{"id":33674,"date":"2020-07-24T17:49:00","date_gmt":"2020-07-24T14:49:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/personal-connections-key-to-strong-supply-chains\/"},"modified":"2020-07-24T17:49:00","modified_gmt":"2020-07-24T14:49:00","slug":"personal-connections-key-to-strong-supply-chains","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/personal-connections-key-to-strong-supply-chains\/","title":{"rendered":"#Personal connections key to strong supply chains"},"content":{"rendered":"

“#Personal connections key to strong supply chains<\/strong>”<\/p>\n

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Amid a pandemic when limitations on disinfecting wipes, toilet paper and drugs brought attention\u2014and disruption\u2014to supply chains, new research involving Washington University in St. Louis delivers something of an answer to improving these lines of business:<\/p>\n

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Work with who you know.<\/p>\n

While most of the business world builds success from existing relationships, four scientists including Xiumin Martin from the Olin Business School crunched data to find that personal connections between suppliers and vendors particularly improves the efficiency of the supply chain. To be precise, such rapp<\/a>ort results in better overall performance, less restrictive and longer-lasting contract terms, and crystallized communication.
\n“Recent years witnessed significant increase in the complexity of supply-chain relationship due to outsourcing,” said Martin, professor of accounting. “Such increased complexity pushes my co-authors and me to think about how some fundamental issues concerning information asymmetry are addressed in this new regime. We examined this question by focusing on personal connections because the world has also become increasingly connected.”
\nThe research team\u2014Martin along with Ting Chen of the University of Massachusetts Boston, Hagit Levy of the City University of New York and Ron Shalev of the University of Toronto\u2014studied 2000-11 data from public companies, though private businesses may even more keenly rely on personal, existing relationships.
\nIn their paper, forthcoming in the Review of Accounting Studies<\/i>, the researchers focused on previous education and work connections between suppliers and vendors. They showed such a personal relationship proved a successful way to select suppliers in a chain that has become more complex amid outsourcing and this global economy\/information age.
\nIn compiling their 12-year-long data set, they used a database called BoardEx\u2014listing universities, employment histories, charitable involvements and board memberships\u2014to try to find supplier-customer connections. Through another database, Compustat Segment, they were able to determine long-running business relationships between 1,430 suppliers and 2,630 customers.
\nUltimately, they focused on just two relationships: university and work connections. They found 7.4% of the sample had educational connections and 21% had either educational or past-work relationships. Looking at the organizational charts, they discovered 0.5% connections between CEOs and 15.2% between non-C-level executives.<\/p>\n

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Such personal connections increased the likelihood a vendor will select a supplier by 60% over baseline probability, the scientists learned. Connections between C-Level executives show statistically stronger effects than those between lower-level executives, though the COO\u2014who oversees most firms’ supply chain\u2014has a more pronounced effect on supplier selection than a CEO or CFO.<\/p>\n

They also studied when that connection was broken\u2014say, one of the parties in the relationship leaves their employer or retires. There, they found that the supplier-customer relationship ended earlier after a departure of a connected executive than after a departure of an unconnected executive.
\nBoiled down, these prior college or work connections:<\/p>\n