Dependence and trust between suppliers and industrial customers

Suppliers have experienced unexpected consequences for their businesses due to changing situations for their important customers. Such events may also occur at short notice, at least when it comes to necessary and radical decisions. Often suppliers are not aware of the full extent of these events until it is too late for them to take countermeasures, i.e. develop appropriate strategies. With increasing turbulence in the marketplace, it is clear that firms need to be aware of relationship-oriented marketing strategies. To cope with change the supplier and its customer will need strategies based on jointly understood action. Action, both strategic and operational, is based on each party’s meanings concerning why they do business with one another (enactment). Dependence and trust between the parties are issues in their construction of meaning and will therefore underlie their enactment. The purpose of this paper is to investigate dependence and trust between suppliers and industrial customers, implications for action of dependence and trust, and, finally, draw conclusions about dependence and trust for business strategy. Dependence. A firm can be dependent on a specific other firm due to investments in specific assets geared to that firm. A literature survey identifies five types of specific assets: Personal relations, competence, integration of governance systems, dedicated volume of goods/services, and product/process specialization. Another reason for dependence is the structure of the market, which may lack alternative providers of similar products. Then it becomes difficult or impossible due to large switching costs to substitute one firm with another for the provision of good/services. Trust. A literature survey concerning trust leads to the conclusion that important aspects of trust probably vary between different environments and settings where trust is an issue. Since trust between suppliers and industrial customers is the issue in this study, the notion and implications of trust among strategic decision-makers in that empirical setting would be important. By using the trust literature together with an empirical investigation three types of trust for the study are discerned: Relationship-based, competence-based and moral based trust. Dependence and trust. There is a temporal interplay between trust and dependence. Trust is expectation concerning the future. Dependence differs from trust by being formed in the present time and may therefore become a means to avoid the problems in assessing the future. But when you choose to trust someone, as a consequence you become dependent. Interrelationship between dependence and trust is thus complex and intertwined. It varies with task, situation and persons involved. The order of events in time has an impact. Earlier actions by actors influence later ones. Trust develops stepwise in repeated encounters between the parties. The parties’ actions towards each other and the evolvement of action processes seem to be the key to understanding suppliers’ and customers’ dependence and trust. This interplay is in the paper illustrated with dependence and trust development in two dyads of supplier – industrial customer. In the cases we could discern that meaning construction with dependence and trust, interrelated with action, can lead to improved or deteriorated business relations between the parties. As in the cases patterns of virtuous circles or vicious circles may emerge. Expectations concerning the other party, i.e. trust, could thus change substantially, leading to different types of action than before. Conclusions concerning business strategy. Dependence and trust have different impacts on a firm’s strategy and consequently on strategic change. Dependence indicates preconditions for action and what action is precluded due to the characteristics of business between the parties in terms of specific assets and substitutability. In all, dependence sets limits for strategy, wide or narrow. Trust, on the other hand, can be a driving force shaping strategy, opening up possibilities in markets and products as well as governance systems linking parties. But lack of trust and deteriorating trust may also preclude business that could otherwise have been done. There needs to be trust backing up any viable strategy and strategic change. Furthermore, it is vital that the parties concerned convey in their communication what they consider to be meanings in their business. If they have dissimilar views on dependence, action may become disjointed and not understood by the other party. Likewise, openness concerning trust in one another is needed in order to display mutuality in trust or build mutual trust. On industry level trust in supplier relationships at firm level can be promoted by providing information exchange and arenas for that purpose to support potential business partners to embark upon trust development. Society, in its policy-making, can promote trust on firm level by clear-cut rules of the game, which – among other things – will reduce the risks that parties in an exchange will go to disjointed action due to different interpretations of what society requires from firms in business.supply chain; strategy; business relationship

After outsourcing – the outsourced unit: Dependence, capabilities and strategy

Outsourcing is in this study defined as the transfer of responsibility and activities, including relevant assets and resources, from a user to a legally separate party, that becomes a vendor to the user. An outsourcer transfers activities to an outsourced unit. The situation of the outsourced unit becomes problematic in its provision of goods or services to both the outsourcer and other buyers. Specifically, the outsourced unit after outsourcing has ample and tight bonds to the outsourcer and there is a need to strike a balance between dependence and independence towards the outsourcer. The investigated problem reported in this article is: How can the outsourced unit strategically handle its situation after the outsourcing? Issues at stake for the outsourced unit are: How to hand le dependence on the outsourcer. How to use and develop competitive advantages, capabilities and resources. How to develop and implement business strategy. Dependence can reside in asset specificity: Relationships with the outsourcer and business partners, need for the exchange partner’s competence, joint governance systems, the relative volume of goods/services provided and/or specialization of goods/services towards the exchange partner. The structure of the market may make it more or less possible to substitute one exchange partner for another. For sustainable competitive advantage, the possession of or access to strategic capabilities and resources is needed, which the outsourced unit accumulates and deploys. The firm must meet the demand with a supply based on its capabilities and resources. The outsourced unit obviously starts with resources collected and capabilities developed by the out sourcer. It is its management’s task to identify and muster the resources and strategic capabilities of the firm. Inherited capabilities and resources may thus need to be developed into capabilities that are important for the outsourcer’s new role and position. In two in-depth cases outsourced units are studied with focus on dependence on the outsourcer, the units’ guiding competitive advantages, their capabilities and resources. Two distinct strategies are identified. A strategy of conjunction with the outsourcer is to make use of competitive advantages, align capabilities and resources towards the outsourcer’s needs and to build on dependence by holding specific assets of interest for the outsourcer. A strategy of disjunction implies reducing dependence on the outsourcer by seeking new alliances and markets outside the outsourcer-outsourced relation. Disharmony with either of the strategies is discussed as a reason for strategic change.Outsourcing; business relations; strategy

Benchmarking business practices in Swedish manufacturing firms

Regional benchmarking studies were conducted on business practices in manufacturing plants in three regions in Sweden. The studies were designed to determine their use of best practices and thus enable firms to identify areas in which they need to make improvements. The questionnaire contained around 200 questions to which 452 firms responded. In analysing the results, questions and responses were grouped into six categories. Two indices were developed. The studies classified firms scoring high as leaders, and firms scoring low as laggers. The studies showed inter alia that the gap in performance between leaders and laggers is particularly wide in Information & benchmarking and Innovation & technology. Conclusions are that improving benchmarking processes is a strategic step towards improving the firm’s business practices.Benchmarking; business relations; strategy

Impact on health when sugar is replaced with intense sweeteners in soft drinks, ‘saft’ and nectar. Opinion of Vitenskapskomiteen for mattrygghet Norwegian Scientific Commitee for Food Safety

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Risk assessment on the use of triclosan in cosmetics. Prepared by the Scientific Committee in cooperation with the Panel on Biological Hazards and the Panel on Food Additives, Flavourings, Processing Aids, Materials in contact with Food and Cosmetics

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Risikovurdering av ”energidrikker” med koffein, taurin, glukuronolakton, inositol og vitaminer.

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The Risk Thermometer - A tool for risk comparison

<p>In this project, the first version of the Risk Thermometer for comparison of chemical risks associated with chronic exposure via food (i.e., not acute effects) has been developed. This tool can for example be used to assess and compare exposures to environmental contaminants, pesticides, food additives, chemicals used in food contact materials, as well as minerals/nutrients. A public consultation on the draft report on the Risk Thermometer was held between 2014-12-17 and 2015-02- 28. The public consultation helped to improve the final product.</p> <p>The Risk Thermometer consists of four parts: 1) a severity-adjusted margin of exposure (SAMOE) approach, which is an extension of the present approach for chemical risk characterization, 2) a model that describes the uncertainty in the SAMOE, 3) a risk classification approach that categorizes the SAMOE value in terms of health concern levels, and 4) a graphical illustration of the results. The present report focuses on the underlying parts (1, 2, and 3) of the Risk Thermometer, and while examples of illustrations are included the graphical front end of the tool (part 4) will be further developed.</p> <p>By choice the Risk Thermometer is based on both scientific considerations (risk assessment) and value-based considerations (risk management). The tool is regarded to bridge the three elements of risk analysis (risk assessment, risk management, and risk communication. It is, however, in line with the important principle of an operational separation between the three sectors. The Risk Thermometer provides the Swedish National Food Agency (NFA) with a new approach for priority-setting, and contributes for example to the further development of a risk-based food control. Importantly, results from the Risk Thermometer represent one basis for risk management. For example, they apply to the target population under investigation. Thus, aspects of total public health burden, taking population size into consideration is not explicitly included. Such factors need to be accounted for separately as part of further risk management. The Risk Thermometer also aims to communicate levels of risks to consumers, the media, and other stakeholders, and it is anticipated that it will clarify the results of quantitative risk assessments performed by the NFA. As noted above, the graphical illustration of the results (part 4 of the tool) that relates to risk communication will be further developed. In general, updates of the Risk Thermometer will be considered as experience of using this approach in the process of risk analysis increases.</p> <p>To satisfy the objectives of the Risk Thermometer a framework for comparative risk characterization has been developed that efficiently can be integrated in today’s risk assessment, risk management, and risk communication workflow at the NFA. Such a practical framework needs to be based on current risk assessment methodology, including data requirements as well the use of default values (e.g., adjustment factors, AFs), to a high extent. These considerations have been important for the selection and design of the SAMOE approach.</p> <p>The minimum data requirement for the SAMOE approach is 1) an estimate of the exposure to a chemical in the target population, and 2) a reference point (RP) like the benchmark dose (BMD). These are the main inputs currently used for quantitative risk characterization of chemicals where an RP, or similar, is compared to the exposure using the margin of exposure (MOE), or MOE related concept. Thus, for chemicals the risk is generally described by a MOE. The MOE indirectly relates to the probability of occurrence (or change in the response) of a health effect.However, the severity of the health effect is also an important element of the risk concept which is generally not accounted for by the MOE. This consideration is of particular relevance herein since the objective of the Risk Thermometer involves comparative risk characterization across chemicals and health effects in contrast to applications of the traditional MOE approach. The SAMOE approach addresses this issue by penalizing the traditional MOE value depending on the severity of the critical health effect used as basis for risk assessment. This is achieved by the systematic use of a severity factor (SF). The SF is determined from a developed health effect classification scheme. This scheme is a key element of the SAMOE approach, and differentiates the SAMOE approach from the traditional MOE, or MOE related concepts.</p> <p>A semi-quantitative model for describing the uncertainty in the SAMOE estimate has also been developed. This method involves determining the level and direction of uncertainties associated with each of the parameters of the SAMOE. Whenever possible data driven input are used in this model, and if data is not available semi-quantitative standards are used instead. The overall uncertainty in the SAMOE is in addition to the point estimate accounted for in the risk classification approach discussed below. Using a risk classification approach the SAMOE estimate is categorized in terms of health concern levels. The approach for risk classification currently consists of five Risk Classes. The main purpose of the risk classification, and the underlying SAMOE metric, is to describe chemical risks on a comparative scale. The NFA may further develop the risk classification approach regarding statements about the level of health concern that is associated with each Risk Class.</p> <p>In the interim, the Risk Thermometer is considered not to be fundamentally more protective/conservative than the traditional risk assessment approach. It is regarded that exposures (at population level) that are in the range of a traditional healthbased guidance value, or similar, would most likely classify in Risk Class 3 (lowto- moderate concern), which represents the midpoint of the risk classification scale. Exposures in Risk Class 3 may depending on the particular situation require application of risk management measures, including dietary advice or regulatory initiatives, and collection of more information to fill data gaps. From a risk perspective, the application of such measures is more likely to be relevant in the case of exposures categorizing in Risk Class 4 and 5, while it seems not likely to be needed in the case of exposures categorizing in Risk Class 1 and 2.</p> <p>There are challenges associated with the present as well as future approaches for comparing food related risks. However, the use of such methodology is regarded as an improvement. For example, it increases the transparency by which the severity of effect influences statements regarding health concerns associated with chemical exposures. In general, the area of chemical risk assessment is regarded to benefit from the introduction of approaches that forces the interpretation of exposures or risks in a greater context. Public interests concerning potential health risks associated with food consumption may benefit from such developments, as well as the health agencies that need to prioritize the use of their resources with respect to risk related questions.</p

Opinion of the Scientific Committee on "A Harmonised Approach for Risk Assessment of Compounds which are both Genotoxic and Carcinogenic". Comments from the Norwegian Scientific Committee for Food Safety

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Impact on health when sugar is replaced with intense sweeteners in soft drinks, ‘saft’ and nectar. Opinion of Vitenskapskomiteen for mattrygghet Norwegian Scientific Commitee for Food Safety

publishedVersio

Risk assessment on the use of triclosan in cosmetics. Prepared by the Scientific Committee in cooperation with the Panel on Biological Hazards and the Panel on Food Additives, Flavourings, Processing Aids, Materials in contact with Food and Cosmetics

publishedVersio