The Reason Of Formation Of Supply Chain Partnership

Modern firms are no longer isolated firms, but the ones which are open systems connecting outside systems, like suppliers, wholesalers and retailers and also. Moreover, the modern competition is no longer the one among the firms, but the one among the supply chains.Through the analysis of a typical model in the theory of the supply chain ?beer game, we can discover the importance of information or knowledge in the supply chain. With traditional supply chains being out of order, supply chain partnership (SCP) will gradually come into being. SCP is a kind of internal institution. Therefore, the formation of SCP is a kind of nature institution change. This change will not take place without the opportunities of gaining profit from certain disorder of institution. The main reasons causing institution disorder are like the following: (1) the change of the supply chain institution's option aggregation, (2) technology innovation, (3) the change of other supply chain institution, like economy globalization, (4) the change of demand of institution, such as the price of element and product in the supply chain fluctuate in the long run. The fundamental reason of formation of SCP choosed from the supply chain institution's option aggregation is that SCP is more efficient than other institution for some kinds of transaction both in the production cost and the transaction cost.