Introduction
It must be noted that strategic partnerships and alliances have become very important, particularly at a time where shippers as well as carriers increase their cooperation level. During the 2008 world economic downturn, many analysts predicted some gloomy future as far as the long-term supply chain relationship is concerned (Ernst & Young, 2012). The foundation of this prediction was based on that fact that all decisions would be made on the basis of lowest prices and underestimation of the increase of mutually beneficial collaboration that existed between the partners of supply chain partners. However, these forecasts never accounted to the experts of the supply chain, whereby they found innovative ways of improving optimization while at the same time trimming waste within the existing supply chain designs (Satellite Logistics Group White Paper, 2013). Many companies, therefore, survived the market turbulence simply because of their long term relationship with their vendors and clients. This review looks at the importance of strategic partnership and alliances, the reasons behind their formation as well as the associated benefits of such arrangements to shippers and carriers.
Reason for the Formation of Partnerships and Alliances
It has been noted that the increasing demand in the marketplace comes along with complexity in the supply chain. According to several researches that have been conducted, the supply chain managers have been under intense pressures to develop new processes that are capable of enhancing both customer satisfaction and optimization (Ernst & Young, 2012). This has been attributed to the increasingly competitive supply chain. On the other hand, developing new processes have proved quite risky and expensive at the same time. Therefore, the only way to mitigate such risks for purposes of providing benefits to both partners as well as cost reduction is the formation of long-term partnerships and alliances (Satellite Logistics Group White Paper, 2013).
Lastly, there are a number of benefits resulting for shippers and carriers who enter into such arrangement. Collaboration has been found to work well, particularly with problems that need structure, imagination as well as voluntary sharing of ideas and knowledge. With this in place, organizations easily adapt to the changes around their world. Moreover, collaboration allows shippers and carriers to free up some of their resources in order to meet their production schedules (Ernst & Young, 2012). In doing so, one of the partners is normally forced to create solutions that combine the use of their counterparts, local transportation fleet with the others supply chain network.
References
Ernst & Young (2012), Driving Improved Supply Chain Results –Adapting to a Changing Marketplace. www.EY.com
Satellite Logistics Group White Paper, Available from: Leveraging Long-Term Strategic
Partnerships http://www.slg.com/wordpress/wp-content/documents/2013-Leveraging-Long-TermRelationships-Sierra-Nevada.pdf, Retrieved on March 1, 2014
