Managing supplier relationships (The partnership model)
The partnership model has three major elements that lead to outcomes: drivers, facilitators, and components. Drivers are compelling reasons to partner. Facilitators are supportive corporate environmental factors that enhance partnership growth and development. Components are joint activities and processes used to build and sustain the partnership. Outcomes reflect the performance of the partnership.
Drivers. Both parties must believe that they will receive significant benefits in one or more areas and that these benefits would not be possible without a partnership. The primary potential benefits that drive the desire to partner include: (1) asset/cost efficiencies, (2) customer service improvements, (3) marketing advantage, and (4) profit stability/ growth. While the presence of strong drivers is necessary for successful partnerships, the drivers by themselves do not ensure success. The benefits derived from the drivers must be sustainable over the long term.
Facilitators. Facilitators arc elements of a corporate cm environment that allow a partnership to grow and strengthen. They serve as a foundation for a good relationship. In the short run, facilitators can not be developed; they either exist or they don't. And the degree to which they exist often determines whether a partnership succeeds or fails. Facilitators include: (1) corporate compatibility, (2) similar managerial philosophy and techniques, (3) mutuality and (4) symmetry.
Facilitators apply to the combined environment of the two potential partners. Therefore, unlike drivers, which are assessed in managers in each firm independently, facilitators should be assessed jointly. The discussion of corporate values, philosophies, and objectives often leads to an improved relationship even if no further steps toward building a partnership are taken. The more positive the facilitators, the better the chance of partnership success.
Drivers and facilitators determine partnership type.
Components. Components are the activities and processes that management establishes and controls throughout the life of the partnership. Components make the relationship operational and help managers create the benefits of partnering. Every partnership has the same basic components, but the way in which the components are implemented and managed varies. Components include: planning, joint operating controls, communications, risk/reward sharing, trust and commitment, contract style, scope, and financial investment.
Outcomes and Feedback. Whatever type of supplier partnership is implemented, the effectiveness of the relationship must be evaluated and possibly adjusted. The key to effective measurement and feedback is how well the drivers of partnership were developed at the outset. At this beginning point, the measurement and metrics of relating to each driver should have been made explicit. These explicit measures then become the standard in evaluation of the partnership outcomes. Feedback can loop back to any step in the model. Feedback can take the form of periodic updating of the status of the drivers, facilitators, and components.