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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https://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 [email protected]. More information and articles are available at

www.ChartCourse.com.

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