To guarantee the adequate and even higher profits for all the members of the supply chain, it is necessary to reduce the possible negative consequences of the ineffective communication within the definite supply chain. Moreover, the reduction of the overall costs also depends on the effective changes in approaches to producing, delivering, and storing goods and products.
The problem is in the fact that if the parties of the supply chain are competitors, they are inclined to concentrate only on appropriating value from the chain (Shah 228). In this situation, the necessity to create the definite value for the chain is not discussed as the priority for the members of the supply chain because of not seeing the potential benefits for them.
As a result, the party which is stronger and has the greater potential for the development and success within the chain and market intends to use the possibilities of the weaker party in order to increase its own profits.
The absence of the balance within the supply chain can lead to the significant increase of the overall costs because of the absence of the effective communication between the parties. To improve the work of the supply chain, it is necessary to focus on the methods for developing the communication between the parties and on the ways to reduce overall costs. It is possible to state that these goals are correlated because they are oriented to the development of the supply chain’s economic potential, involving all the parties.
The supply chain can develop more effectively if there is the focus on the reliability and speed of interactions between the chain’s members. Moreover, it is important to create the sustainable environment for the parties of the supply chain in relation to the improvement of the information flow and communication between these parties (Wisner 26).
There are a lot of technologies which are developed to improve the information flow and exchange of the data. The usage of the certain software and programs to realize the exchange of the information is important to make the communication between the parties more effective and immediate (Wisner 27-29).
The next step is the focus on the direct connection with the consumer. When a lot of members of the supply chain have no direct connections with consumers there are few possibilities to meet all the parties’ needs and expectations fully. That is why, the needs of the customers should be discussed as important not only by retailers but also by the other members of the supply chain.
The reduction of the overall costs is possible when all the parties are interested in the results of the realized transactions. If the parties are competitors, it is necessary to insist on the reduction of the excess inventories which can lead to the reduction of the overall costs because of decreasing the extra usage of resources (Wisner 26). It is also important to prevent the exploitation of the weakest parties which can be downstream according to their position in the supply chain in order to satisfy the economic needs of the stronger members.
The complex supply chains cannot work effectively because of a lot of parties involved in the process. The focus on the direct cooperation can also lead to the reduction of the overall costs.
Works Cited
Shah, Janat. Supply Chain Management: Text and Cases. India: Pearson Education India, 2009. Print.
Wisner, Joel. Principles of Supply Chain Management: A Balanced Approach. USA: Cengage Learning, 2011. Print.