Give example of situations where supplier and purchaser need to share similar cultural values to be able to work together effectively ?

Answer:

1. Negotiations for lower costs. In the supply chain, Purchasers and suppliers need to engage in interactions in order to agree on the exchange of products, services, and information at a minimal cost. When both suppliers and buyers have the same cultural values, information will be aligned, and participants know well how to negotiate based on behavior, status, and traits of one another as they share the same cultural values. We can also say that opportunistic behavior is likely not to happen. Transaction Cost Economics states that opportunistic behavior occurs when participants in a relationship maximize their own utility at the expense of someone else's. This usually happens when cultural differences are present. When negotiating for lower costs, the same cultural values shared by both suppliers and purchasers will enable them to work together and simultaneously.

2. Consolidation of the supply chain. Supplier consolidation, or vendor consolidation, is a supply chain management concept that has gained traction in recent years. Supplier consolidation is the practice of lowering the number of suppliers in a given supply market and concentrating on the most successful ones. 

The more that both the p purchaser and the supplier understand each other by sharing the same cultural values, the more they may help each other. This requires sensitivity and adaptation to both sides, but it can lead to further efficiencies and increased operational value making both supplier and purchaser work hand in hand and effectively. When the purchaser and supplier share similar cultural backgrounds, supply chain performance is enhanced with an outcome that is predictable giving benefits to both sides.

3. Outsourcing Activities. Outsourcing can be defined as a strategy by which an organization or a purchaser contracts out major functions to the specialized and efficient suppliers, who would become valued business partners. With shared cultural values, relationships between suppliers and purchasers develop. Trust is constantly built allowing the buyer to outsource non-core activities to the supplier, including inventory responsibility and customer service. This external integration could be best achieved if purchasers and sellers are in collaboration and this would be easier if both parties significantly understand each other's backgrounds and cultural values. Participants coming from different cultural backgrounds in a buyer-supplier relationship may negatively affect the degree of cooperation, resulting in inefficiency, lack of trust, and exploitation. 

Cultural values provide characteristics of identification for members of a social group. Cultural values provide a set of rules and guidelines assisting its members to interpret people, their behavior, situations, and other aspects. Therefore, In the supply chain, cultural values hold a significant part as suppliers and buyers often probe by asking questions to determine each other's goals and expectations. Answers to these probing questions and as well as the expectations and ability to understand highly depend on the cultural values and variables each one has. This might include their individual backgrounds, position in society, mindset, and other cultural aspects. The activities explained above are best achieved if both buyer and supplier share the same cultural values for them to work collaboratively.