Supply Chain Engagement Through Relationship Management?

Abstract

Many studies carried out in relation to construction procurement methods have revealed evidence that there needs to be a change of culture and attitude in the construction industry, moving away from traditional adversarial relationships to cooperative and collaborative relationships. At the same time there is also increasing concern and discussion on alternative procurement methods, involving a movement away from traditional procurement systems. Relational contracting approaches, such as relationship management, are business strategies whereby client, commercial participants' and stakeholders' objectives are aligned. This paper reviews a range of relationship management project case studies undertaken between public and private organisations in Queensland, Australia and reports on the critical factors identified that influence the success of relationship management projects. The research takes place within the context of the supply chain and reflects attempts by a government agency to engage the supply chain through relationship management approaches. The advantages accruing from engagement include community benefit, added value and innovation. Relationship management is a system that provides a collaborative environment and a framework for all participants to adapt their behaviour to project objectives and allows for engagement of those subcontractors and suppliers 'down the supply chain'. It is about open communication, sharing resources and experiences, exposing the 'hidden' risks in the project for the benefit of all participants. The case studies suggest that leadership has a strong influence on the relationship management climate which needs to be facilitated and nurtured. Commitment and action by the senior management (and, so, parent organisations) can have a strong impact on the team and relationship management culture, indicating relationship management has a high chance of failure when there is inadequate support from top management. Like all relational contracting approaches, trust between relationship management partners is important. The authors conclude that without a positive approach to relationship management a sustainable industry and continuous improvement are not possible. So, the authors postulate that a 'sustainable supply chain' is essentially tautological without the existence of a clear relational vision that leads to both soft and hard infrastructure to assist and inform decision making and encourage relationship building. An example of this is discussed at the end of the paper