Partnerships in the Supply Chain
A partnership is a tailored business relationship based on mutual trust, openness, shared risk and shared rewards that results in business performance greater than would be achieved by the two firms working together in the absence of partership.
Click on any part of the model (ie Drivers) for a short description
An important aspect of implementing supply chain management is the formation of appropriate linkages between members of the supply chain. While practitioners and academics have championed the value of partnerships for this purpose, the challenge is to find effective methods for developing the appropriate type of relationship. In an environment characterized by scarce resources, increased competition, higher customer expectations, and faster rates of change, executives are turning to partnerships to strengthen supply chain integration and provide sustainable competitive advantage. Partnering provides a way to leverage the unique skills and expertise of each partner and may also “lock-out” competitors.
Partnerships, however, are costly in terms of the time and effort required. Consequently, a firm cannot and should not partner with every supplier, customer or third-party provider. It is important to ensure that scarce resources are dedicated only to those relationships which will truly benefit from a partnership. Yet, many organizations become involved in relationships that do not meet management expectations and/or which end in failure. How can managers determine, in advance, if a potential relationship is one which will result in competitive advantage, and is worthy of the time and resources needed to fully develop into a partnership? Further, all partnerships are not the same. How does management know what type of partnership would provide the best pay-off? These questions may be answered by utilizing the partnership model presented in this book.
The partnership model represents a systematic process for developing, implementing and continuously improving corporate relationships. Without a foundation of effective relationships, efforts to manage the flow of materials and information across the supply chain are likely to be unsuccessful. Partnering between firms is one way to find and maintain competitive advantage. The partnership model provides a structured and repeatable process to effectively and efficiently build and maintain tailored business relationships that may become an asset for executives looking for competitive advantage. One example is the Wendy's and Tyson relationship, which was the basis for a 2004 article in Harvard Business Review. You can also read more detail on the partnership model in Chapter 14 of the book.
The partnership model
Click play to watch Dr. Douglas M. Lambert provide a brief description of the partnership model.
The Partnership Model has become an essential tool for me in structuring the supplier relationships that are necessary for business success. Understanding both parties’ expectations and the potential benefits of a relationship is essential to appropriately allocate time and resources. Using the model has improved our efficiency and success rate with supplier relationships. Our suppliers often praise it for helping them better allocate resources and achieve the improved results.
—Judith Hollis
Vice President Supply Chain, R&D, and QA
Fazoli's System Management, LLC