The Process of Supply Chain Alignment

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Table of Contents

Introduction
Learning and Trust in Alignment Process
Case Studies
Practical Implementations
Conclusion
Reference

Introduction

In the article Supply chain alignment as process: Contracting, learning and pay-for-performance, Kostas Selviaridis and Martin Spring sought to investigate how buyers and sellers in supply chains align their performance through the process of learning. Specifically, the authors were interested in the contracting behavior of companies and how this behavior changed over time. For that reason, two longitude case studies were conducted which adopted contract analysis and manager interview methods for investigation purposes. The results indicated that prolonged collaboration leads to mutual learning of business counterparts concerning each others behavior, pursued goals, and communication styles, which facilitates future bilateral negotiations between these partners. In this regard, this paper intends to, firstly, present what is supply chain alignment based on Selviaridis and Springs understanding and, secondly, discuss the results of their case study. Moreover, it seeks to analyze the actions that the companies should take to ensure an aligned supply chain based on the researchers findings and explain why they are important.

Learning and Trust in Alignment Process

Selviaridis and Spring (2017) view achieving supply chain alignment as a continuous process of managerial efforts contrary to the once reached state of equilibrium. The authors argue that the ever-changing nature of the market explains such a condition. Moreover, it is maintained that managers do not possess the full information about their counterparts since the beginning of the partnership; rather, the counteragents learn about other companys behavior through longer periods of interaction. As a result of mutual research, the relations between partners gradually improve which is manifested in better and more balanced contracts and, thus, the supply chain becomes more aligned. Additionally, the researchers argue that trust the second important antecedent of increased alignment cannot appear immediately during or after the first encounter but is gradually built. Therefore, Selviaridis and Spring (2017) conclude that the companies should seek to build long-term relations based on continuous mutual learning to achieve a more integrated supply chain.

Case Studies

To prove their claims, the authors conducted two longitude case studies. Case A presents the situation when one of the companies decides to change performance priorities and, thus, reevaluates the demands to counteragents. Selviaridis and Spring (2017) found that it took the partners several unsatisfying attempts to balance the interests of both sides before the counteragents reached an agreement and alignment. The researchers determined that the main reason behind the success was the managers desire to collaborate and learn what is important for the counteragents. On the other hand, Case B showed that learning might not only happen regarding the partners but also regarding the contract itself. In this regard, it was found that companies needed time to discover how to formulate best certain agreement provisions avoiding previous unintended consequences. Therefore, it is seen that the researchers previously made hypothetical claims were tested on practice.

Practical Implementations

Based on the examples of successful supply chain alignment, now it is possible to draw certain recommendations that the companies should follow and explain why they are necessary. Firstly, organizations should seek to build long-term relations with their counteragents instead of changing business partners. That is important because only during continuous interactions can the companies sufficiently learn about each others behavior, goals, and communication styles which is the precondition for an aligned supply chain. Also, the managers should be oriented to achieve the state that would follow the win-win logic instead of concentrating only on their own company goals. Finally, it is imperative to build trustful relations with the counteragents as it is the second necessary condition of successful supply chain alignment.

Conclusion

Overall, the current paper analyzed how Selviaridis and Spring (2017) characterize the concept of supply chain alignment in their research. It was found that the main antecedents that determine alignment success are long-term mutual learning and building of trust. Additionally, the case studies revealed that learning may be applicable not only to the counteragents but also to the building of contracts. Finally, the recommendations on how the companies that seek to align their supply chain should act were provided.

Reference

Selviaridis, K., & Spring, M. (2018). Supply chain alignment as process: Contracting, learning and pay-for-performance. International Journal of Operations & Production Management, 38(3), 732-755.

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The Process of Supply Chain Alignment

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