2 Cooperation

• Materials and services bought from outside to support operations

  → Related to logistics because goods and services must be delivered in the required quantities, precise time, …

Buying goods and services

• Relational exchange approach involving limited number of suppliers

• Emphasizes the issue of coordination and control of flow of goods between company and its suppliers according to demand

Cooperation between company and its vendors of logistics services

• Scope of services provided

• Expected period of cooperation with vendor

• Number of vendors of the same type of service

• Expected influence of vendor on strategy of principal

• Commitment of vendor in development of principal’s core activity

• Joint investment (risk sharing) with vendors

• Provider of single type of logistics tasks or simple related tasks (transport & storage)

• Developed as an alternative to independent performed logistics task (First party logistics)

• Offer comprehensive logistics services

• Covers supply, distribution, and flow of good in production

• Tasks are defined in the contract with the client

• Evolves from 3PL

• Includes a wider range of logistics services beyond transport and storage

• Cooperate with specialized service providers

• Can manage the logistics activity of several / all partners cooperating in the supply chain

• Combines 3PL and 4PL functions

• Manages logistics throughout the entire supply chain with focus on the network cooperation

• Makes strategic decisions to enhance flexibility

• Relies on advanced IT tools for comprehensive monitoring

  → Detect chain reducing or eliminate bottlenecks

• Individual transactions

• Individual, simple serviced rendered (transport of well-known goods, standardized vehicles, loading with usual loading forklifts)

• Greater need to integrate activities of principal and supplier

• Partnership based on equal status and mutual benefits

• Stability of activities (handling orders with delivery to customer)

• Boundaries of each partner are difficult to identify / describe

• Working together

• Commitment of employees of both parties

• Ability to work in teams required

• Involvement of all enterprises in the preparation of the offer for the final customer

• Agreed risk-benefit strategy

• Increased one-party risk associated with increased benefits for that party

• Sharing of information, ensuring transparency, and understanding of actions taken

• Joint planning, forecasting, and replenishment (CPFR)

• Synchronized material movement

• Regarding quality of delivered goods, skills to handle deliveries, and delivery times

• Financial security

• Maintenance of performance quality

• Own risk management and care to reduce partners risk

• Applies to activities and effects on all links of the supply chain

  → Exchange of information

• Ensures fast flow of information concerning new risk factors

• Adapt processes to common standards

• Adaptation of partners to work according to “Just-in-Time” concept, “Total quality management” approach or as joint risk management

= Time of moving goods from first suppliers to the final customer

• Closely related to the reduction of inventory storage times, waiting for production, movement of material / semi-finished products between production stages

• Velocity is dependent on the level of integration of the partners activities

• When buyer purchases specific services and closely monitors the vendor, trust is less critical

  → Detailed control reduces the need for a high level of trust.

• If vendor offers complex logistics services and the partnership is long-term, trust becomes more important

  → Trust is based on goodwill and vendor's competencies, as detailed control is limited In supply chain the need to trust partners is most important

• Depends on attitude of parties

• Value of company’s relationships with its customers and suppliers (relational capital)

• Belief, that relationship with other company is important and needs maximum effort to maintain and ensure its continuity (relational commitment)

• Attitude of employees concerns trust in goodwill and competence of partner (reliance on partner)

• Reliance on partner reduces risk of cooperation

Susceptibility to disruption that could lead to a loss

→ Variety of forms as it related to the management of logistics activities

• Model to identify sources of uncertainty that can affect the risk exposure for logistics activities

• Identifies several types of sources of uncertainty (shipper, customer, carrier, control systems, external environment

• Can help to structure and consider potential risk that could influence the logistics system

• Perceived negatively (approach is different to description of risk)

• Multidimensional

• Different types of risk have different components

• Significances of risk is subjective

• Considers account logistics cooperation it relates to non-performance or unsatisfactory performance of partners

• Negative scenarios occurring in logistics activity and relationships with partners

• Risk factors, affecting the occurrence of identified scenarios

• Sources of risk factors

• Consequences of scenarios (importance of consequences for further operations)

• Identification of action for reducing the risk of different scenarios