Strategic alliances in Supply Chain Integration - strategic alliances are cutting edge


In order to maintain the competitive edge in the market, alliances outside one's organizations are order of the day.
Such an alliance is made with another organization who may be tactically favorable to the other organization.

In fact, this has to have a win-win kind of an arrangement for both the partners in terms of the advantage one is getting with the other one.
Both the partners should feel that their partnership is not only working fine rather had they been working with any other partner

the alliance would not have been so mutually rewarding. This is the basis of a strategic alliance or partnership.

The supplier believes that it has a long term business with the organization with assured orders and returns on the one hand and the organization feels that it is assured of a long term supply from a trusted source that would ensure an unhindered operation within the organization. Supplier partnering or strategic alliances are thus a continued relationship between firms involving a commitment over a considerably long period of time on repeat basis by a mutual sharing of information and the risks and the reward owing to the relationship.

Cooperation--Strategic alliances--Vertical Integration

Characteristics of a healthy alliance :

* Partners working together at all levels vertically

* Mutual concern for alliance partners at the top management
* Openness and mutual trust and cooperation
* Shared business goals and vision
* Fairly long term commitment
* Joint efforts in development of product
* Growing business volume for each
* Sharing of information for mutual benefit
* Flexibility in resolving day to day problems


There are certain key factors , general in nature and mostly described  above that contribute to a healthy alliance such as cost savings, growing business, compatibility of culture etc.

One of the recent emergence of a powerful factor for alliance has been the technology that has made world wide communication a routine affair. Distance is now not a barrier but at times a sound strategic factor. 

The key factors can thus be summarized also as :

  • Drivers : These are the genuine business  reasons for forming the partnership , such as cost reduction, better after sales service

  • Facilitators : These are the necessary support system , usually the top management of the partners, shared goals, compatibility of operations etc.

  • Components : These are the joint activities and operations that are normally used to build and maintain the relationship. Communication channel , joint planning etc are such examples

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