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By Stuart Emmett Much has been said about how suppliers should be managed by procurement. Indeed one view (Supply Management January 2007) was that the Procurement Manager will become re-titled as the Relationship Manager in future years.

competition in supply chain?

This would then mean considering cooperative management styles and perhaps stepping back from any adversary “them and us” competing power based styles.

With such a change, then what needs to be done? The competitive or competition in supply chain way Most buying and selling organisations have to compete, not only in their local markets but also on a global market.

Interestingly this competition is not just for customers demand, but also for suppliers, as many are becoming selective in their choice of customers.

When organisations compete, this is a seen rational and sound business practice.

This rational and logical way creates a sense of what is “right and wrong” and has norms, that are clear and objective, for example, “this is how I should behave” or in its extreme, “this is how I must behave.”

This rational view is however only, one, of the two options available and for example, baking a cake with only 50% of the ingredients will never produce the best cake.

Compete or cooperate A competing process fosters the protection of “my” interests and a tendency for “I win, you loose” styles of negotiations and methods of business.

Competing can also become a fiercely fought business discipline, not just between organisations and with external suppliers, but also internally between departments and between the people within organisations.

Indeed as has been noted by Professor Alan Waller, “we have been taught to compete and not cooperate.”

” What has happened here is that competition has taken over from cooperation and rules and procedures have majored over relationships.

This subduing of suppliers and competitors by competitive power plays involves minimising the risk “for me.”

This can mean in the longer term, suppliers have to survive on limited margins as they may be continually expected to meet the demands placed on them for lower prices and higher productivity.

This in turn leads for some having to survive on extended cash flows and credit, (that one day will have to be re-paid).

Indeed one may wonder how long such continual searches for lower prices and increased performance will continue to give increased quality and more added value.

It has been comprehensively proved, by those organisations practicing TQM, that low prices and high levels of quality are incompatible goals;

however dominant buyers choose to believe they can maintain their position because they are easily able to switch suppliers and markets. Market forces at play here, yes, but at what cost? Is there not a better way to use the market?

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The joining of needs, values and norms Whilst dominant buyers may choose to believe their needs will continue to be met by forcing external competition driven by rules and procedures; what they are really ignoring here, is that any power to influence others, is also determined by the perceptions of these others as to how, their own needs will be met. This duality of meeting needs is going to be largely ignored in the power based rational and norms of for “me” approach. Additionally, ignored will be the desire to find common ground and the use of cooperating “we” views and values. This incompatibility and conflict between values and norms, means, that unless a newer form of mutuality of interest in working emerges, disintegration is the only ultimate and eventual result. For those who cannot see any relationship between values and norms, then witness the colossal changes made in East Europe in the 1980’s and 1990’s. Here, eventually people values on society, became at odds with the norms from the political society and a major change in political systems followed.

The rational and emotional best way view Most western organisations lean more towards a rational scientific view.
Whilst emotional and subjective views are often subordinated in Western cultures, they are not in Eastern cultures.
Here, the role of buyers and suppliers in practicing continuous improvement with a fuller involvement of suppliers in buyers’ organizations.
This is in turn, connected to the dominance of Japan in certain sectors. What are needed therefore are norms and values of “rational-emotionality for us.” However, it seems to be difficult for many pre-conditioned “rational only” Western managers to make such a change. This for example, was one of the reasons for the 1980/1990’s failure of TQM methods to impact many organisations. TQM was then being seen, as the source for future success of “UK Limited” and whilst TQM has been successful for a few, most UK companies who tried, failed. Here the already existing superficial attitudes and short term views drove behaviour and the needed fundamental changes were not made “deeper inside.” Organisations wanted the quick fix tools and not the thinking that went behind them.

Changing our views It seems therefore that Western managers must individually determine how they look at things, and then to be prepared to change their view to incorporate emotional values. After all, they have such emotional values, they were born with them and use them regularly away from work; but Western organisational socialisation and methods have often subdued them and bred competition as, “the one best way”. Changing however can be a most difficult form of learning for many managers as they have their own “fixed” perception, which can, in effect, block the view. Therefore, if we want to see things differently, we need to change our perception. Remember that perception is reality. The way we see, leads to what we do and what we do, leads to the results we get. So to change the results, we really do need to change the way we see. As an American colleague of mine says, a crazy person is defined as someone who keeps doing the same things but expects better results. The choice today is change or die It is my belief that business is, at its roots, an emotional experience. Trying to pretend people’s emotions don’t exist in business relationships is dangerous, as building and developing good relationships involves more than just following rational rules and procedures. To have effective procurement and supply chain management, then we must fully consider how cooperative relationships are to be handled so we can achieve the greater benefits that will only occur when sharing and mutuality happens. By retaining the current dominance of competition and rules, this means subduing the place of cooperation and relationships. Cooperation and relationships must take a stronger place and find a better balance with traditional rational competition and rules found in most UK supply chains.

For some organisations therefore, the future will mean demise and possibly death, for others, a re-birth and growth. Growth is the better option and needs a conscious choice to learn new ways and in so doing, to change.

All written by Stuart Emmett, after spending over 30 years in commercial private sector service industries, working in the UK and in Nigeria, I then moved into Training.

This was associated with the, then, Institute of Logistics and Distribution Management (now the Chartered Institute of Logistics and Transport). After being a Director of Training for nine years, I then chose to become a freelance independent mentor/coach, trainer, and consultant.

 

This built on my past operational and strategic experience and my particular interest in the “people issues” of management processes. Link for the blog:

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http://www.learnandchange.com/freestuff_23.html

Cooperation or competition in supply chain?