Partnering with SuppliersBy: Gregory P. Smith
Purchasing Magazine has called partnerships with suppliers a major trend in business today and indicated that most companies are seeking these relationships in their key buying categories. They have also proven to be disappointing if not planned and executed well. So what does it take to have a successful partnership?
A partnership is defined as an on-going, mutually beneficial relationship between a buyer and a seller. Both stand to win if the relationship is successful, and both stand to lose if it fails. Most of the time, the understandings are formalized in a contract; but the partners may prefer an informal agreement. Cooperation and commitment are critical to the relationship. Partnering encourages the parties to share information, risks and even profits. This means that a partner accepts some responsibility for the otherís success.
Obviously, this kind of relationship is radically different from the typical adversary buyer-seller ways of the past. It is no longer a buyer searching for the lowest cost and the seller trying to obtain the highest margin. Both parties are now working toward a common objective.
Either party can initiate partnerships. Or they may evolve out of a long-term traditional buyer-seller relationship. In many cases, companies have a strategic plan to eliminate the number of suppliers in order to reduce purchasing department workloads, improve consistency of materials, and upgrade inventory management.
It will not be possible or desirable to build a partnership with every customer. Some are too small or have no desire. An organization also has limited resources to commit to such relationships; therefore, selecting the right partners is a serious decision which should be evaluated carefully.
The driving force for this new type of relationship came from the quality emphasis in this country during the past few years and the need to find innovative ways to gain productivity. There must be an ongoing commitment to quality as the prerequisite for a partnership.
Partners have to address some critical issues to achieve success:
© Copyright 2000 Gregory P. Smith
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