Systems thinking relationship management and supply chains

systems thinking relationship management and supply chains

SYSTEMS THINKING, RELATIONSHIP MANAGEMENT AND SUPPLY CHAINS Ximing Sun and Ray Collins School of Integrative Systems, University of. Scenario Planning in Supply Chain Risk Management- Aman Deep, Samir Dani 30 7. Supply Chains Risks: a Systems Thinking Perspective- Abhijeet Ghadge, . what may trigger them and their relationship to the supply chain functioning. Applying systems thinking to supply chain integration in construction. Article (PDF many years in construction management. Due to the depends on the strength of the relationship between members of the supply chain, and. whether the.

Chinese firms had weaker relationships with their partners than did Australian firms. In examining whole chain relationships, those of the Chinese were again weaker than in Australian chains. Given that the two countries have totally different cultural, social and distribution systems, the research further examined whether the poor whole chain relationships in China were due to the country itself or the weak relationships of firms with their immediate business partners.

Findings indicated that poor whole chain relationships, to a large degree, were caused by the country itself, although the relationships of firms with their immediate business partners did have some influence.

In other words, good dyadic relationships may not translate into good whole chain relationships because they are mitigated by the business environment in which the chain is operating. In other words, the greater the number of firms in the chain involved in cooperation and integration, the higher the impact of the external environment on chain performance, because of its mitigating impact on relationship management between firms.

Using relationship management to coordinate internal operations or operations between adjacent firms is much easier than coordinating a chain or chain network that involves many firms operating under different business conditions. The impact of relationship management and external environment on SC performance at different levels When managing chain relationships at the higher levels of integration, uncertainty and risk can increase significantly because relationship management involves more than a firm s immediate partners and because of the impact of the external environment.

External factors are less easily controlled by individual firms so chain stability at the high levels of integration could be affected negatively as shown in Fig 4. We argue that systems thinking is needed in firms relationship management at higher levels of chain integration. Cross- border supply chains face even more complex settings, where relationship management on its own may not achieve the desired levels of chain performance.

Seeing the chain as a system in a particular setting is the precursor for managing successfully in such an environment.

systems thinking relationship management and supply chains

There is evidence that social, cultural, political and economic systems can impact on relationship management in the supply chain. In research on cross-border trade with developing countries, Roekel et al. Other studies have shown that regional culture can negatively affect supply chain practices and performance Money et al. In the case of China, research has shown that its massive size, inefficient information systems, poor logistics and unreliable distribution systems make it difficult to implement supply chain management principles Longo, ; Bin, ; Li and Fung, A lack of coherent business laws and the presence of strong government control over limited resources have also been reported as affecting relationship management within supply chains Nee, ; Xin and Pearce, Arias even argued that the concept of business relationships in China can be quite different to western countries.

While many studies have focused on the relationships themselves, little attention has been paid to the interactions between these relationships and the external environment of the system within which they operate. When performance is measured on the basis of individual firms rather than by whole chain performance or end user satisfaction, it is very difficult for firms to adopt a systems perspective.

Hald pointed out several reasons for the difficulty of adoption of system thinking in a firm, its employees, planners and boundary spanning mangers: Managers are most often interested in reducing complexity, and focusing internally will reduce complexity considerably; boundary spanning managers have less incentive to adopt a wider SCM view in their performance management thinking if their performance is measured by internal activities that reduce purchasing spend and production cost, or volume of sales.

During the past decade, competitive forces are putting firms under pressure to adopt supply chain management strategies to improve quality, delivery performance, and 7 8 responsiveness while simultaneously reducing costs Kannan and Tan, Competition between firms in a chain has given away to the competition between chains.

The quip that the best supply chain wins is a biting reality for companies that do not adapt Shub and Stonebraker, Firms seeking to integrate at the whole chain level need to understand the complexity of the system and the uncertainties arising from its external environment.

Cross-border integration multiplies this complexity considerably. It is particularly true for managing global chain. Several principles in system thinking Maani and Cavana, can be used to help firms understand how to manage their relationships with their business partners under such complex and uncertain conditions: The structure of a system determines its behaviour and performance There is more to reality that what can be seen.

There are often multiple possibilities Our assumptions, values, beliefs and worldviews confound understanding of problems and create unintended consequences of our decisions Systems thinking could reduce ambiguity and bring hidden assumptions to the surface. It could also help to avoid miscommunication in complex and dynamic circumstances. For firms seeking to enhance their competitiveness through improving whole of chain performance by relationship management with their suppliers, customers, and other chain members, systems thinking could transform the known benefits of relationship management at low levels of supply chain integration to benefits at the higher levels.

Relationship strength at one level of the chain may not be reflected at the next level due to the external environment in which the chain is operating. The impact of external factors could dominate chain performance at the whole chain or network level. In these circumstances, relationship management may be a less effective way of improving chain performance.

systems thinking relationship management and supply chains

Given the complexity and interdependent nature of supply chains at higher levels of integration, systems thinking could offer managers a perspective capable of encompassing relationships and the external environment. This study reports one case study and it leaves many unanswered questions. More research across a range of settings is needed to establish the dynamics of within chain relationships and the influence of the external environment. The use of pledges to build and sustain commitment in distribution channels, Journal of Marketing Research, 29, Feb, pp Anderson, J.

systems thinking relationship management and supply chains

A model of distributor firm and manufacturing firm working relationships, Journal of Marketing, 54, Jan, pp B. Seller-buyer interactions during the commercialisation of technological process innovations, Journal of Production Innovation Management, 13 5: How international firms are coping with supply chain issues in China, Supply Chain Management, An international Journal, 7 4: Exploring the performance effects of key supplier collaboration: An examination of the nature of trust in buyer-seller relationships, Journal of Marketing, 61 April: Partnering pitfalls and success factors, International Journal of Purchasing and Materials Management, 31 2: WIndustrial Dynamics.

Dealer dependence levels and reciprocal actions in a channel of distribution in a developing country, Journal of Marketing, 53 January: Determinants of long-term orientation in buyer-seller relationships, Journal of Marketing, 58 April: The structure of commitment in exchange, Journal of Marketing, 59 January: Developing the concept of supply strategy, International Journal of Operations and Production Management, 19 7: R and Tan, K.

systems thinking relationship management and supply chains

Squaring lean supply with supply chain management, International Journal of Operations and Production Management 16 2: Applying system dynamics approach to the supply chain management problem, Thesis S. Massachusetts Institute of Technology. Li and Fung Explorations of national culture and word-of-mouth referral behaviour in the purchase of industrial services in the United States and Japan, Journal of Marketing, The Commitment-Trust theory of relationship marketing, Journal of Marketing, Relationship marketing in practice: Myths and reality, Industrial Marketing Management.

Organizational dynamics of marketing transition: How much cream is there?

Following the logic of Garrison Keillor's Lake Wobegon "where all the women are strong, all the men are good-looking, and all the children are above average," most supply chain managers would like to think that they employ systems thinking. The real truth is that the majority of them don't. I have seen far more examples of a lack of systems thinking in supply chain over 28 years in this business than I have good practice of it. While I do believe that there is a small core of real systems thinkers in supply chain management, I also believe there are far more managers who would like to believe they approach their supply chains using systems thinking to solve problems, but only partially think at a true systems level.


It's just been my experience. Systems Thinking and Causal Diagrams Anybody out there remember the last time they drew a causal diagram? Let's get more selective.

Has anybody used a causal diagram in the past month? How many today even really know what a causal diagram is? We live in a complex environment, surrounded by complex systems of people, things and actions.

Most supply chain activities, even when they look simple on the surface, can be very complex under the covers. Our ability to visualize the components of a system, the interaction between the components, and understand the outside influences on the system directly affects our ability to understand the complexity of that system.

Visualization is key to cognitive ability - and is often critical to be able to understand what is really going on. Something I learned a long time ago was that it is hard to think about something that is complex without drawing a picture of it. Most of us use white boards, flip charts, chalkboards, paper, and bar napkins often the best!

So, let me ask a different question: How many of you in the past day used some sort of drawing to help you think? I bet a decent percentage of you say yes, and that's a start.

But was it a causal diagram? As supply chain managers, we like to talk about getting to the root cause of a problem, not treating the symptom, but fixing the cause first because that fixes the problem for good. In fact, many of us are proud about our desire to get to the root cause. However, if you look at the way problems get solved in the supply chain, we often in fact never really get to the root cause.

There are many reasons for this lack of success, and one is we don't draw enough causal diagrams of the systems we work in. What on earth am I talking about?

systems thinking relationship management and supply chains

The best way to illustrate is to illustrate. It is a systems model that focuses on the new product development, illustrating the complexity of a single supply chain.

As complex as it looks, this is really a basic, simple model. There are only ten nodes of influence, and only five cycles.