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.

SCM information flow

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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. 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. 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 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 an article in Harvard Business Review. You can also read about the Partnership Model in Chapter 15 of the Supply Chain Management book or purchase the Building High Performance Business Relationships book which contains an in-depth description of the model, provides details about how to use it and tools for managing a partnership meeting.

The Collaboration Framework

The Partnership Model should be used to structure relationships with key customers or suppliers where there is a history of working together and both sides view the relationship as having the potential for partnership. But, what should management do if these conditions are not met? To be successful, business-to-business relationships require that each side clarifies their expectations and mutually agree on goals for the relationship.

The Collaboration Framework can be used to structure collaborative business relationships where the conditions for successfully using the Partnership Model have not been met. A new relationship with
high potential or an important relationship to each side that is not a balanced relationship are examples where The Collaboration Framework should be used.

Also, The Collaboration Framework can be used in the development of product and
service agreements with key customers and suppliers. During the one-day collaboration meeting, managers from each organization involved in a business-to-business relationship clarify their expectations and mutually agree on goals for the relationship.


Click here to read a case study of the Collaboration Framework in action.