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Partnering with
Suppliers
By
GREGORY SMITH
Business Columnist
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 others 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:
· Needs/Capabilities Match. There must be a match between what
a supplier can (and will) do and what the customer needs and expects.
This requires a lot of open-ended questioning and investigation. There
must be good dialogue and information sharing. It may be necessary to
modify equipment and processes.
This courtship should continue until a trusting relationship can be developed;
and once the decision is reached, it needs to be a total company commitment.
· Long-Term Relationships. As the number of suppliers is reduced,
partnerships will be built on long-term relationships. The process is
difficult and time consuming; and multi-year agreements are necessary
to justify the efforts and resources required by both parties. Strategic
as well as operational planning becomes part of the agenda.
· Capable Sales Team. The salesperson becomes the quarterback of
the sales team, communicating, coordinating, and taking responsibility
for nurturing the partnership. This can result in some role ambiguity
and conflict resolution skills may be needed. The customer will look at
the salesperson as a non-paid, problem-solving consultant, available and
able to do whatever needs to be done.
Continuity of personnel has
been the most common cause of failed partnerships, and a variety of support
people may be involved in the team from time to time.
Everyone involved must share the commitment. Partnerships certainly should
also be a top management priority with appropriate involvement in the
process.
· Shared values. There must be a supplier and a customer with common
goals and shared values. Problems need to be solved with win-win attitudes.
Suppliers must consider themselves a part of the customer’s system
and take responsibility for it. Commitment must be continually demonstrated
and the relationship periodically reexamined.
Successful partners in the new millennium will be rewarded with a more
stable customer list, preferred supplier positions, and barriers which
make it increasingly difficult for competitors to break into the relationship.
Partners will grow together and depend on each other for support. Building
the trust needed to gain such a position may take quite some time and
effort. These partnerships may not be easy to build, but who wouldn’t
like to have a few good ones?
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http://www.ChartCourse.com
Gregory P. Smith shows businesses how to build productive and profitable
work environments that attract, keep and motivate their workforce. He
speaks at conferences, conducts management training and is the President
of a management consulting firm called Chart Your Course International
located in Conyers, Georgia. Phone him at (770) 860-9464 or send an email
at greg@chartcourse.com. More information and articles are available at
www.ChartCourse.com.
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