Partner Collaboration June 2, 2008
Posted by mhattoninovis in News.Tags: business relationships, crediting deductions, partner collaboration, Supplier Relationships, supply chain
trackback
Image Source: polyglot.com
Many businesses have long cited working with suppliers rather than against them as a best practice for long term, sustained health of their organization. Examples of working with suppliers include structuring mutually beneficial contracts, collaborating on process improvement initiatives, sharing forecast and point of sale information, and crediting deductions after corrective actions have been taken. Sure, there may be some costs associated with these approaches or even a small amount of lost revenue, but over the long run the benefits far outweigh the costs.
Unfortunately, not all businesses have the same approach to supplier relationships. In fact, many businesses still maintain an adversarial relationship with their suppliers. And while the ‘my way or the highway’ approach can work in the short term, it is very difficult to maintain over the long haul. Yet another example of this is highlighted in a recent Supply Excellence article where automotive suppliers are struggling due to long term fixed pricing agreements. These pricing agreements worked well until the price of raw material commodities began to skyrocket. Now you have situations where auto suppliers are losing money by selling at the fixed prices; obviously a bad situation for the supplier, but also a terrible situation for the buyer!
The moral of the story, collaborating with partners and structuring mutually beneficial business arrangements can lead to sustained benefits for all parties over time.
