Partnerships

Partnerships

 

In the last three decades, a large number of organizations have started to create “partnerships” or closer relationship with their suppliers.  The interest in supplier partnerships started in the 1980s by the study of Japanese companies that maintained very close relationships with their suppliers.  This was seen as one of the key elements in the achievement of quality, fast delivery, and continuous improvement.

 

  • SEMATECH’s Partnering Perspective – was originally created through a joint effort of the American electronic industry giants and the American government to assist the electronic industry and its suppliers to be world class.  SEMATECH evolved into an international consortium through which each member company cooperate precompetitively in key areas of semiconductor technology to accelerate the development of advanced manufacturing technologies needed to build powerful semiconductors.  The project identified the need for an “expanded partnership” with selected key suppliers.  An expanded partnership would normally have a top executive assigned from the buying and selling organization, and both counterparts would meet periodically to monitor internal progress and smooth the way for changes necessary for success.
  • Early Supplier/Supply Involvement (ESI) – Early supplier/supply involvement can affect value more significantly in the early stages (need recognition and description) than in the later ones.  Involving the supplier and the buyer in the early stages can lead to improvements in processes, design, redesign, or value analysis activities.
  • Partner Selection – Thing about the longer term regarding partnerships at the initial stages of the relationship may help to prevent dissatisfaction in the long run.  Selecting partners for the long term should focus on hard and soft factors.  Developing partnering type relationships takes time and some organizations may be ill prepared for the amount of time it may take before seeing the desired results.
  • The Longer Time Perspective – Companies attempting to sustain long term partnerships have to focus on many variables, which include defining the goals of the partnership, discerning the level of commitment of both sides, and the specific current situation for the partnership.
  • Co-Location/In-plants – Organizations continually look for ways to do more with fewer people and achieve high productivity levels, so they look increasingly at the partnerships with suppliers for answers.  For example, having a key supplier locate personnel in a department in the buying organization who can function as buyer, planner, and salesperson can improve buyer-seller communications and processes, absorb work typically done by the firm’s employees, and reduce administrative costs.
  • Concerns about Partnerships – Not all supply professionals believe that cooperative partnership are better than the competition-based culture upon which most traditional procurement tools and techniques are based.  There is always a concern that a partner might take advantage of its “preferred status and lets the commitment to the relationship slide.  Fro example the danger in single sourcing lies in buyer becoming puppets of suppliers. Suppliers know that customers depend on them, and because of this suppliers may charge excessively or let quality or delivery slip, or slow down or stop continuous improvement programs.  Supplier relationship management is important here because value in the partnership must be understood and defined for each partner, each partner is held accountable to maintain that value.