Monday, 22 March 2010

Partnership

In recent conversations with a strategic director for outsourcing at a large IT company , he was sharing war stories on the relationship crises that were occurring with key suppliers. He was quite open in his analysis that the problem was on his side, and that his business did not have the core competencies to manage partners well. As someone who managed a global partnership with them, I could well understand that in their world, partnerships are suppliers, and suppliers are vendors, but both are basically to do as their told. I could not help but remember the saying “When the economy goes well, things go well for lawyers. When the economy goes bad, things go even better for lawyers".

I remember reading about a study of supplier/ automaker relationships in the U. S., Japan, and Korea which examined the extent to which automakers manage their "arms-length" and "partner" suppliers differently. The findings indicated that U.S. automakers have historically managed all of their suppliers in an arms-length fashion, Korean automakers have managed all suppliers as partners, and Japanese automakers have segmented their suppliers and have somewhat different relationships depending on the nature of the component. Only Japanese automakers (Toyota and Nissan) have strategically segmented suppliers in such a way as to realise the benefits of both the arms-length and partner models of supplier management. I would argue that firms should think strategically about supplier management, and perhaps should not have a "one size fits all" strategy for supplier management.

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