The Formation of Partnership Model in Supply Chain Management

Abstract

Abstract Supply chain management is a complex and systematic process of moving commodity flows from the moment of production planning to the further distribution of products in accordance with the market conditions and the target segment requirements. Meanwhile, the effectiveness of the supply chain can be achieved through the formation of partnerships that are aimed at organizing comprehensive cooperation of economic entities with its inalienable integration into the logistics chain of their own production. Also, such partnerships are based on the desire of economic entities to concentrate the required resources in the area of the irown competence, whereas to delegate the other functions to the third-party enterprises (for example, outsourcing them). In order to establish a partnership, the parties involved must determine and agree on possible motivators, contributing factors, business process components and expected results, taking into account the balance of power, specialization, readiness for cooperation of stakeholders, possible damage and distribution of risks, importance of the applicant, reasons for withdrawal from the contract and “force majeure” circumstances. This proposed model of partnership in supply chain management allows reducing the production cycle, the maintenance costs and the “money-money” cycle. It also allows improving the performance of the supply chain, optimizing logistics costs, which, in turn, creates favorable conditions for reducing foreign economic costs, increasing profits and focusing the core competencies of the enterprise-manufacturer.