‘Partnership’ Supply Relationships

Topics: Supply chain, Corporation, Vertical integration Pages: 2 (501 words) Published: July 16, 2013
‘Partnership’ supply relationships

Partnership relationships in supply chains are sometimes seen as a compromise between vertical integration on the one hand (owning the resources which supply you) and pure market relationships on the other (having only a transactional relationship with those who supply you). Although to some extent this is true, partnership relationships are not only a simple mixture of vertical integration and market trading, although they do attempt to achieve some of the closeness and coordination efficiencies of vertical integration, but at the same time attempt to achieve a relationship that has a constant incentive to improve. Partnership relationships are defined as: ‘relatively enduring inter-firm cooperative agreements, involving flows and linkages that use resources and/or governance structures from autonomous organizations, for the joint accomplishment of individual goals linked to the corporate mission of each sponsoring firm’. What this means is that suppliers and customers are expected to cooperate, even to the extent of sharing skills and resources, to achieve joint benefits beyond those they could have achieved by acting alone. At the heart of the concept of partnership lies the issue of the closeness of the relationship. Partnerships are close relationships, the degree of which is influenced by a number of factors, as follows:

Sharing success. An attitude of shared success means that both partners work together in order to increase the total amount of joint benefit they receive, rather than manoeuvring to maximize their own individual contribution. •Long-term expectations. Partnership relationships imply relatively long-term commitments, but not necessarily permanent ones. •Multiple points of contact. Communication between partners is not only through formal channels, but may take place between many individuals in both organizations. •Joint learning. Partners in a relationship are committed to learn from each other’s...
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