Managing goals in supply chain networks

Issues relevant to the management of aims in supply chains:

  • Problems of cooperation often arise from conflicts of interest.
  • Problems with coordination arise from lack of knowledge about the behaviour of others, or unawareness of interdependencies.
  • A focal company needs to set the network strategy and coordinate it’s implementation so that all parties act in the best interests of the network, taking into account the objectives of all parties, and the need for them to reach agreement on a collective strategy.

Ways of distinguishing between goals:

  • Compatible goals are goals that can aid the achievement of other goals. Without compatible goals at firm-level, achievement of network-level goals is probably impossible.
  • Conflicting goals are ones that can hinder the achievement of other goals. Conflicting goals at firm level can result in conflict with network-level goals.
  • Indifferent goals are those that have no impact on each other because there is no overlap between individual-level and network-level goals. Although there is no direct impact, these goals can however have an influence on the effectiveness of the network.

The role of goals at both firm and network levels:

  • There is a need to be sensitive to firm-level goals that affect individual parties in the chain, as well as network-level goals that affect all parties.
  • The focal firm is usually central to implementing collective strategies and setting network-level goals.
  • The focal firm has to ensure all members pursue network-level goals.

How the focal firm must manage goals at both levels:

  • Deal with the problems of cooperation and coordination.
  • Ensure the interests of the participating members are properly aligned.
  • Motivate participating members to work together.
  • Gain and transfer knowledge about the behaviour of the participating members.
  • Seek goal consensus among participants with regard to network-level goals.
  • Strive for goal commonality to minimise the risk of inter-firm rivalry.
  • Attempt to maintain goal compatibility with the social and organisational characteristics of the individual members.
  • Be prepared to use a power process to force compliance with network-level goals where goal compatibility is absent.

(Source: Gagalyuk and Hanf, cited in B325, Organizational Collaboration).

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