GEMI-Forging New Links

 Forging New Links

Enhancing Supply Chain Management
Through Environmental Excellence

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Engaging a cross-functional team
Achieving organizational alignment
Establishing supply chain partnerships
Collaborating with customers and suppliers
Collaborating with stakeholder organizations



Only in a few cases will a genuine partnership be justifiable.


Establishing Supply Chain Partnerships

Many companies believe that supply chain partnerships are essential for their continued success. However, to establish and maintain genuine partnerships requires a considerable investment of time and resources. It is important for companies to identify those key relationships for which partnering would create exceptional advantages, and to manage their other supplier and customer relationships with appropriate expectations. An in-depth study of supply chain relationships by The Global Supply Chain Forum arrived at the following definition of a true partnership:

"A partnership is a tailored business relationship based on mutual trust, openness, shared risk, and shared rewards that yields a competitive advantage, resulting in business performance greater than would be achieved by the firms working together in the absence of partnership."
This study classified supply chain partnerships into three main types, listed below, reflecting an increasing level of commitment. Only in a few cases will a Type 3 partnership be justifiable.
  • Type 1: Agreement to coordinate selected supply chain activities, with limits on time and scope.
  • Type 2: Agreement to integrate a broader range of selected activities over a longer time frame.
  • Type 3: Commitment to a significant level of operational integration, with no anticipated end date.

The study produced a partnership model, illustrated below, which provides a basis for making decisions about partnering with suppliers or customers on EHS value creation opportunities.


 A decision to partner will be influenced by driving factors that indicate mutual benefits, as well as facilitating factors that increase the likelihood of a successful relationship (e.g., cultural compatibility, managerial approaches, mutuality, and symmetry.) For example, the partnership between Coca-Cola and McDonald’s is enhanced by the fact that both companies are the leaders in their industry. Coca-Cola is McDonald’s largest supplier, and McDonald’s is Coca-Cola’s largest customer. Other potential facilitators include exclusivity, shared competitors, close proximity, prior history, and shared end users.

While EHS issues are seldom the primary motivation for partnerships, there are cases in which a partnering decision can be reinforced by important EHS-related factors, such as:

  • Opportunities to increase overall supply chain efficiency through process streamlining, e.g., shared assets, redesigned packaging, reduced transportation, inventory reduction, and waste reduction.
  • Opportunities to reduce joint risks and liabilities through closer communication regarding compliance and risk management strategies, as well as sharing of technical expertise.
  • Outsourcing opportunities that leverage the capabilities of one or both partners, e.g., total chemical management services provided by a chemical supplier.
  • Marketing and/or public relations advantages based on a shared commitment to environmental and social responsibility.

Once a partnership is initiated, the parties must establish and manage a number of components that make the relationship operational. These include joint planning processes, joint operating controls, communication links, and risk/reward sharing mechanisms. Partnerships are strengthened by trust and commitment, streamlined contract style, broad scope of activities, and shared financial investment. It is important that the partners’ mutual expectations be expressed in terms of performance indicators, so that the outcomes of the partnership can be monitored and the components can be adjusted as needed. Also, each partner must allocate sufficient resources to adequately support the relationship. Since EHS resources are typically limited, the required staff commitments must be explicitly planned and supported.

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