensure that the critical tier suppliers are
engaged for a strategic long term partnership. Normally the top tier 1 supplier who has neither financial nor
technical constraint is expected to help the enterprise fulfill increase in demand whereas the subsequently
lower tier suppliers are considered unable to do so and if they do help the enterprise at the time of need, they
get an opportunity to be shifted up from tier 2 to tier1. Also in the same context if a tier 1 supplier fails to
provide support in normal fulfillment of the order, it is time to revisit the supply base or at least after judicious
investigation to relegate this supplier from tier 1 to tier 2. The reason being it may be possible that the supplier
has shifted his focus from your enterprise to another enterprise or line of business or the supplier does not
view you as a Tier 1 Customer.
B. Securing Enterprise Champion or Management Sponsorship: This is an important concept,
quite often separate policies and procedures are allocated for securing executive sponsorship: Having C-level
or other top executives engaged in managing the most strategic suppliers is vital if SRM is to be positioned
correctly. The involvement of a CEO or CFO, for example, helps to align strategic objectives internally and
with the supplier. It also sets the right tone for the relationship and ultimately unlocks value for both. Very

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rarely a senior management representative would suggest a supply manager to have a transaction based
relationship with the supplier.
C. Embedding processes and governance: Documented SRM processes, roles and responsibilities
are a must. In reality the situation is patchy across the enterprise, with "pockets of excellence", particularly in
IT as a result of its early outsourcing of some operations. Most of enterprise do have a written policy, but are
yet to detail the process by which they intend to manage supplier relationships or assign clear roles and
responsibilities internally. The majority of enterprises follow a "one size fits all" approach to process and
governance, rather than tailoring it for different supplier segments. This approach can at least help ensure
avoiding pockets of excellence or narrow focus or functionalization of the supply chain. In other words, the
supply chain partners would end up becoming a victim of functional goals and deviate from strategic
objectives.
D. Technology Application: The traditional postal mail system over the centuries can be used to show
the concept of supply chain as it identifies the flows of information, product or message. Even messengers
were used to do the same. As of today, most of the enterprises do not possess technology that can provide
strong support to SRM.
Instead of making use of the e-Procurement system, where electronic documents that support the make, buy,
material specification of the product being purchased can be communicated directly to the supplier. The
enterprises still use the reactive approach, where they often incur addition cost of rejecting a received part. If
these enterprises proactively allow the supplier to use the e-document or e-drawing with their purchasing
procedure, a lot of time and money can be saved.
Most systems focus either on contract management or supplier performance management, while a number
of enterprises report confusion among internal stakeholders as a result of transactional procurement modules
in their ERP systems. Unfortunately, you will come across situation where transaction based ERP systems are
termed SRM Systems. A remedial strategy is to make a front end web based solution that links the ERP
database to all the key elements of supply chain through cloud technology, internet, intranet or extranet.
However, centralized web-based information portals, similar to customer relationship management systems
on the sales side, are available and already being used by companies like Vodafone and Royal Mail.
E. Improving Skills of Human Resource: Organizations that insist on pursuing supplier relationship
with purchasing as a functional approach or behavior would experience loss of credibility with supplier and
subsequent failure and going out of business. With this attitude or behavior, the supply chain cannot achiever
efficiency, effectiveness or response time. Upgrading or up skilling the function is essential. Some take the
view that buyers aren't cut out for SRM. An extreme reaction often seen is the mistreatment of people working
for supplier relationship management being termed as poor resource as they had worked as purchasing
function. A good training intervention can help change from a traditional bureaucratic behavior to SRM
compliant conduct. So to suggest that Supplier Relationship management requires different skills to those
usually found in procurement departments would be very unfair. Also SRM is not an add-on to the day job
rather a core role.
F. Measuring the benefits: Quantifying the value from SRM initiatives and presenting a compelling
business case is extremely challenging. A considerable number of organizations are unable to put a number
on the "hard" cost savings achieved as a percentage of annual suppliers spend. It is important, though, not to
overlook the "soft" benefits of SRM, such as access to innovation and faster speed to market, because senior
executives intuitively understand the value of these things and they may be worth far more to the organization
in competitive terms than savings alone. Quite often suppliers that are linked to the enterprise through supply
chain when dealt with strategic sourcing attitude would not extend any help beyond with the contractual
obligation where as in case of SRM, these suppliers often suggest better improved raw materials at a cheaper
price that often increases the product life of the product being manufactured by the enterprise.
Sustaining Supplier Relationship Management
Having a SRM in place is not the complete strategy rather a sustainable SRM is what the enterprises aspire
for. The following 7 steps are advocated to be adopted by enterprises functional in Pakistan. VU students
should ideally be able to learn and replicate or modify these steps at their enterprise in order to ensure
sustainable SRM in place.

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1. Focus SRM efforts on suppliers where there is greatest potential to create value and reduce
risk. If the enterprises focus is not correct then even if by chance SRM is achieved it would not be sustainable.
2. Treat all suppliers with a high degree of professionalism and respect. Enterprise should agree
to develop a system of mutual respect, so whatever respect the supplier gives to the enterprise is reciprocated
by the enterprise to the supplier. It is a kind of two-way communication.
3. Invest in understanding suppliers better. An enterprise can train its individuals to better
understand their suppliers. If that is not possible than the services of a third party consultant can be hired to
better understand the supplier. This becomes an utmost important requirement as in the times of
globalization, a supplier say in France or Germany may have a different work ethic, language important
holidays, culture or religion that may require the enterprise to incorporate that diversity in doing business with
them.
4. Invest in helping suppliers understand your company better. Most of the enterprises live with
a false positive that they have been able to explain their needs to the suppliers only to figure out at the failure
of a transaction or collapse of a supply requirement. If this problem cannot be addressed in house, then it
should be addressed through a consultant.
5. Actively build and sustain trust with suppliers. Ideally this should be done proactively otherwise
on a transaction need to need basis so the supplier can understand your needs and trusts you as strategic
partner.
6. Invite supplier feedback on your own company’s performance and track benefits to suppliers.
It is pertinent that feedback of the enterprises performance should be shared with supplier as according to a
pre-agreed profit sharing formula, the highest percentage of profits go to the suppliers, as the suppliers face
the maximum risk.
7. Invite and be open to supplier ideas and suggestions. Enterprises often resist the suggestions
provided by the supplier and this can prove fatal. An enhanced raw material can often improve the product
quality which translates into longer product life and profitability. Enterprises should be open to supplier’s
suggestions and recommendations, even if not interested in following them. It carries the potential of
providing competitive advantage over your competitors.
Ideally these strategic steps should be incorporated in the policies and procedure manual. VU students may
be surprised to see that these are available in purchase manuals as part of other purchasing instructions or
limitations.
MODULE 4: COLLABORATION
The concept of collaboration would be readily identifiable and understood if you can comprehend and
recognize the different meanings and words associated with the word “Collaboration”.
Most of the dictionaries and textbooks suggest that collaboration means or relates to Relationship,
Partnership, Teamwork, Group Effort, Association, Alliance or Cooperation. We can pictorially represent the
two types of Collaboration as below.
Keeping in view the above associated meanings of the word Collaboration, we can investigate supply chain
relationships in terms of enterprise’s relationship with its suppliers and customers. As a matter of fact,
Organizational Relationships are of two types namely the vertical relationship and horizontal relationship.
Vertical Relationships: these refer to the traditional linkages between enterprises in the supply chain such
as retailers, distributors, manufacturers, and parts and materials suppliers.
Horizontal Relationships: includes those business agreements between enterprises that have “parallel” or
cooperating positions in the logistics process.

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Discussion on Collaboration often takes into reason the vital concept of Strategic Alliance.
STRATEGIC ALLIANCE is the equilibrium among the strategic polices developed and formulated about
Asset Utilization, Supply Chain Costs and Customer Service Level. Strategic Alliance would only be possible
if the enterprise is able to achieve the status of
1. Minimum Supply Chain Costs
2. Optimum Customer Service Level
3. Optimum Asset Utilization
If the triple constraint equilibrium is achieved
the enterprise is said to enjoy the coveted
characteristic of entering into strategic alliance
with another favorable enterprise, be it a supplier
or a customer.
We are now in a position to identify the range of
relationship types whether purely operational
(transactional) or strategic in nature or more
commonly within the range.
Transactional: is a type of relationship between two parties. Both parties in a vendor relationship are said to
be at “arm’s length”. Supplier may not provide help beyond a certain point and enterprise would aggressively
pursue a cost cut in the supply of raw material or commodity. Some of the common features are
1. Both the parties look for temporary contact
2. Both look for protection of own self interests
3. Arm Twisting is considered to be a winning strategy
Strategic: is a type of relationship that represents an alternative that may imply even greater involvement
than the partnership or strategic alliance. In other words, the partnership aims to exploit mutual benefits, to
the maximum for a long period. But in all reality this is just an idealistic relationship as maximum benefit is
enjoyed by the party which is in a stronger position. If it’s a buyers’ market it would be enjoyed by the buyer
and if it’s a suppliers’ market, then it is the suppliers benefit.

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Collaborative: is a type of relationship suggested by a strategic alliance is one in which two or more business
organizations cooperate and
1. willingly modify their business objectives
2. practices to help achieve long-term goals
and objectives
This is one of the more important relationships but
often ignored or not taken up seriously. Both the
businesses are willing to sacrifice their individual
benefits in favor of mutual benefits.
Please refer to the figure on the right which depicts
the relationship spectrum between supplier and the
enterprise.
The table below shows a more complete type of relationship spectrum when viewed with different
perspectives.

RELATIONSHIP CHARACTERISTICS

Interaction
Confidence Visibility with Communication Culture
Competitors

Technical
requirements Computerized
Buy from the Market Arms-length Significant Not an Issue
of the Interaction
purchase
Some
Medium Through
Ongoing sharing of Awareness of
Term Some designated
Relationship goals and Culture
Contracts contact points
tactics

Increased
Longer Full sharing interaction
Term Adaptation to
of goals, between related
Partnership Contracts Limited each other’s
strategies departments;
culture
and tactics some degree of
trust

Full sharing
of goals,
strategies Extensive
Collaboration/ Limited or
Long term and tactics communication, Merging of
no
Strategic Alliance relationships and attempt high level of Cultures
interaction
to reflect trusts
partners plan
in their own
Full sharing
of goals,
Mergers and strategies
Ownership None Varies One Culture
Acquisitions and tactics,
as internal
information

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LIST OF DIFFERENCES
Regardless of form, relationships may differ in numerous ways. A partial list of these differences would
include: -
1. Duration.
2. Obligations.
3. Expectations.
4. Interaction/communication.
5. Cooperation.
6. Planning.
7. Goals.
8. Performance analysis.
9. Benefits and burdens.
Most of the enterprises face lack of knowledge, ownership and support of the senior management and thus
fail to make good use of strategic alliances and thus their supply chains often are declared unsuccessful
Now the question that needs to be addressed is that VU students where do you place your organization?
We have already seen that many enterprises lack the guidelines to develop, implement, and maintain supply
chain alliances but do they really have an understanding the relationship? Virtual University Students are
requested to understand the finer concepts of Drivers and Facilitators so they can clearly communicate with
their enterprise’s senior management.
Drivers: defined as “compelling reasons to partner”; all parties “must believe that they will receive significant
benefits in one or more areas and that these benefits would not be possible without a partnership”, some of
the common examples of drivers include Asset/Cost efficiency, Customer service levels, Marketing
advantage, sales promotions, price discounts, Profit stability/growth.

Facilitators: are defined as “supportive corporate environmental factors that enhance partnership growth
and development”. As such, they are the factors that, if present, can help to ensure success of the relationship.
Corporate compatibility, management philosophy and techniques, Mutuality of commitment to relationship
formation, symmetry on key factors etc., all are prime examples of facilitators.

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Often senior management asks the Supply Chain Manager how can the product or service based supply chain
value be implemented and improved continuously? The answer to this lies in the figure above, managers can
identify the steps of customer value research, flow charting, statistical process control, activity based costing,
benchmarking and process reengineering which all contribute to improve supply chain value continuously.
So while concluding our module on collaboration we should remember that
1. Collaboration occurs when companies work together for mutual benefit. Collaboration goes well
beyond vague expressions of partnership and aligned interests.
2. Companies leverage each other on an operational basis and creates a synergistic business environment
in which the sum of the parts is greater than the whole
However, the word of caution being the requirements for collaboration to be understood, some of which are:
-
1. Parties involved to dynamically share & interchange information
2. Benefits experienced by parties to exceed individual benefits
3. All parties to modify their business practices
4. All parties to conduct business in a new & visibly different way
5. All parties to provide a mechanism and process for collaboration to occur
Often senior management with help of an outside resource like a consultant would go for 7 undeniable laws
of collaboration matrix compliance.
Seven Undeniable (Immutable) Laws of Collaboration:
These seven laws actually identify what Collaborative SC Networks must support:
1. Real and recognized benefits to all members
3. Dynamic creation, measurement, and evolution of collaborative partnerships
4. Co-buyer and co-seller relationships
5. Flexibility and security
6. Collaboration across all stages of business process integration
7. Open integration with other services
8. Collaboration around essential logistics flows
MODULE 5: THIRD-PARTY LOGISTICS (3PL) AND FOURTH PARTY LOGISTICS (4 PL)
The importance of 3 PL and 4 PL providers for supply chain managers cannot be over stressed as most of
the time supply chain managers are required to evaluate the competence or performance of a 3PL/4PL
company or the supply chain manager may be actually
working for an enterprise which identifies itself as
3PL/4PL firm to the market or its collaborative
partners. So essentially, we can a third party logistics
(3PL) enterprise may be defined as an
“External supplier that performs all or part of a
company’s logistics functions”.
A 3PL Supplier (firm) operates by ensuring that multiple
logistics activities are integrated or managed together;
and they provide “solutions” to logistics and other
supply chain problems.
Types of 3PL Providers can take different forms like
Transportation, Warehouse/distribution-based,
Forwarder-based, Shipper/management-based,
Financial-based and Information-based enterprises
TYPES OF 3PL PROVIDERS
There are four types of 3PL providers like standard 3PL provider, service developer, the customer adapter
and the customer developer.

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1. STANDARD 3PL PROVIDER: This is the most basic form of a 3 PL provider. They perform activities
such as pick and pack, warehousing and distribution, which are one of the more fundamental functions of
logistics.
2. SERVICE DEVELOPER: This type of 3PL provider will offer their advanced value added services such
as tracking & tracing, cross docking, specific packaging or providing a unique security system. E.g. A solid IT
foundation & a focus on economies of scale and scope will enable this type of 3 PL provider to perform these
types of tasks.
3. THE CUSTOMER ADAPTER: This type of 3PL provider comes in at the request of the customer and
essentially takes over complete control of the company’s logistics activities. For example, this type of 3PL
provider improves the logistics dramatically, but does not develop a new service. The customer base for this
3PL provider is typically quite small
4. THE CUSTOMER DEVELOPER: This is the highest level that a 3PL provider can attain with respect
to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes
over their entire logistics function. The point of contention or interest is that these providers will have a few
customers but will perform extensive and detailed tasks for them. Thus should naturally improve the
effectiveness of logistics.
The next significant evolution in SCM after 3 PL is fourth party logistics 4 PL.
FOURTH PARTY LOGISTICS ALSO KNOWN AS 4PL
1. SUPPLY CHAIN INTEGRATOR: The 4 PL is a supply chain integrator that assembles and manages
the resources, capabilities and technology of its own enterprise with those of complementary service providers
to deliver comprehensive supply chain solutions.
2. PROVIDES SINGLE POINT OF CONTACT: It can be suggested that 4PL companies are 3 PL
enterprises that have invested in technology, human resources and alliances in order to provide a single point
of contact for operation of a customer’s supply chain. Quite often, it is said, that a firm that invests in value
chain and strategic alliance is a 4 PL enterprise.
3. ROBUSTNESS AND CAPABILITY: The effectiveness and efficiency of 4 PL firm depends on the
robustness and capability of the IT infrastructure. It reflects an idea that 4 PL would not be able to handle
other issues relating to Supply Chain, also there is a propaganda that 4PL companies do not add value and
charge premium costs for their services so one should go for 3 PL logistics company.
4. SPECIAL CHARACTERISTIC OF 4 PL: The 4 PL service providers coordinate, assemble, align and
manage the capabilities of 3 PL vendors. The 4 PL enterprises include Federal Express, UPS Logistics, Exel
and Schneider Logistics. 4PL is an asset less vendor. 4PL operates on IT platform and delivers a
comprehensive supply chain solution using capabilities of 3 PL vendors.
There is very thin line of distinction between 3 PL and 4 PL with point of distinction between heavy IT
infrastructure and IT dependence.
The 4 PL depends on its IT based network and should fulfill or cove the entire supply chain of the Customer.
It should provide collaboration between two or more logistics service providers on the resources sharing basis
to extent logistics solution to a common customer. Also alliances are led by integrator with an IT based and
not an asset based service provider. It should be a flexible arrangement
The 4 PL Works in the following four ways
1. Increases Revenue
2. Reduces Costs
3. Reduces Working Capital
4. Reduces Fixed Capital
4 PL is an emerging trend and is still considered to be a complex model and offers greater benefits in terms
of Economies of Scale.
Last but not the least, the 4 PL provides solution in the following three ways: -

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1. Reorganizing: The most critical element in supply chain management is synchronization of supply
chain planning and execution activities across all partners. Reorganizing in the area of consulting
skills, business strategy alignment and creatively design and integrate supply chain of participants
2. Transformation: Transformation efforts focus on specific supply chain function. Transformation
covers in the areas of strategic planning analysis, process redesign, and integrate the client’s supply
chain activities and processes.
3. Execution: It is an execution at the tactical level.
An organization can outsource the entire range of its supply chain activities to a 4 PL provider for execution.
MODULE 6: RETAILER SUPPLIER PARTNERSHIP
Supply Chain Managers working in the retail industry often face stiff challenges which can be as simple as
decline in buying pattern to force majeure events like earthquakes, floods that disrupt the supply.
It is the formation of strategic alliances between the retailers and their suppliers that can help the supply chain
effectively. This module is critical as it briefly explains how effectively the retailer supplier partnership can be
managed. The answer actually lies in judicious execution of any of the three strategies or combination of
these strategies.
It can take the forms of Quick Response Strategy, Continuous Replenishment Strategy or the Vendor
Managed Inventory System
1. Quick Response Strategy: Suppliers receive Point of Sale (POS) data from retailers and use this
information to synchronize their production & inventory activities with actual sales at the retailer.
2. Continuous Replenishment Strategy: The vendors receive POS data and use this data to prepare
shipments at previous agreed upon intervals to maintain specific levels of inventory. IN an advanced version
of continuous replenishment, suppliers may gradually decrease inventory levels at the retail store or
distribution center as long as the service levels are met. In a structured manner the inventory levels are
continuously improved. This type of partnership is a system between Quick Response Strategy and Vendor
Managed Inventory.
3. Vendor Managed Inventory System: is MORE integrated than the previous two systems. Students
may like to remember this that this VMI system is being used in Wal-Mart and Proctor and Gamble since
1985 and has improved on time deliveries to Wal-Mart while increasing Inventory Turns.
The VMI brings advantages to both retailers and suppliers. It is possible because of availability of Advanced
Information Systems, support and commitment of the Top Management, trust among partners and above all
the ownership of the Inventory.
This sub-module highlights some of the fundamental problems that often an organization needs to address.
The common issues include but are not limited to Switching Costs (Segmentation Model), Degree of Control,
Logistics for the need of channel partners, Degree of Outsourcing and legal aspects.
There is a possibility that this alliance or partnership may not be continued in the future but then it is just an
idea which may or may not come true.
ISSUES IN STRATEGIC ALLIANCE
Virtual University students (working as supply chain managers) are requested to set up a strategic alliance with
their suppliers or their retailers with intent that you would be able to fully leverage all the supplier assets, the
expertise and capabilities to maximize the competitive advantage. If you can do these collaborative
relationships, strategic alliance, vendor managed inventories, 3PL/4PL or even Supplier Relationship
Management issues would turn into an advantage for your enterprise. It is true and depends only on how
judiciously you can do this.
Identify the boundaries of all these terms with respect to their enterprise and its partners. Also they can make
use of the pictorial graphs and tabular information presented here, by capturing and using their enterprise and
three supply chain partners’ data.

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END OF LECTURE 5: GIST AND CRUX:
1. Supply There is a specific need for Supplier Relationship from the perspective of both supplier & enterprise. Sourcing &
SRM (Sourcing limitations, sourcing failures)
2. Achieving SRM is possible but Sustaining SRM is a must
3. Collaboration types and range may be mission critical for any enterprise and its tier partners. It is pragmatic to change the
type or range if and only if it increases competitive advantage and revenues without loss of market, or partners.
4. 3 PL / 4 PL companies support not only logistical side of an enterprise and its partner but also improve the information
management.
5. Relationship between suppliers and retailers is a critical link. It is successful only if the enterprise honestly extends the
same business objectives for the upstream supplier and downstream retailer. The VU student is also requested to “Fully
leverage all supplier assets, expertise and capabilities to maximize competitive advantage” for its Enterprise.

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