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Sabastina Ellingsworth
Contract Management
19 March, 2018
innovative ways to collaborate, restructure their operations, increase efficiencies, and optimize
Supply Chain Management (SCM) departments to reconsider their strategies and commitment to
supply chain collaboration. However, issues with lack of commitment have limited SCM
In the opinion of Simon, et al. defined SCM as “the integration of key business processes
from end user through original suppliers that provides products, services and information that
add value for customers and other stakeholders.” SCM departments are focusing on supply chain
collaboration relationships to a unified business entity to improve and manage costs, product
quality, risk, and performance. Supply chain collaboration means “sharing joint objectives,
intellectual agility, trust, respect, and commitment, in order to get the best outcome for each
member” (Mamillo). Even though supply chain collaboration gives numerous benefits for SCM
Departments, suppliers, buyers, and end users, their joint initiatives often do not work out due to
need the assurance of commitment from the supplier, buyers, and customers to perform and
deliver efficiently and effectively as promised. Chao, et al. say “Commitment involves continuity
or long-term cooperation between parties to maintain the relationship and helps increase the
efficiency and effectiveness of relationships among supply chain members.” SCM departments,
buyers, or customers may, for example, lack the commitment they need from the upper
management to drive supply chain collaborations, or the message that the supply chain
collaboration is important may be missed. According to Kwon and Suh, “successful supply chain
performance is based on a high level of trust and a strong commitment.” Commitment and trust
foster positive performance, but broken trust cannot enhance commitment to supply chain
collaboration.
suppliers or buyers’ unwillingness and the fear of lack of reliability and competence in terms of
delivering a quality product or honoring their promises. SCM departments’ reliability is based on
the previous contact with a buyer or experience, whether they honored their promise and
delivered quality performance. Repeated interaction among SCM departments and time lead to
high level of confidence, consistency, and commitment from the supplier. Reliability must be
collaboration. Suppliers and buyers must be able to do what they say they are going to do.
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Competency shows how suppliers and buyers perform their assigned tasks in a given situation.
SCM departments need the assurance of their buyers or customers’ skills, capability, and fitness
to perform effectively and efficiently as promised. In this way, the suppliers, buyers, and
customers’ competencies are very important for the commitment to supply chain collaboration
dependent on trust beginning within the firm and ultimately extending to supply chain partners”
(Kwon and Suh). SCM departments, suppliers, buyers, and consumers want their information,
commitment to sharing information, innovative ideas, and other personal data can create
inefficiencies and effectively work together. However, the need for confidentiality regarding
important reason why firms do not commit to closer supply chain collaboration. In the opinion of
Li and Zhang, “lack of confidentiality is one of the greatest obstacles to supply chain information
sharing.” For this reason, suppliers are sometimes reluctant to share critical information,
intellectual properties, or innovative ideas with partners with the fear that information may be
sold to their competitors. This is because there is also the possibility that a supplier is a direct
competitor, or may become one in the future, or a supplier can be misled by poor information.
The reputation of a buyer and supplier or business is crucial to its survival. SCM
departments rely on the past performance of their suppliers and buyers to decide whether to be
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fully committed to supply chain collaboration or not. “Every individual's reputation depends on
its past cooperative actions and this information is taken into account by the rest of players in the
next time step” (Pedroza-Gutierrez and Hernandez). However, a bad reputation is another
reputation can extend to a corporate brand’s reputation and performance as well. Some of the bad
reputations might include abuse of child labor in other countries to manufacture a cheaper
product, not obeying the environmental rules, bad performance on deliveries, product quality, or
lead time. Moreover, lack of consistency, lack of response to a crisis, and lack of transparency
can quickly destroy the reputation of a firm; hence, commitment to supply chain collaboration
becomes hard.
For SCM departments to have effective and efficient supply chain collaboration, it will
require commitment. For commitment to exist among SCM departments and their suppliers, trust
must exist. Trust is an important factor among suppliers, buyers, consumers, and SCM
departments. Trust has been described by Petersen, et al. as “the confidence the buying firm has
that the supplier will behave fairly and honestly in their business dealings.” If trust is present, it
can improve the chances of a successful supply chain relationship; if not, transaction costs can
rise through poor performance. “A lack of trust among trading partners often creates a condition
where every transaction has to be scrutinized and verified, thereby increasing the transaction
costs to an unacceptably high level” (Kwon and Suh). Suppliers committing to each other and
To resolve the issue of bad reputation, suppliers need to first establish trust in their
commitment. Thus, they need to keep every word or promise no matter what in terms of
providing services, paying suppliers when due, and keeping promises to customers. This will
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help set and build credibility with both SCM departments and customers. Next, SCM
departments or buyers need to be responsive, returning calls and answering emails promptly,
letting each party know their importance to the SCM departments and the firm. They also should
be able to resolve errors and mistakes. It is not healthy to make excuses or place blame on others
if the issue is the fault of the firm. It is always best to own up to mistakes committed, render an
apology, and come up with a better solution to resolve that issue. It is always best for suppliers
and buyers to communicate effectively and transparently with SCM departments. Doing so, both
SCM departments and buyers can build their reputations, increase profit, and establish
It is also important to acknowledge the source of the mistrust. If a buyer and supplier is
seeking to repair broken trust, this implies that there has been an event or some variable factor
that has undermined the strength of the relationship. Where a ‘wrong’ has been perceived, the
buyer must recognize the supplier’s side. Where necessary, buyers should feel confident in
apologizing. Finally, invest in the future of the relationship. Certainly, trust is an important
component in a company’s market reputation, and it is best to invest in the future of relationship
if deemed valuable. In SCM departments collaborative relationships, the future is more important
than the past. If a supplier feels as though the partnership has genuine prospects, then they will
To address the concern about confidentiality, some strict measures could require SCM
departments and other parties involved to sign appropriate confidentiality agreements relating to
any intellectual or innovative ideas. This can eliminate the fear among SCM departments and
suppliers about having their information or intellectual property stolen or being sold to their
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competitors. It will improve the trust among suppliers, buyers, and customers and confidence
As SCM departments are finding ways to improve their commitment in supply chain
collaboration with buyers, they should note that reliability, competency, reputation, and
confidentiality are essential when it comes to commitment to supply chain collaboration. For
commitment to exist between SCM departments and buyers, trust must be present. Recognizing
and working towards that would enhance their commitment in trustworthiness and in good faith.
Learning about commitment in SCM department collaborations teaches the value of trust,
also teaches the important for companies to think of innovative ways to collaborate, restructure
their operations, increase efficiencies, and optimize productivity to stay ahead of the competition
Works Cited
Chao, Cheng-Min, et al. “Trust and Commitment in Relationships among Medical Equipment
Suppliers: Transaction Cost and Social Exchange Theories.” Social Behavior and
Personality: An International Journal, vol. 41, no. 7, 2013, p. 1057+. Academic OneFile,
http://link.galegroup.com.proxy.chemeketa.edu:2048/apps/doc/A346926110/AONE?u=or
Kwon, Ik-Whan G., and Taewon Suh. “Factors Affecting the Level of Trust and Commitment in
Supply Chain Relationships.” Journal of Supply Chain Management, Spring 2004, p. 4+.
Academic OneFile,
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Li, Lode, and Hongtao Zhang. “Confidentiality and Information Sharing in Supply Chain
Coordination.” Management Science, vol. 54, no. 8, 2008, p. 1467+. Academic OneFile,
http://link.galegroup.com.proxy.chemeketa.edu:2048/apps/doc/A184299036/AONE?u=or
Mamillo, Denisa. “Supply Chain Collaboration Under Uncertainty in The Albanian Beer
Market.” Management Dynamics in the Knowledge Economy, vol. 3, no. 1, 2015, p. 99+.
Academic OneFile,
http://link.galegroup.com.proxy.chemeketa.edu:2048/apps/doc/A410905047/AONE?u=or
And Reputation as A Central Resource. The Mercado del Mar, A Fish Market in Central
Mexico." PLoS ONE, vol. 12, no. 10, 2017, p. e0186063. Academic OneFile,
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http://link.galegroup.com.proxy.chemeketa.edu:2048/apps/doc/A508945255/AONE?u=or
Petersen, Kenneth J., et al. “An Examination of Collaborative Planning Effectiveness and Supply
Academic OneFile,
http://link.galegroup.com.proxy.chemeketa.edu:2048/apps/doc/A132891979/AONE?u=or
Simon, Alexandre Tadeu, et al. "Evaluating Supply Chain Management: A Methodology Based
http://link.galegroup.com.proxy.chemeketa.edu:2048/apps/doc/A400785542/AONE?u=or