One of the greatest benefits from long-term supply chain collaboration (and one that consistently delights operationally oriented managers) are the cost savings that result from routinized procedures over the life of the relationship. When buyers and suppliers begin a relationship, there interactions often are fraught with inefficiencies and expensive organizational idiosyncrasies, adding to the cost of doing business in year one. In year two, however, procedures typically become more streamlined, kinks in IT are worked through, and interpersonal relationships between organizations become more efficient.
The longer the relationship, the more indirect costs—operational and otherwise— are reduced. These cost savings are shared by both buyers and sellers, increasing the benefits to both. They can also be passed on to customers in the form of lower prices, thereby increasing the supply chain’s position in the competitive landscape.
One of the greatest benefits from long-term supply chain collaboration (and one that consistently delights operationally oriented managers) are the cost savings that result from routinized procedures over the life of the relationship. When buyers and suppliers begin a relationship, there interactions often are fraught with inefficiencies and expensive organizational idiosyncrasies, adding to the cost of doing business in year one. In year two, however, procedures typically become more streamlined, kinks in IT are worked through, and interpersonal relationships between organizations become more efficient.The longer the relationship, the more indirect costs—operational and otherwise— are reduced. These cost savings are shared by both buyers and sellers, increasing the benefits to both. They can also be passed on to customers in the form of lower prices, thereby increasing the supply chain’s position in the competitive landscape.
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