Effectiveness and Efficiency Between Firms

Abstract

Materials Administration, Materials Management and most of the other integrative concepts which have been proposed, have one feature in common. They emphasise the need to view the system to which they relate as a whole. A key argument of those who promote these concepts is often that problems occur between departments or functions more often than in them. Thus is follows, continues the argument, that a system‐wide view aimed at co‐ordinating objectives, strategies and operations would help to increase the effectiveness and efficiency of the whole system. But what is this “whole system”? Where do its boundaries lie? Are we talking about the firm, the industry or the economy? As far as this paper is concerned, the relevant system comprises more than the individual firm and includes the set of suppliers to the firm. It is the main theme of the paper that the benefits of taking a holistic perspective in this way may be the prelude to achieving enhanced efficiency not only to the individual firms concerned but possibly to the economy as a whole. It is argued that the traditional competitive model of buyer‐supplier behaviour in industrial materials markets is inadequate and that the incumbents of both roles can benefit by taking a longer term and wider perspective and working together to improve the effectiveness of the overall relationship.

Citation

Farmer, D. and MacMillan, K. (1981), "Effectiveness and Efficiency Between Firms", International Journal of Physical Distribution & Materials Management, Vol. 11 No. 2/3, pp. 67-73. https://doi.org/10.1108/eb014493