What is Supplier Partnering?
Partnering is a defined as a continuing relationship, between a buying firm and supplying firm, involving a commitment over an extended time period, an exchange of information, and acknowledgement of the risks and rewards of the relationship. The relationship between customer and
supplier should be based upon trust, dedication to common goals and objectives, and an understanding of each party’s expectations and values.
Benefits of Partnering
The benefits of partnering include:
(i) Improved quality;
(ii) reduced cost;
(iii) Increased productivity;
(iv) Increased efficiency;
(v) Increased market share;
(vi) Increased opportunity for innovation; and
(vii) Continuous improvement of products / services.
Key Elements to Partnering
The three important elements to achieve the customer / supplier partnering relationship are :
1. Long-term commitment: Long-term commitment provides both customer and supplier the much needed environment to achieve the planned objectives. Because to set up and solve the problem of continuous improvement, both parties may require the sufficient time.
2. Trust : Mutual trust between two parties forms the basis for a strong working relationship. Trust enables the partners to effectively combine their resources and knowledge. It results in a ‘win-win’ situation for both partners.
3. Shared vision : Both the customers and suppliers have the common goal i.e., to satisfy the end user. In order to ensure this goal, both particles should share and understand their goals and objectives.
Three types of supplier sourcing are:
o Sole sourcing;
o Multiple sourcing, and
o Single sourcing.
1. Sole Sourcing
Sole sourcing is the use of only one supplier for the organization. The organization does not have any choice. It is forced to use only one supplier.
This forced situation is because of the following factors : patents, technical specifications, raw material location, only one organization producing the item, etc.
2. Multiple Sourcing
Multiple sourcing is the use of two or more suppliers for an item.
The basic concept of multiple sourcing is that competition will result in better quality, lower costs, and better service. (The selection of suppliers from various alternatives is based on their performance in terms of prices, quality and delivery.
3. Single Sourcing
Single sourcing is the use of one supplier for an item when several sources are available. It leads to long-term partnering relationship.
The suppliers should be treated as partners to achieve the same quality level as attained within the organization.
The following forces need Supplier Partnership to improve quality, reduce costs and increase market share.
Ø Deming Philosophy (Deming’s 4th point)
Ø Continuous process improvement
Ø ISO 9000
CUSTOMER – SUPPLIER RELATIONS
Dr. Kaoru Ishikawa has given ten principles of customer-supplier relations. They are
1. Both the customer and supplier are fully responsible for the control of quality.
2. Both the customer and supplier should be independent of each other.
3. The customer is responsible for providing the supplier with clear and sufficient requirements so that the customer can know precisely what to produce.
4. Both the customer and supplier should enter into a non-adversarial contract.
5. The supplier is responsible for providing the quality that will satisfy the customer.
6. Both the customer and supplier should decide the method to evaluate the quality of the product or services.
7. Both the customer and supplier should establish in the contract the method by which they can reach an amicable settlement in case of any dispute.
8. Both the customers and supplier should continually exchange information.
9. Both the customer and supplier should perform business activities.
10.Both the customer and supplier should have the best interest of the end user in mind.
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