Everyone knows the importance of a good relationship. In a Lean supply chain, business relationships have a value all their own. These relationships have a direct impact on company efficiency that is greater than when focus is directed on competitiveness or an individual firm’s efficiency.
The underlying interaction that occurs among manufacturers and suppliers is a process that helps form long-term relationships that go beyond single and independent business transactions. Such long-term relationships take on a natural organizational form and are much more efficient than single or sporadic relationships with external parties, which are considered an inefficient way to manage business transactions. Business relationships are a pattern of interactions and the mutual conditioning of behaviors that take place over time, which makes them a great fit for the Lean supply chain model.
To understand how to use long-term relationships to the advantage of a supply chain, it is essential to understand the elements that make up the relationships and how these elements affect the development of relations. Also known as the ARA model, these three elements include:
1. Actors. In a Lean supply chain, there are multiple actors. There is the buyer and there could be one or more suppliers. The buyer decides how to interact with suppliers based on his perception of previous interactions, market conditions, and perceived value of the relationship.
2. Resources. Manufacturers do not have all the resources the need for conducting their processes. Therefore, these firms must interact to access the resources they need, for example, packaging products like tins produced by Desjardin that are used for packaging cosmetics and food. In building inter-company relationships, firms acquire, access, provide, and develop the needed resources. This then ties the two entities together. The consequence of such relationships is that they can have implications for the individual actors as a dependence could be formed when resources are limited.
3. Activities. Activity links occur when what happens in one company is related to activities for others in the supply chain. This makes the various activities that occur in the different firms dependent on the activity structures of other. For example, cosmetic or food producers need to package their products and must have packaging supplies at a specific point of the manufacturing process. Therefore, at a certain point, the order for packaging goods will be triggered by an activity within the supply chain. The number of activities can also expand and form new combinations when activities are outsourced to other firms. Such combinations may provide economic advances and may change or increase activity interdependencies. Overtime, activity patterns evolve through interactions, this making it crucial to evaluate new activity combinations according to patterns and determine when optimization is needed.
As a provider of metal packaging for cosmetics and food products, Desjardin enters the Lean supply model as part of the JIT process of the supply chain. Desjardin does not package products, but instead, supplies manufacturers with adapted tins (made from tinplate or aluminum) that are custom printed according to each manufacturers’ specifications. These specifications may include using the same type and sized tin but using varied printing for example for products sold in different regions or different content.
When included in a manufacturer’s lean supply chain, Desjardin responds to manufacturing’s need for packaging according to demand pull. This helps prevent manufacturers from experiencing bottlenecks while having to wait for packaging for products that are ready to be sent out and distributed in a timely manner.