Coordination is a very important issue in management theory. Fayol included coordination as a function of management or element of management in the theory of management developed by him. But Koontz and O'Donnell argued that the purpose of management is coordination and hence every elements of management contributes to coordination and coordination is not a separate element in management. Chopra and Meindl also indicated that coordination is the output of SCM approach. They said adopting SCM implies a focus on coordination.
Coordination implies actions by various agents in the supply chain that are aimed at increase in total supply chain profits. It also implies that supply chain agents avoid actions that improve their local profits but hurt total profits. Hence supply chain coordination principles requires each stage of the supply chain to take into account the impact its actions have on other stages.
A lack of coordination creates "bullwhip effect" in the supply chain. Due to this effect, fluctuations in sales become larger and larger fluctuations in orders at higher stages in the supply chain. This leads to situations wherein large shortages or large surplus capacities are felt in the supply chain cyclically.
Bullwhip effect reduces the profit of a supply chain by making it more expensive to provide a given level of product availability.
In what way bullwhip effect increases costs for the supply chain?
1. In increases manufacturing cost.
2. It increases inventory cost.
3. It increases replenishment lead times.
4. Increases transportation cost.
5. Increases labor cost in shipping and receiving.
All items of cost increase because excess capacity has to be installed to take care of unnecessary peaks in demand.
6. It reduces product availability due to some orders not getting filled when demand peaks. So some retail outlets may go out of stock.
7. Leads to problems of relationships - every body claims that they have done right. But still there is problem in the supply chain either as unfilled orders or excess inventory not having the order from down stream side.
The main reasons for coordination problems in supply chain are distributed owners of various stages of production & distribution, and product variety.
The fundamental challenge is for supply chains to achieve coordination in spite of multiple ownership and increased product variety.
What are Obstacles to Coordination in a Supply Chain?
Incentive obstacles
Information processing obstacles
Operational obstacles
Pricing obstacles
Behavioral obstacles
(Chopra and Meindl)
Managerial Levers to Improve Coordination in Supply Chains
Aligning goals and incentives
Improving information accuracy
Improving operational accuracy
Designing pricing strategies to stabilize orders
Building Partnerships and trust
(Chopra and Meindl)
Building Strategic Partnerships and Trust within a Supply Chain
The key steps to be taken in the design of partnership are:
1. Assessing the mutual benefit of the partnership.
2. Identifying operations roles for each party in the partnership.
3. Creating effective contracts
4. Designing effective conflict resolution mechanism
References
Sunil Chopra and Peter Meindl, Supply Chain Management: Strategy, Planning and Operations, Prentice Hall, 2001.
What Drives Supply Chain Behavior? HBS Working Knowledge article June 2004
Supply Chain Management: Chopra and Meindl - Book Information and Review
Trust Management: Key Factor of the Sustainable Organizations Embedded in Network
Adam Jabłoński, Barbara Kożuch
MDPI, 16-Jul-2019 - Business & Economics - 396 pages
Trust is an element of relationships between entities, but, above all, it positively influences the building of an organization's intellectual capital. This capital can be defined in different ways, but its definition always references elements that determine the potential of sustainable organizations, often in human, social, relational, organizational, and innovation dimensions. Trust is increasingly becoming the key determinant of this capital (Kożuch, Lenart-Gansiniec, 2017). Trust also has a number of different definitions. However, the basis of many of these definitions is the building of relationships focused on developing some kind of individual or inter-organizational link. Organizational trust is a complicated concept, and it is the basis of all organized activities performed by people in the organization, largely because trust is needed to develop relationships with integrity and commitment. Thus, it is interesting to study the relationship between trust and the building of the intellectual capital of sustainable organizations. Indeed, intellectual capital plays a special role here. It is a guide and a platform for achieving not only a competitive advantage for the sustainable organization, but also a source of value creation in the short and long term. Thus, this strategic hybrid, composed of a business model, strategy, and business processes, is favorable to the development of intellectual capital (Jabłoński 2017). Trust is an element that ties this capital to relationships in business. Moreover, it has an integrated character (R.C. Mayer, J. H. Davis, F. D. Schoorman 1995). Assuming that, nowadays, the network paradigm is becoming increasingly important, it is worth asking how the mechanism of building trust-based intellectual capital in a sustainable organization functions as its key asset in the network environment.
https://books.google.co.in/books?id=ACyjDwAAQBAJ
Conflict: From Analysis to Intervention
Sandra I. Cheldelin, Daniel Druckman, Larissa Fast
A&C Black, 13-Aug-2003 - Political Science - 373 pages
This major new textbook analyses the emergent role of conflict analysis and resolution. Cheldelin, Druckman and Fast are all based at the Institute for Conflict Analysis and Resolution, and are international experts in the field of conflict. Covering theory, research and practice, the authors provide a comprehensive typology of conflict, as well as an in-depth analysis of the structural, strategic and cultural factors which influence conflict. They explore its management and resolution, paying particular attention to the concepts of negotiation, mediation and peace-building.
https://books.google.co.in/books?id=ChmkoVckP8wC
New Directions in Conflict Theory: Conflict Resolution and Conflict Transformation
Raimo Väyrynen
SAGE, 23-Aug-1991 - Conflict management - 240 pages
This is a timely work which explores the validity of rational and subjective approaches to conflict resolution, considers the value of international law and organizations for addressing complex social phenomena, and outlines a structural approach to international conflicts. In addition it extends the analysis of conflict transformation to new issues on the international agenda, such as antagonism between urban and rural areas and threat to the environment.
https://books.google.co.in/books?id=c2eek635-BYC
Updated 26 October 2019, 10 April 2015, 10.2.2012
Coordination implies actions by various agents in the supply chain that are aimed at increase in total supply chain profits. It also implies that supply chain agents avoid actions that improve their local profits but hurt total profits. Hence supply chain coordination principles requires each stage of the supply chain to take into account the impact its actions have on other stages.
A lack of coordination creates "bullwhip effect" in the supply chain. Due to this effect, fluctuations in sales become larger and larger fluctuations in orders at higher stages in the supply chain. This leads to situations wherein large shortages or large surplus capacities are felt in the supply chain cyclically.
Bullwhip effect reduces the profit of a supply chain by making it more expensive to provide a given level of product availability.
In what way bullwhip effect increases costs for the supply chain?
1. In increases manufacturing cost.
2. It increases inventory cost.
3. It increases replenishment lead times.
4. Increases transportation cost.
5. Increases labor cost in shipping and receiving.
All items of cost increase because excess capacity has to be installed to take care of unnecessary peaks in demand.
6. It reduces product availability due to some orders not getting filled when demand peaks. So some retail outlets may go out of stock.
7. Leads to problems of relationships - every body claims that they have done right. But still there is problem in the supply chain either as unfilled orders or excess inventory not having the order from down stream side.
The main reasons for coordination problems in supply chain are distributed owners of various stages of production & distribution, and product variety.
The fundamental challenge is for supply chains to achieve coordination in spite of multiple ownership and increased product variety.
What are Obstacles to Coordination in a Supply Chain?
Incentive obstacles
Information processing obstacles
Operational obstacles
Pricing obstacles
Behavioral obstacles
(Chopra and Meindl)
Managerial Levers to Improve Coordination in Supply Chains
Aligning goals and incentives
Improving information accuracy
Improving operational accuracy
Designing pricing strategies to stabilize orders
Building Partnerships and trust
(Chopra and Meindl)
Building Strategic Partnerships and Trust within a Supply Chain
The key steps to be taken in the design of partnership are:
1. Assessing the mutual benefit of the partnership.
2. Identifying operations roles for each party in the partnership.
3. Creating effective contracts
4. Designing effective conflict resolution mechanism
References
Sunil Chopra and Peter Meindl, Supply Chain Management: Strategy, Planning and Operations, Prentice Hall, 2001.
What Drives Supply Chain Behavior? HBS Working Knowledge article June 2004
Supply Chain Management: Chopra and Meindl - Book Information and Review
Trust Management: Key Factor of the Sustainable Organizations Embedded in Network
Adam Jabłoński, Barbara Kożuch
MDPI, 16-Jul-2019 - Business & Economics - 396 pages
Trust is an element of relationships between entities, but, above all, it positively influences the building of an organization's intellectual capital. This capital can be defined in different ways, but its definition always references elements that determine the potential of sustainable organizations, often in human, social, relational, organizational, and innovation dimensions. Trust is increasingly becoming the key determinant of this capital (Kożuch, Lenart-Gansiniec, 2017). Trust also has a number of different definitions. However, the basis of many of these definitions is the building of relationships focused on developing some kind of individual or inter-organizational link. Organizational trust is a complicated concept, and it is the basis of all organized activities performed by people in the organization, largely because trust is needed to develop relationships with integrity and commitment. Thus, it is interesting to study the relationship between trust and the building of the intellectual capital of sustainable organizations. Indeed, intellectual capital plays a special role here. It is a guide and a platform for achieving not only a competitive advantage for the sustainable organization, but also a source of value creation in the short and long term. Thus, this strategic hybrid, composed of a business model, strategy, and business processes, is favorable to the development of intellectual capital (Jabłoński 2017). Trust is an element that ties this capital to relationships in business. Moreover, it has an integrated character (R.C. Mayer, J. H. Davis, F. D. Schoorman 1995). Assuming that, nowadays, the network paradigm is becoming increasingly important, it is worth asking how the mechanism of building trust-based intellectual capital in a sustainable organization functions as its key asset in the network environment.
https://books.google.co.in/books?id=ACyjDwAAQBAJ
Conflict: From Analysis to Intervention
Sandra I. Cheldelin, Daniel Druckman, Larissa Fast
A&C Black, 13-Aug-2003 - Political Science - 373 pages
This major new textbook analyses the emergent role of conflict analysis and resolution. Cheldelin, Druckman and Fast are all based at the Institute for Conflict Analysis and Resolution, and are international experts in the field of conflict. Covering theory, research and practice, the authors provide a comprehensive typology of conflict, as well as an in-depth analysis of the structural, strategic and cultural factors which influence conflict. They explore its management and resolution, paying particular attention to the concepts of negotiation, mediation and peace-building.
https://books.google.co.in/books?id=ChmkoVckP8wC
New Directions in Conflict Theory: Conflict Resolution and Conflict Transformation
Raimo Väyrynen
SAGE, 23-Aug-1991 - Conflict management - 240 pages
This is a timely work which explores the validity of rational and subjective approaches to conflict resolution, considers the value of international law and organizations for addressing complex social phenomena, and outlines a structural approach to international conflicts. In addition it extends the analysis of conflict transformation to new issues on the international agenda, such as antagonism between urban and rural areas and threat to the environment.
https://books.google.co.in/books?id=c2eek635-BYC
Updated 26 October 2019, 10 April 2015, 10.2.2012
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