Emerging Concepts of Lean Supply Management- Study Purpose

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    Emerging concepts of Lean Supply Management

    Write two study reports to further explore the two of the following three SCM areas: Explore theemerging concepts of Lean Supply Management based on what can be referenced in concurrentliteratures; discuss the critical imperatives of efficiency and effectiveness that the lean approachcan bring about. Propose a general approach with adequate level of details for an organization to

    and sustain lean supply management. initiate, developElucidate the critical importance of supplier relationship management for the supply chaincompetitiveness; by finding and referencing to a number of professional literatures criticallyreview some relationship management frameworks, models and approaches; discuss how abusiness might decide on the most appropriate relationship portfolio and management approach.Explore the definition and concept of supply chain performance and explain how that is relatedor contributing to business excellence; explore what constituent components of supply chainperformance measures and further distinguish it from business performance measures; discusshow those measures may be used constructively to transform the business strategy and improveoperations and customer services.

    SECTION 1

    INTRODUCTIONThis paper looks at lean supply management and a brief discussion on how it came about, itseffectiveness and efficiency, and a general approach to its initiation, development and sustenancein an organization.LEAN: MEANING

    According to Plenert, (2007), Mainstream management consulting firm defined lean as asystematic approach that focuses the entire enterprise on continuously improving quality, cost

    delivery and safety by seeking to eliminate waste, create flow and increase the velocity of thesystems ability to meet customers demand. Abbott et al., (2004) also defined lean assystematic approach to identifying and eliminating waste (non-value-added activities) through acontinuous improvement by flowing the product at the pull of the customer in pursuit of

    perfection.The common words from the above definitions are; systematic, waste, flow, customer, improve.What this implies is that lean is mainly focussed on delivering a qualitative product to a customerat the least expensive price, and at the right time and this can be achieved by the continuous flowimprovement and waste elimination along the whole chain of activities needed to deliver theproduct.Abbott et al., (2004) further mentioned that the American Product and Inventory Control Socitey(APICS) sees lean not as a system as mentioned above but as a philosophy used in reducing allthe inputs needed in an organization to achieve a result while Dough Howard of the LeanEnterprise Institute sees lean as a set of tool box where one can take any tool in making betterwhatever needs to be made better in an organization.Whichever way lean is seen, whether as a philosophy, systematic approach, a philosophy or a setof tool box or a combination of the three , what is key is that it should be applied in such a waythat will lead to the maximisation of the results it tends to achieve.LEAN PRODUCTION: A BRIEF HISTORY

    The term lean which has its roots in manufacturing was coined in 1988 by a researcher, JohnKrafcik at the International Motor Vehicle Programme (IMVP), Massachusetts Institute ofTechnology (MIT), USA (Womack, et. al., 2007). However, two books; The machine that

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    changed the world and Lean Thinking by James Womack and Daniel Jones made the term verypopular. (Dennis, 2002).Around the 1900s, craft production was the order of the day, to have a car, one would need tovisit a craft specialist who would then make the car according to the clients specification. Thecraft production system was characterised by the low production, and high cost. (Dennis, 2002).

    According to Daniel Jones although the term lean just became popular in the 1990s its principlecan be traced back to Henry Fords mass production assembly line at Highland Park (Taylor &Brunt, 2001). Womack, et. al.,( 2007) further reiterated this point that by inventing the moving

    assembly line in 1913 and justaposing it with his earlier 1908 technique of continousineterchangeability of parts,Henry Ford was able to increase astronomically the number of carsproduced with the same number of people and equipment when compared with his earlier massproduction model of 1908 which climaxed with Ford T model .Womack, et. al., (2007) attribute the lean production system, which according to Wilson, (2010)can also be interchanged with the Toyota Production System , to a Japanese engineer, Ohno, whovisited the Ford production system in Detroit in the late 1940s and noticed that a lot of the wholesystem was filled with waste which he referred to as muda. After carefully understudying the

    Detroit factory and experimenting with the presses he bought from them, when he got back toJapan, by late 1950s he was able to reduce the time needed to change a die from one day to threeminutes in Toyota car factory where he worked as an engineer.Ohno identified the different muda ( see fig 1) as seven and he listed them to be waste due toexcessive inventory, waste due to waiting, waste due to transportion, wastes due tooverproduction, waste due to defect, waste due to movement and waste due to excessiveprocessing . (Wilson, 2010)Figure 1: The Seven Wastes: Source (WMG, 2010)`

    Womack, et. al., (2007) further stated that Ohno introduced measures which were totallydifferent from the Fords mass production system. Ohno believed in getting it right at the very

    first time, thereby eliminating the need for rework .His philosophy was also hinged on what hereferred to as Kaban or Just in time which tends to eliminate the need for inventory as materialswere delivered in small amounts as needed in the factory. Ohno also developed multiskilledworkers and gave them the power to stop production in the entire assembly line should anydefect be noticed while working. The wokers would then to solve gather and try the problem byasking the 5 whys which Wilson, (2010) referred to as the Therefore technique.Fern, (2002) stated that with the application of the lean principles, Toyota was able to develop asystem called mass cutomisation as coined by Joseph Pine in 1993 because they were able tomanufacture cars which met different customers needs at a price cheaper than that of massproduction.LEAN SUPPLY MANAGEMENT

    MEANING AND EMERGING CONCEPT

    Lean supply as defined by Abbott et al., (2004) is a set of organisations directly linked by theupstream and downstream, flows of products, services and information that collaboratively workto reduce cost and watse by effectively and efficiently pulling what is needed to meet theindividual customer.Basically, lean supply looks at leanness not just in an individual organisation, but the applicationof lean across a chain of organisations which are interconnected to one another and also tend tohave one common goal in mind which is satisfying the customer.

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    According to Phelps et al., (2003) while the method of lean manufacturing tends to look atbringing value to the customer by eliminating waste in the internal production process, leansupply management tends to look at ways of bringing value to the customer by the optimisationof the whole supply chain ,WMG, (2010) lists some attributes of a lean supply system summarised below as :

    Having a tier based supply structure where a strong relationship is developed with a small tierone supplier usually a few.Supplier being chosen not just on the traditional lowest bidder case but on how well they havedone overtime.Making sure the suppliers are involved at an early stage when introducing a new product whichwill necessitate the buyer to share some design and proprietary information with the supplierMaterials being delivered just as needed in small but regular quantity ( JIT)Using a competitive price the customer is willing to pay less profit (Target costing) rather thanthe traditional supplier cost plus profit approach.HIGH OUTSOURCINGSMALL SUPPLY BASE

    Figure 2: Lean Supply Structure: Adapted from (WMG, 2010)The figure 2 above shows how lean supply is structured as opposed to the traditional mass supplystructure shown in figure 3 below.LOW OUTSOURCINGLARGE SUPPLY BASE

    Figure 3: Mass Supply Structure: Source (WMG, 2010)

    Lamming, (1996) further reiterated the relationship between the supplier and buyer in leansupply management that for there to be leanness in the supply chain, the buyer and supplier mustsee their selves as being in the same boat and having a mutual destiny. This can be achieved

    through cost transparency and collaborative efforts. He further stressed that the buyer must bewilling to share information on cost and deisgn process, he must also be willing to carry outmutual assesment as opposed to the traditional vendor assesment method where the buyerasseses the supplier. Finally, the buyer must be willing to share blame with the supplier whensometing goes wrong which is opposed to the traditional thinking where the buyer is seen as thelord and tends toblame the supplier should any problem arise.However, McIvor, (2001) argued based on the research he carried out between an electroniccompany and its suppliers that lean supply is difficult to achieve based on the reasons statedbelow:Design personnel in the electronic company being reluctant to sharing information with thesuppliers in the design stage and also internal conflicts between the design team of the electroniccompany and the its purchasing department as to who will lead the collaboration effort with thesupplier.Open book negotiation and costing difficult to implement as a result of the numerous andvarying costing techniques used between suppliers and the electronic companySuppliers not being comfortable disclosing their true production cost to the electronic companyfor fear of being shortchanged in the long run

    EFFECTIVENESS AND EFFICIENCY OF LEAN SUPPLY

    Macbeth in 1994, Axelsson and Wynstra in 2002, considered effectiveness as the improvementin value of a commodity or service i.e. quality perspective, while efficiency is a reduction incycle time and price. (Senja and Westerlund, 2009).

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    Basically, in determining how effective and efficient the lean supply management is, one has tomeasure its impact on the price, cycle time and quality of materials produced overtime in a firmthat has adopted that approach. For example, Plenert (2007) stated that after the introduction oflean supply in a particular aircraft manufacturing company, the aircraft gear box production costreduced by $17.5 million annually. Also, in the same firm, the aircraft rebuild time reduced to 51

    days from the pre lean time of 132 days leading to a 90 percent reduction in overtime.Also Womack, et. al., (2007) stated that a survey carried out by the IMVP in 1987 showed 135defects per 100 cars in General Motors Framingham assembly as opposed to 45 in Toyota ( alean producer) Takaoka assembly.However, Cox and Chicksand, (2005) also argued that lean suply has its limitations as academicscholars (such as ,Fisher, 1997; Christopher and Towill in 2002 and Lee in 2002) all of the agileschool believe that lean supply is mainly useful when there is high volume, predictable demandwith supply certainty and for functional product. What this implies is that lean can not be appliedto products say in the fashion industry that have demand which is highly volatile. The table 1shows the basic differences between lean and agile product profile.Distinguishing Attributes

    Table 1: Lean and agile product profile: Source (Cox and Chicksand, 2005)INITIATION, DEVELOPMENT AND SUSTAINANCE OF LEAN SUPPLY

    MANAGEMENT

    INITIATIONAccording to Bernstein, (2006) before lean can into be initiated the supply chain, productionexecution accuracy has to be in the range of 80-85 percent and inventory accuracy has to beabove 95 percent. Also, a good supplier evaluation and performance monitoring system has to bein place.Plenert (2007) also stated that since implementation of lean could be disruptive, there has to be avery cogent reason for its implementation. The reason could be as a result of an organisationsunfavourable stance among her competitors.Plenert (2007) and Phelps et al., (2003) identified the necessary steps for lean supply initiation:Top management coming together and reaching an agreement on the need to implement lean.Engagement of an experienced lean facilitator who discusses with top management and definesin specific terms what the objectives (e.g. 20percent reduction in lead time, 100 percent qualityachievement and 100 percent on-time delivery) of the lean supply implementation programmeare.The management with the facilitator then decide which target assembly and supply chain theimplementation would start from. This has to be done because lean implementation could bedisruptive and as such should be done in phases.A core team comprising a manager in the target assembly, first tier suppliers and sub tiersuppliers and lean facilitator is formed. The first tier suppliers are chosen based on Paretos rule,their perceived ability to meet the lean target goals and their willingness to adopt the leaninitiative.The facilitator then trains other core team members (if they dont know) about lean and how theimplementation would be carried out. The facilitator is just there as a guide, the other core teammembers will be the drivers of the lean development process. The facilitator could introducetools like Change Acceleration Process (CAP) in order to make them buy fully into the idea oflean implementation as change could be difficult.

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    DEVELOPMENT

    Plenert (2007) and Phelps et al., (2003) identified the following as the three major steps indeveloping lean supply as:Assessment of the current state: The core team members then asses the current supply chain inorder to determine the non value adding processes. This can be achieved using macro value

    stream mapping (which is a link of the individual value stream map in each level in the supplychain) (Womack and Jones, 2005) technique to access the materials flow across the supply chainlevels i.e. assembly line, first tier and sub tier suppliers. Spaghetti mapping will be used forpeople movement; while systems flow chatting will be used for mapping the flow of informationacross the supply chain. Once the entire loop holes and non value activities across the supplychain have been identified and documented, the next phase would involve the mapping of thefuture state.Developing a future state map: This map describes how the supply chain will look in the futurein order to meet the set objectives and goals. It involves the development of the macro futurestate value stream map (Macro-FSVSM) for the supply chain. This can be done by firstlydrafting a future state map (usually 18-24 months focus) for each level of the supply chain. Then

    with the macro current state value stream map, individual draft future state map for each level ofsupply chain identified and the performance objectives in place, a draft macro future state mapcan then be developed. The draft future state map is then presented in the form of a Macro-FSVSM) with a time line chart also in place so that progress would be measured duringimplementation.Implementation: Once the core team has an idea of how the supply chain will look in the future,the next phase would be implementing the change. This would be done by the forming of projectteams with project leaders in place across the supply chain. They would be taught what to do andhow to go about it. There would be a time line in place and the future state Macro-FSVSMwould serve as a guide. From time to time, the core team members would meet to see if setobjectives are being met.SUSTAINMENT

    In order to sustain the gains from lean, the core team members would remain excluding thefacilitator who could be consulted from time to time. There would be the need for leanchampions in various departments who would meet the core team members from time to time tosee new areas of possible improvement. Management also has to review from time to time theperformance of the organisation and see if they meet the set goals. Also, continuousimprovement (kaizen) workshops could be introduced in the organisation and participants wouldcut across employees of the assembly line, first tier suppliers and sub tier suppliers.

    CONCLUSION

    The value which lean supply brings into the supply chain competitiveness cannot beoveremphasised. However, as discussed in the body of the paper, lean supply management styledoes not fit all types of organisations. There has to be a cogent reason for its implementation. Asreiterated by Abbott et al., (2004), more often than not, the lean supply management style isusually used alongside another quality management tool, e.g. six -sigma. So in todaysorganisations, we hear people talk about lean-sigma. Therefore, there should be a paradigm shifttowards lean six-sigma.SECTION 2INTRODUCTION

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    This paper looks at the competiveness which supplier relationship management brings to thesupply chain, various frameworks, models and approaches for supplier relationship managementand how a firm can choose the most appropriate relationship management approach in order togain competitive advantage.

    IMPORTANCE OF SUPPLIER RELATIONSHIP MANAGEMENT FOR SUPPLY

    CHAIN COMPETITIVENESSBuyer- supplier relationship management can be described as the management of the outcomewhich arises as a result of the interaction that is built overtime between buyer and supplier forvalue creation and beneficial achievements to the parties involved. (Cite this from pawlaksarticle)According to Mudambi and Helper, (1998) there has been recognition in recent years that there isa sustainable competitive advantage (financial and strategic) gained when the relationshipbetween firms and their suppliers are improved overtime.Dyer and Sigh, (1998) further reiterated this point that gaining competitive advantage in modernmarket is not just a function of how well a firm provides competitive range of products, but has alot to do with how well it manages her suppliers.

    Cusumano and Akira,( 1991) using the car industry as an example stated that a typical car hasover 15000 parts and very few of these parts are produced within, as such there is a need todetermine the appropriate supplier relationship management approach in order to gaincompetitive advantage both in price and quality.From the above, it can be seen that the need for supplier relationship management cannot beoveremphasized; especially in todays world where there is a lot of outsourcing and globalization.

    RELATIONSHIP FRAMEWORKS, MODELS AND APPROACHES

    RELATIONSHIP MANAGEMENT STYLES

    Cox, et. al., (2004) described four basic buyer-supplier relationship management styles (seefigure 4) as:Adversarial arms- length relationship: Usually short term and the buyer relate with the supplierin an aggressive manner and uses exploitative approach in the didactic relationship.Non adversarial arms- length relationship: Usually short term; however, the buyer uses theprevailing market price for bargaining in a non aggressive manner.Adversarial collaboration relationship. The buyer tends to maximise the value gotten from thedidactic relationship when he has dominant power, however, he is more open and sharesoperational information which will help the supplier in delivering a good product and service.Non adversarial collaborative relationship. Usually long-term, win-win relationship type. Thebuyer maintains a very close relationship with the supplier. They both share the commercialvalue gotten from the relationship equally.Figure 4: Relationship Portfolio Analysis: Source (Cox, 2004)

    CRITICAL REVIEW OF CURRENT TREND IN RELATIONSHIP MANAGEMENT

    APPROACH

    Over the last 15years, there has been a paradigm shift in the sourcing community concerninghow buyers and sellers should relate (Cox, 2004). There are those scholars such as (Pawlak, 2009;Kraljic 1983, and Cox 1999) who argued that relationship styles should be treated differently indifferent circumstances and that it could be adversarial in some cases and collaborative in othercases depending on the prevailing conditions between buyers and sellers.Cox, (2004,) argued that any relationship style could be appropriate and it is dependent on powerregime analysis between buyers and sellers.

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    Kraljic, (1983) in his seminal work argued that relationship between buyers and sellers should bebased on product categorisation using supplier risk and impact on business profit as the basis. Assuch, he stated that the classification of materials which he listed as bottle neck, leverage, non-critical and strategic, should be the determinant for the appropriate relationship.Pawlak, (2009) argued using the economics of relationship theory ( see fig 3)that collaborative

    relationship might not always be useful because it may be expensive to manage and in somesituations the cost associated with managing such relationship could outweigh its benefit .However, another school (such as, Carlisle and Parker, 1989; Sako, 1992; lamming, 1995,) whoafter the seminal work on lean supply by Womack et al. in 1990 based their arguments on thesuccess of the Japanese car manufacturing firms stated that relationship between buyers andsellers in all cases should shift away from the adversarial nature to a more collaborative onewhere trust and mutuality is important.But Cox, (2004) of the agile supply school argued that the collaborative approach as advocatedby the lean supply school should not be a one purpose fit all style. He based his arguments on thefact that long term collaborative approach which the lean supply advocates proposed for all typesof relationship might not be appropriate in a situation such as fashion and film making industries

    where demand is not stable, not continuous and volume is low .Cox, (2004) also argued that while in theory, the lean supply relationship (high level ofcollaboration, evenness in power distribution) pattern assumes that there is equal level ofdependence between the buyer and seller, but in reality, it contradicts the assumption completelyas it is only applicable in a system where the buyer is dominant.The author believes in the school that tries to use different relationship style in differentoccasions. While the long term collaborative relationship style sounds desirable in theory, it isnot easy to implement in practise as trust is not easy to achieve. Though we might never get tosuch an ideal, however, it is worth considering.Every business is in to maximise profit. What should buyers in long-term collaborative win-winrelationship do if the suppliers become not competitive enough as per product quality and cost?Should they stick to such a supplier since they have the same mutual destiny and are in the sameboat (Lamming, 1995)? The author believes that should a case like this arise, the buyer shouldlook for an alternative supplier. In essence, while long term collaboration and partnership mightbe good in some cases, it is not always the best and should not be used in all cases as it might beuneconomical to do so.In continuation of the discussions above, the next section critically looks at differentframeworks/ models available for developing a buyersupplier relationship strategy.FIG 3 ECONOMIC OF RELATIONSHIP FROM PAWLAK

    CRITICAL REVIEW OF RELATIONSHIP MANAGEMENT MODELS

    CRITICAL REVIEW OF KRALJIC PORTFOLIO MATRIX MODEL

    Kraljic, (1983) proposed a four step approach into purchasing portfolio management. The foursteps he proposed are classification of the items into various categories (leverage, strategic,bottle neck and non-critical) using 2 x 2 matrices with the supplier risk and profit impact on theitems taken into consideration.Secondly, market analysis to determine the supplier and company strength should be carried outusing various criteria some of which are supplier, capacity utilisation suppliers break-even,potential cost of no delivery or inadequacy in quality.etc.Thirdly, strategic positioning of materials in the strategic items quadrant identified in the firststep by analysing the balance of power between the supplier and buyer using 3 x3 matrix with

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    buyers strength and supplier strength identified in two above taken into consideration. Thepossible outcomes are exploiting the supplier if the buyer is more dominant in the market, if thesupplier has more power, then the buyer should diversify, backward integrate, or look forsubstitute item and lastly, a balanced approach when the power between buyer and seller isevenly spread.

    Lastly, he proposed that an action plan which depends on the scenario chosen from step three betaken on various policy issues some of which are volume, price, contractual coverage, newsuppliers, inventories, own production, substitution, value engineering and logistic in focus.

    FIGURE 5: KRALJIC MATRIX: ADAPTED FROM (KRALJIC, 1983)

    SUPPLY RISKLOWHIGHSvahn and Westerlund, (2009) stated that although, Kraljic matrix is one of the most widely usedpurchasing tool, it is also widely criticised. Caniels and Gelderman, (2007) argued that theKraljic matrix basically focussed mainly on the items in the strategic quadrant and did notanalyse fully the other quadrants in the matrix, however, Olsen and Ellram, (1997) modified the

    matrix and focussed on the entire quadrants.Furthermore, Caniel and Gelderman, (2007) argued that the approach taken by Kraljic did notconsider elaborately the issue of power and dependence. Also (Homburg, 1995 as cited inGelderman and van Weele, 2005) argued that there is no clear line between what a high supplyrisk is and what a low one is, and that suppliers perspective was not considered in the didacticrelationship. Pawlak (2009) also argued that Kraljic did not propose any relationship style in hisportfolio matrix.Finally, (Dubois and Pederson, 2002 as cited in Gelderman and van Weele, 2005) argued that thetwo dimensional model is too simple as it does not consider a wide range of factors which couldinfluence decision makers in choosing the most appropriate relationship style to adopt.The next section critically looks at another frame work which fully elaborates the issue of powerand dependency.CRITICAL REVIEW OF THE POWER MATRIX MODEL

    Caniel and Gelderman, (2007) described power as the comparison of the degree at which oneparty depends on the other in a relationship. So invariably, the party that depends less on theother has more power.Cox (2004) proposed a three point approach to relationship management. The first being theidentification of the sourcing approach which is based on the strategic source planning, thesecond being an understanding of the power regime between the buyers and suppliers and third isthe selection of the appropriate relationship management based on outcomes in the first two steps.Cox (2004) identified the sourcing options available as:Supplier selection: This is a reactive approach to selecting first tier suppliers.Supply chain sourcing: This is a reactive approach to selecting suppliers not just from the firsttier suppliers, but across the supply chainSupplier development: This is a proactive approach to selecting first tier suppliersSupply chain management: This is a proactive approach to selecting suppliers across the supplychain and not just first tier suppliers.The second approach is the understanding of the operational practise and commercial exchange

    between the buyers and suppliers, this he referred to as the power regime analysis. This can bedone using the power matrix shown in figure 6.

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    Figure 6: The power matrix: The attribute of buyer and supplier power: Source (Cox, 2004)

    When the sourcing option is selected and power and leverage circumstances are known, theappropriate relationship management model can then be chosen from the table 2.Table 2: Appropriateness in sourcing strategies power circumstances and relationship

    management

    Source: (Cox, 2004)Although the issue of power and dependency which was not properly identified in the Kraljicmatrix has been dealt with elaborately here, there is still a fundamental problem with this framework as it does not consider the action plan for individual product categories. (Pawlak, 2009)The author believes that the power matrix does not identify the possibility of the balance ofpower between a buyer and supplier changing after a period of time. Economic and environmentfactors could skew this power balance from time to time. As such, there should be a constantreview of the balance of power between a buyer and her supplier when using the power matrixmodel.Furthermore, the author believes that since this approach is qualitative and not quantitative, thejudgement of the users of this framework might be subjective.

    It can be seen that the power model did not consider the product categories; therefore, it wouldbe necessary to consider another framework which takes into consideration both power andproduct categorisation.

    PAWLAK RELATIONSHIP MODEL APPROACHPawlak, (2009) developed a frame work shown in figure 7 which considered the effect of powerin a relationship and in addition product categories as developed by Kraljic (1983). The matrixhas a two dimensional approach, the availability of alternative sources and product contributionto future and current profit.Figure 7: Improved framework of relationship management Source: (Pawlak, 2009)

    The different relationship management approach as shown in the frame work is explained usingtable 3.TABLE 3: IMPROVED CHARACTERISTICS OF BUYER -SUPPLIER

    RELATIONSHIPS

    SOURCE: (PAWLAK, 2009)

    Pawlak (2009) stated that in order to determine the appropriate approach, the following stepsneeds to be taken:The right quadrant should be adopted using the two dimensional variable as shown in figure 7.Upon determination of the quadrant, the following questions should be askedIs the product critical?Does a single supplier?Does the product development involve a lot of complexity and long duration?Is there a possibility to influence a closer relationship when the product functionality is importantto the organisationIs there a possibility to influence a closer relationship when the product price is important to theorganisation?If the answers to all the questions above is no, then the first relationship management approachin the quadrant chosen in step one should be adopted, otherwise the second relationship.Although the Pawlaks model has been able to incorporate both power and categorisation of

    products into the framework, however, the Pawlak matrix did not define in clear terms the

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    demarcation between high and low product contribution to both future and current profit. Also,the time line for current profit and that for future profit was not properly defined.Furthermore, what contributes to current and future profit was not properly defined. Users of thisframe work might have different bias as to what the components of the contributing factors tocurrent and future profit are; two different users in a firm might come out with very different

    relationship management styles because different weights might be applied to each contributingfactor. This makes the framework highly subjective since it is not quantitative in approach butqualitative.Still talking about profit contribution, the Pawlaks matrix did not envisage a scenario whereprofit contribution is very high in the present but low in the future. In such a case, since both thecurrent and future states are to be considered, where should the buyer place this effect, on thehigh side or low side? This could make this framework ambiguous.

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