Channel conflicts will happen and exist in any supply chain systems due to the interaction of various stakeholders and the effort to achieve objectives that meet the involved parties’ expectations (Koza & Dant, 2007). Conflicts often arise when the stakeholders in the supply chain lack alignment when trying to reach the business objectives and goals. When the parties are unable to reach a consensus, the dispute between the parties leads to the conflicts.
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Conflicts can be perceived as an event that has positive, negative and neutral impact on the channel efficiency. High conflicting channels can represent the channels that are actively engaged with functional conflicts (Milan et al., 2012). However, such conflicts must be managed properly. The causes of the conflicts must be determined to ensure effective management of conflicts. There are several reasons that cause the outbreak of conflicts within the channel or among the channels.
Firstly, the role of incongruence will be one of the possible causes of conflict within the supply chain systems. This occurs when the members within the channel are not performing in accordance to their defined or expected roles. The members are inconsistent to the obligations that were listed to be followed. For instance, if the wholesaler or a distributor is performing beyond the boundary such as taking charge on the functions of the dealers, then the conflicts will happen. The root cause of the conflict is due to the lack of clear specification of the channel member’s role. Thus, lacking a clear definition and specification of the roles of the members within the channel will lead to conflict among the channel members or between the channel members of the organization.
Next, lacking resources will also lead to conflict within the supply chain systems. Whenever the resources are operating in scarcity, it may lead to competition for the limited resources available. Lack of resources are due to inappropriate allocation. Such resources can either be monetary or non-monetary forms. For example, in an organization, if the number of staff handling the logistics department is limited which is insufficient to cope with the delivery process of the products, different departments within the organization may face conflict due to the various departments seeking to deliver the products to their customers within the fastest way. When the resources are operating in scarcity or limited resources that are caused by poor allocation, conflict may arise.
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Furthermore, conflict within the supply chain system may also happen when there are differences in perception. When the channel members have different views on various aspects of the business, conflict will happen that may lead to departure of the members. Members often may have different business direction after a period of time running the business due to intrinsic and extrinsic factors. These factors lead to the rise of different perception of the members towards the growth of the standard and qualities of the channels. For instance, certain members from different backgrounds or after being influenced by different input from various external environments may come out with different ideas on handling the supply chain system. The values of the parties may be different due to different influences. Hence, the difference in perception and views will result in conflict within the supply chain system.
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In addition, the differences in expectations will lead to conflict within the supply chain system. This often refers to the difference of expected behaviour exhibited by the channel members or do not receive the kind of behaviour expected of other channels. Failure to manage the expectation within the supply chain systems happen when different channels have their different attitudes and core values while executing a plan. The contrast of the expectations will cause the channels to lose the chemistry in moving towards the objectives and goals of the organization. Thus, failure and neglecting to manage the different expected behavior and expectations will lead to possible conflicts.
Moreover, conflict also happens when there are difficulties in communication. Bad communication could cause inter-channel interaction to deteriorate due to confusion, disagreement and frustration. Communication is delivering information. The information of the channels have to be delivered effectively within the supply chain system to ensure smooth delivery of products or services. Conflict often occurs when information is being distorted or omitted. For instance, conflicts may happen when the real objective or the underlying purpose of the implementation of the policy of the firm did not properly and accurately communicated to all the channels which resulted on the doubts happened among the channels or within the channel, whereby such omission to communicate effectively cause the failure of the implementation of policies as well as creating values to the customers.
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Studies have suggested that channel selection is an important task to be conducted by an organization. Channel management is complex as the number of channels and the layers used by an organization increases nowadays. To avoid the conflict within the supply chain system to happen, the evaluation criteria for channel selection has to be properly determined.
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