Monday, November 3, 2008

Talking Business - Strategic Alliances

There has always been and will be conflict in the supply chain, no matter what industry is in question. And this will be true in the future, I believe. More times than I can remember, I have presented my keynote presentation titled, The New Era of Manufacturer/Distributor Cooperation at either manufacturing or distribution association meetings.

One result that is proven to be true for years is the supply chaing partner relationship that is strenghten by good communication, according to research. Unfortunately, that rarely proves to be the case. All supply chain partners can improve with a collaborative relationship and communication.

In building an effective collaborative relationship with your supply chain partner the one thing that will help you the most to improve communication is your ability to understand the value your supply chain partner needs to receive from the relationship. As an example, your procurement department might believe that your supply partner should cut their price so low that they no longer make a profit. And that is just ridiculous.

If you make an effort to understand the total value your supply partner needs and help them to receive that total value package, they will perceive you as a great partner and communication will become easier. Don't give away the bank here, but to deliver the value your supply parnet needs, you should put your energies into the services and activities and other similar tasks.

Improvements of the Supply Chain

Just-in-time inventory purchasing and supplying as exemplified by the famous relationship between Wal-Mart and Procter & Gamble has continued to prove successful. Another example are Dell Computers and Home Depot that have built a strong strategic alliance with the justi-in-time inventory that is so much cost saving. You can do this in your business too. It is possible to develop much closer relationship and communication with a supply chain partner.

To share the same strategy as your partner is a must in the business. The highest priorityis to promptly respond to any complaints and conflicts that arise. It is one of the best ways to improve the trust and build up loyalty betwenn you and your strategic partner.

No comments: