Modeling Strategic Management in Supply Chain Collaboration: A Channel Integrator Perspective

Abstract

Supply chain vs. supply chain calls for building competitiveness of the entire supply chain. As competition shifts from an inter-firm to an inter-supply-chain level, the collaborative paradigm in supply chain management regards strategic collaboration as a crucial source of competitive advantage. Such philosophy requires a movement away from arms-length interactions and win-lose relationships toward long-term, partnership-type arrangements to create highly competitive collaborative supply chains.

Strategic collaboration involves Joint Decision-Making (JDM) that promotes cooperation among the supply chain trading partners. It aims to prepare the network for supply chain vs. supply chain competition. JDM goes beyond information sharing, involving "joint, concurrent, intellectual, and cognitive decision-making" among partners. For implementing this high-level collaboration process, a broad guiding framework or a structured approach is required for joint planning (decision-making), governing the strategic collaboration; managing the execution of joint strategy; and driving the strategic performance of supply chain collaboration. This article attempts to develop a comprehensive strategic management process to address the above strategic issues in implementing high-level supply chain integration in the channel integrator (or self-sustained) collaborating model.

I. SUPPLY CHAIN LEVEL COMPETITION

Todays CEOcant simply focus on his or her companys performance in a vacuum; there is an emerging requirement to focus on the performance of the extended supply chain or network in which the company is a partner.In the age of connected and global economy, a major trend observed at present is:competition shifting from enterprise to supply chain level.Available literature and expert views also substantiates this phenomenon. As the economy changes, as competition becomes more global, its no longer company vs. company but supply chain vs. supply chain (Harold Sirkin, 1994) .The best supply chain wins Mike Braatz, Vice-President of business development at supply-chain vendor Optiant Inc., of Somerville. On the other hand, competition is a real driver in a world where company vs. company competition has become supply chain vs. supply chain[footnoteRef:2].For instance, an article mentions that classic model of company vs. company is starting to give way to a new model: supply chain vs. supply chain[footnoteRef:3]. Another article[footnoteRef:4]views that for several years the market is evolving into one of supply chain vs. supply chain. By optimizing internal efficiency, several manufacturers have cut costs, improved agilityand maximized responsiveness.However, in the new global competitive scenario internal efficiency alone is not sufficient to become competitive. Supply chain vs. supply chain calls for building competitiveness of the supply chain. The supply chain-level competition has further augmented the challenge of meeting customer requirements through reduced lead-times, speedy delivery of defect-free products, quality products and services, reliability and cost effectiveness across the value chain, ultimately to deliver unprecedented and differentiated customer value. Driven by these observations/trends, organizations world-wide are currently confronted with the following set of supply chain-wide goals/challenges at renewed levels: [2: Rob Spiegel (2002), What Extended Supply Chain? Less than 5 percent of the supply chain is broadly connected - Distribution Electronic News, Electronic News, River One, 2002] [3: David A. Taylor (2003), Supply Chain vs. Supply Chain - The very nature of business competition is changing, and IT has a big, challenging role, NOVEMBER 10, 2003, Computer World] [4: Chris York (2003), Visibility in your supply chain minimizes surprises, Tompkins Associates, 2003]

1. Minimizing supply chain costs2. Maximisingsupply chainresponsiveness3. Improving supply chain agility4. Maximising supply chain value5. Increasing supply chain resilience6. Maximisingsupply chain reliability/consistency

Above-mentioned supply chainchallenges at a higher level should be dealt through a holistic approach, which means optimization of processes at every stage of the supply chain and the supply chain as a whole. It is critical, therefore, to focus management attention on the performance of the supply chain as an integrated whole, rather than as a collection of separate processes or companies. The entire supply chain network should be transformed into more customer-focused, lean & agile supply chain offering unique or exceptional customer value that is different and much superior to the competitors supply chains. Hence, the ultimate goal and measure is customer satisfaction: the ability to fulfill customer orders for personalized products and services faster and more efficiently than the competitors supply chain. Just offering the best or superior products is no longer adequate. Along with product, the place and time of delivery at a competitive price together determine the unparalleled customer value delivered.For delivering such unparalleled value and, thereby outshine the business in todays connected, global and vibrant economy, a holistic and innovative approach to improvisation and optimization of the overall supply chain competence, is essential.

II. COLLABORATIVE SUPPLY CHAIN FOR COMPETITIVENESS

Great firms will fight the war for dominance in the marketplace not against individual competitors in their field but fortified by alliances with wholesalers, manufacturers, and suppliers all along the supply chain. In essence, competitive dominance will be achieved by an entire supply chain, with battles fought supply chain versus supply chain. Roger Blackman, 1997.

In the age of competition at supply chain level, operational efficiency, agility and performance across supply chain are not just requirements for success, but are prerequisites for supply chain competitiveness. One way to ensure supply chain competitiveness is to have the best or competent partners on both sides, i.e., supply and demand-sides. On the other hand, with the prevalence of business practices such as global sourcing, outsourcing and collaborative commerce, the supply chain performance today largely depends on the integrated performance of the partners. The partners in the supply chain might have a significant adverse impact on the delivery of goods; no matter how well optimized our own inventory/service levels are. The total supply chain may be drastically inferior to that of a competing supply chain, but the firm may be unable to observe that if it has only compared its local node in the chain (e.g. our factory) with that of its competitor. This is often described as "competition across supply chains" rather than individual companies. For instance, in the diagram below (figure 1) both inventory and service levels appear to be comparable between the competitor firms. But, the same appears to be different when their respective supply chains are compared.Figure 1:Comparison of Inventory and Service levels between Competitor firms and their Supply chains

Source:Supply Chain Online

While improving operational efficiency of each supply chain partner is crucial, the firm should also focus on enhancing partners competencies in all relevant areas like product quality, inventory control, cost effectiveness, service levels, agility, management practices, etc. This means building competencies of the partners without restricting to internet links or periphery integration with partners. Capabilities such as visibility, quality, efficiency, resilience and agility should be developed across supply chain members.

As business success now depends on leveraging improved capabilities, process efficiency and performance at every stage of the supply chain to transform the entire supply chain into lean/agile, supply chain relations at strategy level is required which is beyond the win/lose negotiations of traditional trading or the integrated supply chain relationships.The supply chain management philosophy stresses that maximizing service to key customers at the lowest total cost requires a strong commitment and close relationships among trading partners (Stank, Keller, and Daugherty, 2001). In order to achieve and maintain improved overall supply chain performance, the firms in the value chain should go beyond traditional functional and business performance measures and develop new metrics with enough detail and richness to handle supply chain performance rather than individual business performance[footnoteRef:5]. Such increased focus on suppliers and customers require tremendous levels of coordination and collaboration with partners. Robert E. Spekman, John W. KamauffJr, and NiklasMyhr(1998)[footnoteRef:6]stated that only through close collaborative linkages through the entire supply chain, can one fully achieve the benefits of cost reduction and revenue enhancing behaviors. Thisphilosophy requires a movement away from arms-length interactions toward long-term, partnership-type arrangements to create collaborative, highly competitive supply chains (Stank, Keller and Daugherty, 2001). [5: The Practice of Supply Chain Management: Where Theory and Application Converge, Springer Publications, 2004] [6: Robert E. Spekman, John W. KamauffJr, NiklasMyhr (1998), An empirical investigation into supply chain management: A perspective on partnerships, International Journal of Physical Distribution& Logistics Management, Vol. 28, Issue 8, pp. 630 - 650]

When the success of one company depends on the success of others in the chain, it becomes critical for the supply chain partners to engage in more strategic collaboration, a type of collaboration that would make the chain behave as a single system, coordinated with each element of the chain and aligned with a jointly established supply chain goal (Taylor, 2004).Historically, collaboration has been limited to coordinating operational efforts, but little has been done in the strategic arena, specifically, joint planning.Thus far, collaborative efforts have focused on integrating operational processes, without integrating the planning and design activities, so, returns have been limited(Barratt, 2004).The study carried out by Ann Vereecke, Steve Muylle (2006)[footnoteRef:7]in European countries has proven that higher levels of collaboration among supply chain partners have shown higher performance improvement. Some of the most often discussed benefits of collaboration include improved productivity, increased product quality, increased product cycle times, decrease in overall costs, and overall competitive advantage (Fawcett and Magnan, 2001; Ferdows et al., 2004; Fine, 2000; Lajara and Lillo, 2004; Lee and Whang, 2001). Supply chain collaboration improves collaborative advantage(strategic benefits gained over competitors)[footnoteRef:8] and indeed has a bottom-line influence on firm performance, irrespective of the firm size[footnoteRef:9].Moreover, the structural collaboration was found to be improving flexibility and procurement. In the long run, firms expect the supply chain collaboration to pay off through more competitive products and quicker product development that will transform into possible competitive advantage and increased profits (Stuart and McCutcheon, 1996)[footnoteRef:10]. As competition shifts from an inter-firm to an inter-supply-chain level, the collaborative paradigm in supply chain management regards strategic collaboration as a crucial source of competitive advantage(Gold, S., Seuring, S. and Beske, P, 2010)[footnoteRef:11]. [7: Ann Vereecke, Steve Muylle(2006), Performance improvement through supply chain collaboration in Europe, International Journal of Operations & Production Management, Vol. 26, Issue 11, pp. 1176 - 1198] [8: Collaborative advantage is defined as strategic benefits gained over competitors in the marketplace through supply chain partnering and partner enabled knowledge creation, and it relates to the desired synergistic outcome of collaborative activity that could not have been achieved by any firm acting alone.Supply chain collaborative advantage as the five dimensions: process efficiency, offering flexibility, business synergy, quality, and innovation.] [9: Mei Cao, Qingyu Zhang (2011), Supply chain collaboration: Impact on collaborative advantage and firm Performance, Journal of Operations Management, Volume 29, Issue 3, March 2011, Pages 163-180] [10: Mei Cao, Qingyu Zhang (2011), Supply chain collaboration: Impact on collaborative advantage and firm Performance, Journal of Operations Management, Volume 29, Issue 3, March 2011, Pages 163-180] [11: Gold, S., Seuring, S. and Beske, P. (2010), Sustainable supply chain management and inter-organizational resources: a literature review. Corp. Soc. Responsib. Environ. Mgmt, 17: 230245. doi: 10.1002/csr.207]

Prabir K. Bagchi, Byoung-Chun Ha and TageSkjoett-Larsen (2006)[footnoteRef:12] have proven that collaboration in supply chain design and operations with key suppliers and length of relationship with key supply chain partners were found out to be important factors in supply chain integration that positively affect performance improvement.Daugherty et al. (2005) found that formalized collaboration could provide superior long-term performance. Corsten and Felde (2005) found that supplier collaboration increased financial performance[footnoteRef:13].Chief Executive Officers (CEOs) in the CPG industry recognized collaboration with partners as their highest strategic priority and more than 80 % of the firms surveyed through the Annual Customer and Channel Management (CCM) Survey, conducted by McKinsey & Company, Nielsen, and the Grocery Manufacturers Association in 2010said they were involved in at least one collaboration initiative, and some were involved in as many as 10 such arrangements[footnoteRef:14]. [12: Prabir K. Bagchi, Byoung-Chun Ha and TageSkjoett-Larsen (2006), Supply Chain Integration in Europe: A Status Report, School of Business, The George Washington University in its series Working Papers with number 0003.] [13: Richey, R. G., Roath, A. S., Whipple, J. M. and Fawcett, S. E. (2010), Exploring A Governance Theory Of Supply Chain Management: Barriers And Facilitators To Integration, Journal Of Business Logistics, 31: 237256. doi: 10.1002/j.2158-1592.2010.tb00137.x] [14: Luis Benavides, Verda De Eskinazis and Daniel Swan (2012), Six steps to successful supply chain collaboration, Supply Chain Quarterly, Quarter 2 2012.]

III. STRATEGIC COLLABORATION IN SUPPLY CHAINS

Supply chain collaboration is neither the same as joint ventures or strategic alliances, which normally entail some degree of shared ownership across the parties (Lambert et al., 1996). Nor is it the same as vertical integration, whereby there is common ownership of many supply chain members (Cooper et al., 1997b). In addition to Lambert (1996), we view partnerships as a special case of supply chain collaboration while other partnerships may involve extended financial linkages that are not necessary in supply chain collaboration.It is a synergistic relationship with upstream and/or downstream partners that add value above and beyond what is achievablethrough simple long-term contracts,[footnoteRef:15]involving shared commitment/resourcesthat deal with strategic issues. A simple example is the relationship between Procter & Gamble (P&G) and Wal-Mart, which have worked together to establish long-term EDI satellite linkages, shared forecasts, and pricing agreements. Such collaboration enabled speedy replenishments, reduced inventory and lowered order-processing costs that it can afford to give Wal-Mart "every day, low prices." [15: Stanley E. Fawcett, Gregory M. Magnan, Matthew W. McCarter (2005), Supply Chain Alliances: Rhetoric And Reality,Stanley E. Fawcett, Gregory M. Magnan, (2002) "The rhetoric and reality of supply chain integration", International Journal of Physical Distribution & Logistics Management, Vol. 32 Iss: 5, pp.339 - 361]

Figure 2: Approaches to Strategic Collaboration in Supply Chains (modified from Cooper et al., 1996)

There are many ways to be engaged in supply chain collaboration. Cooper et al. (1997b)elaborate on these different approaches of collaborating in the supply chain (see Figure 3). The firstis the dyadic approach, which may exist at numerous levels in the chain. Many organizations willfocus in their early attempts on the channel members with whom they have immediate contact. Thesecond approach uses a channel integrator. This channel leader plays the key role in setting theoverall strategy for the channel and in getting the channel members involved in and committed tothe strategy. The third approach uses a fourth party logistics (4PL) entity as a centralizedoptimization tool to coordinate and control the channel. As suggested the fourth approach, verticalintegration, adopts ownership of other channel members and therefore is not considered ascollaboration.Figure 3: Multiple Ways of Supply Chain Collaboration (Modified From Cooper Et Al., 1997b)

The Channel Integrator

Collaboration is to create value.Often, creating value requires transformational or significant change. No successful transformational change occurs without proper leadership. Or they must have beenvery lucky, Kotter (1996) explains. According to the theory of five bases of powerdeveloped by social psychologists John R.P. French and Bertram Raven (1959),one of the bases of power is positional power, i.e., power due to the relative position.The relative positions of the partners determine the power relationships.Indeed, the entity(s) with more power becomes the dominant partner in the strategic partnership and controls other members. Dominant Partner is generally present in a supply chain collaboration characterized with asymmetric powers. Examples of asymmetric power in supply chain collaboration are found in aerospace industry (Leslie and Young, 2005), the food industry (Van Dijk et al., 2003), and the automotive industry (Dyer and Nobeoka, 2000; Maloni and Benton, 2000).

Dominant partner or the Channel Integrator in supply chains varies from industry to industry. In sectors like automotive, aerospace, etc. the dominant partner is the FG manufacturer. Whereas in consumer goods, apparels, accessories, etc., big retailers like Wal-Mart, Metro, Tesco, etc., tend to influence upstream partners in their supply chains. Consumer Product Manufacturers (CPMs) have no or limited influence on their retailers, especially in multi-branded outlets. In service supply chains like Healthcare, Banking, Insurance, Hotel, Tourism, etc., the dynamics of supply chain differ from the functional supply chains. Cost-effective infrastructure plays a critical role for service quality in these sectors along with people infrastructure, and therefore, service organizations usually exert control on supply partners.

The dominant partner in the supply chain acts as a channel integrator. It usually sets the overall strategy and vision thats based on its internal and external capabilities.But due to such power relationships many collaborative initiatives have ended up in failure (R. Kampstra, J. Ashayeri, & J. Gattorna, 2006). Several researches have revealed that one partner dominating the other, as one of the major reasons for supply chain collaboration failures. Therefore leadership entirely based on positional power should not be the way to create and drive supply chain collaboration. Positional power should help to open dialogue and initiate supply chain transformation process.

Transformational ChangeA transformational change is usually driven by new constraint(s) or the need to achieve next level of performance. John Kotter (1990) in his book A force for change: How Leadership Differs from Management advocates eight phase model for successful change. 1. Establish a sense of urgency, 2. Create a coalition, 3. Develop a clear vision, 4. Share the vision, 5. Empower to clear obstacles, 6. Secure Short term wins, 7. Consolidate and Keep moving, and 8. Anchor the Change. Kotters analysis concentrates on organizational change showing similarity to supplychain transformation through collaboration.First three stages of Kotter (1996) model describe how a change initiative begins at the top and with three discrete actions by the leaders :(1) create the guiding coalition; (2) establish a sense of urgency; and (3) develop a clear vision.The dominant partner (or) channel integrator drives formation of strategic coalition and develops the joint vision/goal/strategy. The strategic coalition for collaboration depends on how the dominant partner(s) perceives internal and external environments of the supply chain members.Organizations often eliminate suppliers or customers that are clearly unsuitable, whether, because they do not have the capabilities to serve the organization are not well aligned with the company[footnoteRef:16]. Therefore, partners those with higher collaborative value aligned with the long-term interests of dominant partner (or) channel integrator will be chosen for the strategic partnership. Partners (upstream or downstream) with higher collaborative value are identified for collaboration. But due to competitive pressures, several organizations enter into alliance without ample preparation or understanding of partners' needs and hence, these alliances fail (Dacin, M. Tina; Hitt, Michael A.; &Levitas, Edward, 1997). Daugherty et al (2005) found that collaboration efforts often fail because not adequate care is taken in choosing the right partners, matching inter-organizational needs and capabilities. Further, partners enter collaborative ventures with certain expectations and objectives (Dacin, M. Tina; Hitt, Michael A.; &Levitas, Edward, 1997). Thus partner selection process should strive to contemplate inter-organizational needs along with partner capabilities, expectations and objectives embracing a win-win mindset. [16: Rob Handfield (2002), Managing Relationships in the Supply Chain, Supply Chain Resource Consortium(SCRC), Feb, 01, 2002]

From the perspective of corporate vision/goals of dominant partner(s), each partners strengths, limitations, opportunities, threats and challenges are evaluated to qualify as strategic partners. For instance, if the dominant partners vision is to emerge as the global leader in its industry, then it is more likely to influence its supply chain to evolve as a highly competitive global network. In such case, supplier(s) and/orchannel partner(s) which can easily and quickly expand their capacities in any market where the dominant partner has plans to operate in future will have greater chances of being part of the strategic collaboration. However, partner firms who see benefit (or) business value with dominant partner will join the strategic coalition.

Driving CoalitionAccording to James McGregor Burns theory of transformational leadership, a transformational leader focuses on "transforming" others to help each other, to look out for each other, to be encouraging and harmonious, and to look out for the organization as a whole. Therefore, in an environment of win-win/lose-win relationships,the channel Integrator in supply chain acts as the transformation leader. Channel integrator involves the associated partners and lead the supply chain change initiative. It aims to transform selected group of strategic partners in the chain and motivates them to help each other, behave harmoniously and consider the partner firms in the collaborative partnership as one organizational entity. Nextthey establish a sense of urgency and develop a vision and a strategy (Kotter). A sense of urgency manifested in the customized one-to-one negotiation strategies formulated based on strategic values covering both individual and collaborative benefits will motivate identified partners to show willingness to collaborate.The interactions between supply chain members and their associated power equations will ultimately evolve theshared vision for the strategic collaboration. Formulating the shared vision will be more or less not a collaborative effort. But the true collaborative effort begins after the shared vision is set.

Joint Decision-Making (JDM)In a collaborative relationship, only a coordinated and joint effort can deliver expected results. The attributes such as Collaborative/joint efforts, Collaborative continuous improvement, Shared vision and objectives, etc., were all described as fundamental elements of outstandingalliance relationships[footnoteRef:17].In doing so, the companies within the coalition should consider sharing resources with each other. Companies not only have to contemplate sharing operational information (e.g., point-of-sale data, production schedules) but should also consider jointly developing tactical and strategic plans (e.g., inventory and production plans, strategic plans) (Xu and Beamon, 2006).Joint decision-making (JDM) and strategic planning can increase competitiveness (Ajmera, Abhinav; Cook, Jack, 2009). Joint decision-making (JDM) goes beyond information sharing, involving "joint, concurrent, intellectual, and cognitive decision making" among partners (Ayers, 2006). It can be defined as "joint authority and structure to carry out a common mission [in which] the parties engage in comprehensive planning and operate well defined communication channels. They pool resources jointly, and share the resulting benefits" (Scheff and Kotler, 1996). JDM promotes cooperation over competition among the supply chain trading partners. It aims to prepare the network for supply chain vs. supply chain competition. [17: Stanley E. Fawcett, Gregory M. Magnan, Matthew W. McCarter (2005), Supply Chain Alliances: Rhetoric And Reality,]

Figure 3: The elements of supply chain collaboration

Source: Supply Chain Management: An International Journal, Vol.0 number 1, 2004, pg. 30-42Ajmera, Abhinav; Cook, Jack (2009)[footnoteRef:18] proposes an implementation framework to initiate the transition from a simple information sharing agreement to a fully functional JDM collaboration. In the process, they suggested two alternative ways for transition to joint decision-making (JDM) viz., Self-sustained initiative and Third-party managed initiative. Self-sustained initiative requires establishing a permanent steering committee responsible for both operational and strategic aspects of the network. Whereas in third-party managed initiative, companies could outsource the overall supply chain management function to a designated third party, which in the supply chain arena is called fourth-party logistics (4PL). [18: Ajmera, Abhinav; Cook, Jack (2009), A multi-phase framework for supply chain integration, SAM Advanced Management Journal | January 1, 2009]

There are certain joint decision-making (JDM) and control issues like -- what are the broad strategic considerations and framework for joint planning (decision-making) by supply chain collaboration partners? What should be the mechanism to govern &control the supply chain strategic collaboration? How can supply chain partners manage the execution of joint strategy? In what way partners can jointly manage/drive the strategic performance of the supply chain collaboration?

Ensuing discussion attempts to model the strategic management process to address the above mentioned strategic issues in implementing high-level supply chain integration in the channel integrator (or self-sustained) collaborating model. It aims at determining various strategic considerations and provides a suitable framework for joint strategic planning in supply chain collaborations. Next, it provides a collaborative mechanism for governing the supply chain collaboration process. Further, it guides supply chain partnerships in managing the execution and control of joint strategies. Finally, it creates a mechanism for managing strategic performance of the collaboration.

Strategic Management in Supply Chain Collaboration

While the companies are establishing programs to enhance supply-chainrelationships, they are not building the vital alliance management capability that will help themcreate truly synergistic supply chain teams[footnoteRef:19]. Vast majority of companies do not yet have thealliance skills needed to build a cohesive supply chain team.Strategic planning and management in supply chains requires, investigation into and analysis of elements like supply chain functions, productivity, profitability, economics, risks, product performance and quality, etc. across supply chain. In addition, analysis of the supply chain will provide for understanding current performances, achievements, industry benchmarks and effort level required in achieving supply chain goals. As the competition in the global markets has moved from the enterprise level to supply chain, the competitor analysis between competing supply chain networks within the industry can provide an insight for better way of competing. For example, a better way in identifying high cost areas and inter-relationship when costs are applied to various elements. [19: Stanley E. Fawcett, Gregory M. Magnan, Matthew W. McCarter (2005), Supply Chain Alliances: Rhetoric And Reality,]

The financial perspective views organizations as creating long-term shareholder value, and therefore builds from a productivity strategy of cost structure and asset utilization and a growth strategy of expanding opportunities and enhancing customer value. Each partner in the supply chain alliance, therefore views their partnership aligned with their business strategy to maximize their own share-holdersor customer value. Hence, each partner in the supply chain alliance will prefer to pursue either productivity strategy (optimizing cost structure & asset utilization) or growth strategy (enhancing opportunities and customer value) or both to remain aligned with their shared vision or business objectives of the channel integrator.

Organized collaborative strategic functions each encompassing relevant processes offer the mechanism required to set and achieve strategic goals of the supply chain network. Four different functions form the core of such strategic management which can be referred to as collaborative strategic planning and management, viz., collaborative strategic planning, collaborative policy-making, collaborative strategy execution & management and collaborative performance management.

Collaborative process competence mediates the relationship between absorptive capacity and collaborative engagement, and positively influences both operational and relational outcomes[footnoteRef:20]. [20: Zach G. Zacharia, Nancy W. Nix, Robert F. Lusch (2011) Capabilities that enhance outcomes of an episodic supply chain collaboration, Journal of Operations Management, Volume 29, Issue 6, September 2011, Pages 591603]

1.4.1 Collaborative Strategic Planning (CSP)

Devising a feasible joint strategy for the supply chain alliance is a complex challenge as each strategic global partner operates in a different economic, political, technical and regulatory climate.According to Simplified Strategic Planning (Bradford and Duncan, 1999), the external environment is broken into 7 key areas: Markets (customers), Competition, Technology, Supplier markets, Labor markets, Economy, and Regulatory environment. For instance, if the partner(s) operate in an instable economic conditions with high cost of credit, it limits those partners ability to contribute for overall supply chain cost containment or capital expenditure for capacity expansion. Similarly, if stringent labor laws prevail then partner(s) cannot contribute to assets utilization. Quality may not be the strategic plan if the partners have limited access to skilled labor and/or technology resources. Service cannot be the game plan if infrastructure is poor. Hence, to craft an appropriate supply chain strategy it requires channel integrator to analyze the macro environments of each strategic partnerto develop and gain support for the joint strategy. Examining the feasibility, the shared vision may be reviewed and alteredat this stage.In such case, the partners may revisit previous stage to revive the shared vision and keep in the loop until a feasible vision/strategy is framed. Figure 4: Elements of Collaborative Strategic Planning (CSP)

Joint StrategyCollaborative Strategic Planning (CSP)

In the next stage, joint strategy (key components) is decomposed into many transformational change objectives or goals with timelines. For example, if improving supply chain efficiency is one of the components of supply chain strategy then it is usually achieved through improving inventory management and asset utilization, etc. In such case one of the transformational change objectives would be to improve forecast accuracy. Another transformational objective for the same component can be optimizing distribution efficiency. Likewise, several transformational objectives can be identified for each strategic component. So for every component of the joint strategy, the corresponding transformational objective(s) should be identified through due diligence with the strategic partners. However, these transformational objectives should be always viewed in relation with the competitors supply chains. For instance, let us say, the delivery performance of competitors supply chain is relatively better. In such case,the corresponding competitive transformational objective should be to enhance delivery performance of the supply chain that is far superior to the competitors performance. Like this all the transformational objectives for each component in joint strategy should be stated / defined by benchmarking either with the immediate competitor supply chain or with the industry leader, whichever way that aligns well with shared vision. This calls for the competitor analysis. However, to set realistic transformational supply chain goals the supply chain members should also assess the level of opportunities and threats/challenges prevailing in their micro environment before they fine-tune the transformational change goals. For instance, the goal to improve logistics performance cannot be set as high in a highly unreliable or insecure transport environment where the control is limited. On the other hand, there may be opportunities for alternative modes for transportation, but relatively at higher prices increasing the supply chain costs. Final call should be taken through a balanced approach. Hence, a careful analysis of the competitors supply chain performance, opportunities and threats/challenges of the entire supply chain is essential to determine competitive and realistic transformational supply chain goals. Hersey and Blanchard characterized leadership style in terms of the amount of Task Behavior and Relationship Behavior that the leader provides to their followers. According to the selling leadership style, while the leader is still providing the direction, he or she is now using two-way communication and providing the socio-emotional support that will allow the individual or group being influenced to buy into the process. Likewise, the transformational leader (dominant partner)uses two-way communication with other supply chain entities so that they are convinced tosupport the transformational changes. Next step involve development of the appropriate change strategies based on the transformational objectives by the collaboration leaders and strategic partners. Where to change and ultimately what to change to, for achieving each transformational change objective will be focus of developing change strategies. However, identification of what to change and where to change depends on determination of the strengths and limitations of each partner in the supply chain.

Though the partner(s) in the supply chain possesses advantages/strengths, it may not have been leveraged or may be under dormant. So the strengths/competencies of dominant partner(s), strategic partners and other partners in the supply chain should be identified and assessed. All strengths of partners should be mapped to the appropriate transformation objective(s). As in any system, the supply chain partneris haunted by certain limitations that may be affecting the supply chain performance, which we refer to as supply chain constraints. Supply chain constraints can be broadly classified into internal and external to each partner. Internal constraints are those related to the internal limiting factors of each supply chain partner thats affecting their performance such as capacity, creditworthiness, limited working capital, purchase policy, process quality, etc. External limiting factors of each partner refers to those affecting their performance, but related to their immediate external environment in the supply chain like the rigid interfaces, poor service levels, high cost of goods and unpredictable behavior of partner(s).

The purpose of supply chain collaboration (SCC) is to deal with these supply chain constraints and bring the supply chain performance to a higher level. The Theory of Constraints (TOC)concepts (Goldratt, 1990) were originally adapted to a manufacturing environment;however they apply to the supply chain very well.Rahman (2002) discusses the use of the Theory of Constraints (TOC) thinking process in a supply chain environment. TOC concepts are usefulto identify where to change, what is the benefit and ultimately what to change to.With the help of current reality trees the supply chain cause-and-effect relationships are structured, whichmakes the identification of core problems easier. TOC introduceda five-step approach to deal with the systems constraints. Identifying the core problems is one step of thecontinuous improvement suggested by TOC. In total five steps are provided to deal with thesystems constraints: 1) identify the constraint; 2) exploit the constraint; 3) subordinate everythingelse to the above decision; 4) elevate the constraint; and 5) repeat these steps.If some strong positive pulse does not break thisvirtuous cycle, the collaboration initiative could come to a quick end. This observation is supportedby the recent survey conducted by SCMR and CSC (2004).

Whether internal or external constraint, all should be grouped and each limitation should be mapped to the transformational objectives. Those limitations/constraints if elevated can contribute to the transformational objective(s) should be considered as part of the change strategy of that objective(s). These change strategies should be mapped to the partners and be delegated for implementation to the respective partners in the supply chain.

4.4.2 Collaborative Policy-making (CPM)

Steering the strategic partnerships in the supply chain to successfully implement the joint strategy requires governance of certain contractual relationships thatis part ofstrategic collaboration. Confidentiality agreements andInformation sharing facilitates trust-based relationships and is the third most frequently cited key to alliance success. To bind all the partners together and guide them in the strategic process, a set of clear policies should be framed so that desired behaviors are exhibited in strategic collaboration. Need to establish a mechanism for jointly sharing risks and rewards was the second most frequently cited key to alliance success[footnoteRef:21]. Incentive alignment, and risk and gain sharing, are argued to be key factors for the successful implementation of Supply Chain Management (SCM)[footnoteRef:22]. Successful alliances have an established and agreed-to approach to evaluate and resolve any problems that arise and Exit criteria should be spelled out at the very beginning of the relationship[footnoteRef:23]. [21: Stanley E. Fawcett, Gregory M. Magnan, Matthew W. McCarter (2005), Supply Chain Alliances: Rhetoric And Reality,] [22: Norrman, Andreas (2008), Supply chain risk-sharing contracts from a buyers' perspective: content and experiences International Journal of Procurement Management, Volume 1, Number 4, 21 May 2008] [23: Stanley E. Fawcett, Gregory M. Magnan, Matthew W. McCarter (2005), Supply Chain Alliances: Rhetoric And Reality,]

Figure 5: Elements of collaborative policy-making (CPM)

Collaborative Policy-Making (CPM)Partnership Policies

A firm can design incentive structures (Williamson1983) that reward the necessary behaviors and/or penalizenon-compliance in the ongoing relationship. Which means the dominant partner(s) and strategic partners should together agree on certain policies in areas that will govern their strategic relationships. In strategic alliances, the relationship factors that should be governed effectively are: resources and risks. Resource sharing JDM promotes cooperation over competition among the supply chain trading partners and aims to prepare the network for supply chain vs. supply chain competition. In doing so, the companies within the alliance should consider sharing resources with each other[footnoteRef:24].Partners in the alliance should, therefore determine and agree upon what and how they will pool the resources from each other for executing their strategic plans. Similarly, the collaborative initiatives shall not only derive benefits but may also results in certain financial risks. So, the partners should together determine the type of risks involved, how they will address those risks, and if unavoidable, in what way they will share those risks. [24: Jack Cook, Abhinav Ajmera (2009), A Multi-Phase Framework for Supply Chain Integration SAM Advanced Management Journal, January2009]

In strategic partnerships, disputes between partners are common and sometimes inevitable too. So, there should be a mechanism that guides the partners to resolve their conflicts. Strategic partners of the supply chain collaboration should priorly determine what disputes are likely and agree on how they would settle those disputes. Similarly for any reason(s) or no reason(s), if any partner(s) wishes to disassociate from the partnership, it affects the strategic collaboration process. The point at which the respective member(s) want to disassociate themselves determines how it will influence the strategic collaboration. It may also influence the leaving partner(s) either positively or negatively. So, a detailed exit policy should be prepared before the strategic collaboration is started in order to avoid any disputes later.

Collaborative performance of the partnership or a team should be governed and controlled from time-to-time, to prevent under performance of the partners or to know whether all partners are performing as per the pre-determined expectations. But the question of how will the collaborative performance measured, how each partners contribution will be known and what guides the partners to control their own performance, what mechanisms should the partners employ to control their performance and how frequently they should meet to review their own performance, etc., should be answered and understood by all the partners prior to the commencement of the strategic collaborative exercise. So, a broad review policy should be developed by all the strategic partners together. Besides, broad guidelines should be stipulated for the strategy execution from instituting the implementation organization to defining the execution authority and mechanism for execution control.

4.4.3. Collaborative Strategy Execution (CSE)

Every partner in the collaboration is bound to execute the delegated part of the joint strategy. However, a coordination team drawn from the dominant and strategic partners will develop the implementation plan and coordinate the resources and program. Further, the coordination team will exclusively monitor and control the strategy implementation across the supply chain firms. For executing different parts of the strategy, inter-organizational teams comprising specialists/experts in the respective areas will be drawn from the associated supply chain members or sometimes hire consultants from outside. An extension on the training motif is the increased use of process development teams to help supply partners dramatically improve their own capabilities[footnoteRef:25]. When a problem is discovered, a problem-solving team comprised of buyer and supplier personnel comes together to identify the root cause, brainstorm a resolution, and take action. Joint problem solving also can mitigate the impact of an unexpected disaster. For example, when one of Toyotas suppliers suffered a catastrophic fire that burned a key facility to the ground, a joint problem solving team was quickly mobilized to get a critical valve back in production. A desire to shrink concept-to-market cycle times has led to the use of multi-functional product-development teams, consisting of managers from marketing, research and development, manufacturing, purchasing, and logistics as well as representatives from key suppliers.Leadingmanufacturers are aggressively pursuing collaborative product development opportunities. [25: Stanley E. Fawcett, Gregory M. Magnan, Matthew W. McCarter (2005), Supply Chain Alliances: Rhetoric And Reality,]

Figure 6: Elements of collaborative strategic execution (CSE)

Inter-Organizational TeamsCollaborative Strategy Execution (CSE)

Each cross-organizational team will be responsible for transforming a specific area as stipulated in the joint strategy. As per the joint-strategy and transformational objectives, these teams may focus on improving processes, instituting systems for enhancing quality, developing competitive products quickly and cost-effectively, or establishing the technology, logistics and production infrastructure. Usually the combination of any of the following inter-organizational teams is set up aligned with the joint strategy:a. Process Teamb. Quality Teamc. Product Teamd. Infrastructure Teame. Coordination Team

Each constituted team is provided with the set of transformational objectives and the appropriate change strategy to pursue. Their performance will be monitored and controlled in the ways as stipulated in the execution policy.

4.4.4 Collaborative Strategic Performance Control (CSPC)

Majority of supply chain metrics are in fact measures of internal logistics performance (Lambert and Pohlen, 2001), and can be considered inappropriate for the supply chain as a whole (Simatupang and Sridharan, 2002). By sharing performance metrics with customers and suppliers, bottlenecks in the supply chain (in the form of inventory stockpiles and process gaps) can be identified and overall performance improved (Lummus and Vokurka, 1999; Stank et al., 1999b; Ireland and Bruce, 2000). The major barriers to developing such supply chain measures are the complexity of overlapping supply chains and the sharing of information between organizations (Lambert and Pohlen, 2001). Unless real supply chain metrics can be developed, then the various constituent parts of the supply chain will continue to operate in different directions and will not be aligned.Figure 4.7:Elements of collaborative strategic performance and control (CSPC)

Key Performance Areas (KPAs)Collaborative Strategic Performance control (CSPC)

Periodically the strategic performance of the alliance is reviewed by the dominant and strategic partners. The predetermined review policy will guide how the members will measure their own performance and the collaborative performance. The performance of the entire supply chain in various areas as focused by their joint strategy will be known to assess the effectiveness of their joint strategy. Focused areas such as cost, quality, service and revenue aligned with their shared vision are usually assessed and compared with the performance expected at that stage. Any drastic deviation from the expected performance will require the members to review and reformulate their strategy or policies, as indicated by the core problem(s) areas. Otherwise, on successful progress of the strategic partnership, further action-plans will be devised.On achieving the strategic mission, the collaborative team will move on to next agreed common mission if required. Again the entire strategic collaboration process will restart and follow the same steps as defined in figure 1.8. Figure 4.8:Collaborative Strategic Planning and Management (CSPM)

Joint StrategyActiveSupply Chain PartnerCollaborative Strategic Planning and Management (CSPM)Collaborative Functions /Processes

Collaborative Strategic Planning (CSP)

Collaborative Policy-Making (CPM)

Partnership Policies

Inter-Organizational TeamsCollaborative Strategy Execution (CSE)

Key Performance Areas (KPAs)Collaborative Strategic Performance Control (CSPC)

On combining all the collaboration strategic management processes {viz., collaborative strategic planning (CSP), collaborative policy-making (CPM), collaborative strategic execution (CSE), and collaborative strategic performance control (CSPC)}; an integrated strategic management modelis resulted as shown in figure 1.8,

Conclusion

The strategic model referred to as Collaborative Strategic Planning and Management (CSPM) presented in this paper offers a structured approach to effectively address the strategic issues/ challenges of the networked global supply chain firms. The CSPM model developed in this paper, at large, offers opportunities to optimize effectiveness of supply chain integration towards supply chain excellence. It offers a solid mechanism to implement strategic management in channel integrator driven collaborative supply chains. This model helps partners of the strategic alliances (within supply chains) to strategically operate the entire supply chain network as one legal entity, which ultimately results in building supply chain competitiveness. Hence, the CSPM model can help global giant firms to further optimize their supply chain competitiveness to sustain in the era of network competition.

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