Professional Documents
Culture Documents
5-1
Key Concepts
A Transformation in Relationships
Types of Buyer-Supplier Relationships
Transactional Relationships
Collaborative and Alliance Relationships
Collaborative Relationships
Supply Alliances
A Transformation in Relationships
The transformation from reactive and
mechanical purchasing to proactive
procurement and on to strategic Supply
Chain Management equivalents a similar
transformation in relationships between
buyers and suppliers
Prior to the 1980s most purchasing
relationships were reactive
Interaction between vendor and
purchasing resulted in outcomes where
ones gain would be the others loss
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Communication
Competitive Adv.
Connectedness
Continuous Impr.
Contributions to NPD
Difficulty of Exit
Duration
Expediting
Focus
Level of Integration
Transactional
Collaborative
Alliance
Systematic approach
High
Interdependence
A focus
Many ESI
Difficult high impact
Long
Proactive
Total cost
High or total
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Number of Suppliers
Open Books
Quality
Relations
Resources
Service
Shared Forecasts
Supply Disruptions
Technology Inflows
Type of Interaction
Transactional
Many
No
Incoming inspection
Inward looking
Few low skill level
Minimal
No
Possible
No
Tactical
Collaborative
Alliance
One or few
Yes
Design quality in system
Concern w/well being
Professional
Greatly improved
Yes
Unlikely
Yes
Strategic synergy
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Collaborative Relationships
Typically used for the procurement of noncommodity items and services
A collaborative relationship frequently is
an appropriate first step on the road to a
strategic alliance
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Collaborative Relationships
Collaborative relationships tend to
foster.
Longer term contracts
Reduction of risk for suppliers
Reducing total costs
Improvement of processes
Improvement of products
Increased investment in R & D
Increased investment in training
Increased investment in equipment
Better focus on customer needs
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Supply Alliances
The fundamental difference between
collaborative relationships and supply
alliances is the presence of institutional
trust in alliances
The failure to develop and manage
institutional trust is the principle reason
that so many supply alliances fail
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Alliance Attributes
Continuous improvement
Interdependence and commitment.
Atmosphere of cooperation
Informal interpersonal connections
Internal infrastructures to enhance learning
Openness in all areas of the relationship
A living system
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Capability
No Partnership/Alliance-Capable Supplier for the Item
No Partnership/Alliance-Capable Supplier in the
Geographic Area
Rapid Technological Change
Mismatch of Clock Speed
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Competition
Non-Competitive Market
Supplier Dependency Creation
Neglected Areas
Suppliers Seeking to Reduce Competition
Benefits
No leverage (control) from Partnership
No Hard Savings from Partnership
Internal Buy-In
No Internal Customer Buy-In
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INSTITUTIONAL
TRUST
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Trust
Trust is one of the key factors that
differentiates the three classes of
relationships.
The simplest definition of trust is being
confident that the other party will do what
it says it will do.
Some level of trust must be present in all
three types of relationships
The level of trust increases with
collaborative relationships and becomes
an essential characteristic with strategic
alliances
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