Home' Trinidad and Tobago Guardian : May 23rd 2013 Contents 1. Introduction
Businesses in T&T and the Caribbean are
performing at the sub-optimal level, which
has an impact on countries gross domestic
This article aims to highlight challenges fac-
ing the supply chain activities of firms which
contribute to their failure to attain optimal
performance and strategies considered to
improve business performance.
What is procurement?
Procurement is the process of obtaining
goods and services within a supply chain and
is often categorised into either direct procure-
ment or indirect procurement. (Chopra and
Meindl 2013). The procurement process
includes elements like purchase planning, price
negotiations, supply contract management
and inventory control.
What is relationship management?
Customer relationship management (CRM)
is defined as processes that take place between
an enterprise and its customers downstream
in the supply chain (Chopra & Meindl 2013).
The aim of CRM is to create customer demand
and aid placement and tracking of orders.
CRM processes include marketing, pricing,
sales, order management and call/service cen-
tre.Supplier relationship management (SRM)
is defined as processes focused on the inter-
action between the enterprise and suppliers
that are upstream in the supply chain (Chopra
and Meindl 2013).
SRM aims to organise and supervise supply
sources for goods and services. SRM processes
include design collaboration, supplier selection,
negotiations, buying and communication with
Why are these relationships critical for opti-
mal performance and organisation success?
All supply chain actions of a firm belong
to CRM, SRM or internal supply chain man-
agement (ISCM) which are macro processes.
For a firm to achieve optimal performance
and organisation success in relation to supply
chain management, it is critical that the rela-
tionship between these processes is well inte-
grated as they direct the "flow of information,
product and fund" necessary for generating,
receiving and fulfilling a customer request"
(Chopra & Meindl 2013).
CRM and SRM processes can impact a firm s
financial operations "as measured by economic
value added" (Lambert 2008). CRM can affect
total expenses, sales, investment in inventory
and fixed assets and cost of goods sold while
SRM can impact strategic sourcing, procure-
ment initiatives, costs and product innovation
(Lambert 2008). CRM and SRM provide the
crucial linkages throughout the firm s supply
Challenges to developing and managing
business relationships in T&T and the region
Culture: national, organisational and cor-
porate culture is a critical factor which affects
supply chain relationships. Cultures often dis-
played incorporate elements of arrogance,
bureaucracy and red tape, unreasonable
demands, inability to make decisions, poor
planning, incompatible beliefs, customs, ideas
and values and difficulty in achieving change.
Power and leadership issues: managers are
expected to be effective leaders, but often dif-
ferences in understanding of leadership occur
due to firms varying "philosophies and
approaches" (Lambert 2008).
This can result in changing policies impact-
ing suppliers, making decisions which are
unclear or complex, establishing onerous terms
and conditions and even corruption.
Trust and relationship management
Relationship management: some business
leaders, firms or different departments within
the same firm, do not focus on supplier and
customer relationships which can result in
lack of trust and biases.
Weak in competencies important for supply
chain management: competencies include
negotiation; contract preparation; contractor
resource management; inventory/supply man-
agement; logistics and transportation man-
agement; operations/logistics strategy devel-
opment; intellectual property management;
international business and multicultural skills;
contract administration and management;
management of working relationships with
suppliers; global sourcing and risk management
Poor communication and integration: this
often exists between different departments in
a business which handle the CRM, ISCM and
Lack of co-ordination: results in cost
increases and occurs because of clashing aims
at different stages of the supply chain or
delay/distortion of information between stages.
Obstacles to coordination range from incentive,
information-processing, operational, pricing
and behavioural (Chopra and Meindl 2013).
Poor state of customer service: in T&T poor
customer service management processes are
known to affect business performance.
Tension between unions and management:
is often the cause of business disruption in
T&T and has resulted in confrontations and
mistrust (Lambert 2008).
High inequality indices: the Caribbean region
faces some of the highest inequality indices
globally in addition to significant deficiencies
in technology, competitiveness, innovation
and infrastructure (ECLAC 2012). T&T, in par-
ticular, requires institutional strengthening
and a boost to innovation and productivity
Strategies recommended to address these
Enhance standard leadership skills: supply
chain professionals must have the ability to
promote "close interpersonal relationships"
which develop credibility for themselves and
the supply chain function throughout the
organisation (SCMR 2012). Leaders are expected
to build collaborative teams, manage people
and communicate with stakeholders.
Improve global business leadership skills:
to make a firm s supply chain global, profes-
sionals must have the ability to operate in the
international business arena which involves
adapting to different cultures; understanding
how global risk will affect business; fully com-
prehend global supply chain logistics in terms
of optimising import and export flows, sourc-
ing, and dealing with international labour
issues (Dittman 2013).
Develop negotiation and communication
skills: to allow persons to operate more pro-
fessionally in a dynamic environment (Dittman
2013). An increase in negotiation and com-
munication efforts has a strong influence on
the success or failure of the supply chain.
Advance integrated business planning skills:
to enable persons to deal with cross-functional
and cross-enterprise matters, which form a
large share of supply chain management. This
will also help supply chain professionals master
the skill of planning and designing "the end-
to-end supply chain" (Dittman 2013).
Provide the link between supply chain per-
formance and organisational success: leaders
in supply chain management must master
combining "expertise in material flow man-
agement with outstanding knowledge of infor-
mation and financial flow" (Dittman 2013).
Offer education and skill training in core
supply chain management competencies: pro-
fessionals must gain expertise in managing
supply chain functions like inventory man-
agement, warehousing, transportation, pro-
duction planning and customer and supplier
relationships (SCMR 2012).
Build co-ordinated skills
Alter the way supply chain is viewed: to
achieve top performance, professionals need
the ability to embrace the supply chain as a
"system" as well as understand the associations
and interdependencies across "procurement,
logistics, manufacturing, and marketing"
Enhance coordination skills: lack of coor-
dination impacts negatively on the performance
at each stage and results in a loss of trust
which ultimately hurts relationships at different
supply chain stages.
Improve customer service management
skills: to progress in the competitive business
environment, firms must implement a cus-
tomer service strategy and corrective measures
to address situations before customers are
negatively affected (Lambert 2008).
Enhance managerial skills to promote trust
and commitment: in order to facilitate part-
nerships, managers must have the ability to
establish a level of trust and commitment,
reduce conflict and create a balanced rela-
tionship (Lambert 2008).
Impart competencies for conflict resolution:
to improve a firm s CRM and SRM activities
through more effective partnership manage-
ment models and related implementation
In the past, the role of a supply chain man-
ager was primarily functional and depended
on technical expertise in areas such as shipping
routes, freight rates, fuel costs, inventory man-
agement and warehousing (SCMR 2012). Today,
however, the expectations of a supply chain
professional have changed radically, well beyond
a functional role.
The supply chain process now stretches
end-to-end, inside and outside of the business
to include customer and supplier relationship
management. Professionals in this field are
now expected to fulfil not only functional
competency role, but also process expertise
role (SCMR 2012).
The demand for supply chain professionals
with these added competencies are increasing
and will continue to rise as businesses strive
for optimal performance.
In T&T and the wider region, businesses
have been performing sub-optimally due to
a number of challenges which impact supply
The best way to address these challenges
involve imparting the necessary knowledge
and skills through education and workshops
to supply chain professionals in order to enable
this shift in role from functional to process
focused and create leaders in the field.
Dr Zaffar Khan, programme director, MBA
sustainable energy management and MBA
international trade logistics and procurement;
and Kathryn Siriram, researcher, Lok Jack
BG22 | COMMENTARY
BUSINESS GUARDIAN www.guardian.co.tt MAY 2013 • WEEK FOUR
Arthur Lok Jack Graduate
School of Business
in international trade
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