L4M6 Chapter 3

 

Partnering

Partnering is strategic and long duration. It’s a commitment to a long-term relationship for shared objectives.

• It makes sense to form partnerships when spend is high, the supply market is complex, there is lots of innovation required etc

• The downside is reliance on the supplier

There are different types of partnering:

• Limited involvement: there is a coordination of objectives and operations in one area, and it’s relatively short-term

• Extended scope: arrangement covers multiple functions over the longer term. Might be integrated IT systems

• Operational integration: High level of operations and strategy integration. Focus on continuous improvement and innovation for mutual benefit

Communication is important in providing feedback in partnerships. Messages can be provided verbally or non-verbally. The communicator should adjust the message until they are confident that it has landed.

Supplier base optimisation is about finding the right number of suppliers for an organisation.

• Broadening the supplier base could be a viable strategy to tackle supply risk. There are more potential suppliers

• Partnering involves narrowing the supplier base, concentrating supply. This can lead to supply chain tiering, where there are a fewer number of direct suppliers that an organisation interacts with

5 stages in partnering implementation:

• Identify items potentially suitable for partnership sourcing

• Sell the philosophy to others in the organisation

• Define the standards that partners need to meet

• Establish joint commitment to the partnership

• Reviews and audits

Partnership arrangements usually have a defined period, often 5 years, with options to review and extend. Some organisations may want evergreen contracts, with no end date.

There are a number of reasons why partnering relationships may fail e.g. loss of trust, cultural differences etc. Trust could be rebuilt through taking actions to rebuild, such as holding meetings, setting new objectives etc.