Partnership sourcing has been defined as ‘a commitment by both customers and suppliers regardless of size to a long term relationship on clear mutually agreed objectives to strive for a world-class capability and competitiveness.
Reasons for seeking partnerships can include improvements in;
- Delivery and completion time
- Production costs
- Operating costs reduction
- Stock levels
- Cash flow
- Skill and resource availability
ADVANTAGES OF PARTNERSHIP SOURCING
- Emphasis on co-operation between purchaser and supplier
- Consideration of total acquisition costs. Lowest price is never the sole buyer consideration.
- Long term business relationships with the involvement of the supplier at the earliest possible stage.
- Emphasis on quality assurance based on total quality management.
- Emphasis on single sourcing- although it’s not of necessity, it will reduce the supplier base.
- Emphasis on mutual trust between purchaser and supplier.
PROBLEMS OF PARTNERSHIP SOURCING
- Termination of the relationship has to be undertaken over a period of time through an agreed separation plan.
- Inequitable business shares that is possible domination by the customer or over-dependence on the supplier
- Lack of confidentiality_ where prospective partners are also suppliers to competitors
- Requires regular review of competitiveness through regular meetings.
- Attitudes_ traditional adversarial buyers and sales people will require retraining to adjust to the new philosophy .