Chapter Five: Partnering and Strategic Alliances

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Chapter FivePartnering and Strategic Alliances

• MAJOR TOPICS
• Partnering or Strategic Alliances
• Innovative Alliances and Partnerships
• Internal Partnering
• Partnering with Suppliers
• Partnering with Customers
• Partnering with Potential Competitors
• Global Partnering
• Education and Business Partnerships

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Partnering or Strategic Alliances

• Partnering means working together for mutual
  benefit.
• The purpose of partnering is to enhance
  competitiveness.
• It involves pooling resources, sharing costs, and
  cooperating in ways that mutually benefit all
  parties involved in the partnership.
• Partnerships may be formed internally (among
  employees) and externally with suppliers,
  customers, and potential competitors.
• The maximum benefits of partnering are realized
  when all parties in the chain of partners
  cooperate.

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Apple ipod

• Intro Oct 01 ipod dominated market for portable
  media players
• Constant renewal of product new generation every
  year
• Partnering with suppliers
• Capable of quantity and quality
• Global
• Rapid response
• Partnering with logistics retailers
• Walmart/Best buys
• Without extra cost
• Without extra inventory
• Informational supply chain
• Download music videos
• Download software upgrades

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Partnering or Strategic Alliances

• The formation of partnerships should be a
  systematic process involving such steps as
• development of a partnering briefing, Making
  sure all those involved understand the concept of
  partnering, determine the level of commitment,
  develop a mission statement and objective
• identification of potential partners, Chose
  partners determined by how much value they can
  have towards enhancing quality, productivity and
  competitiveness
• identification of key decision makers,Identify
  those key people and decision makers their
  support is necessary for the partnership

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Internal Partnering

• The purpose of internal partnering is to harness
  the full potential of the workforce and focus it
  on the continuous improvement of quality.
• Internal partnering is also called employee
  involvement and employee empowerment.
• Successful internal partnering requires a
  supportive environment, structured mechanisms,
  and mutually supportive alliances.

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Internal Partnering

• Internal partnering operates on three levels
• management-to-employees
• team-to-team partnerships
• employee-to-employee partnerships.

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Internal Partnering
Successful internal partnering requires a
supportive environment, structured mechanisms,
and mutually supportive alliances

• Supportive environmentIf the environment is
  conducive to internal partnering, then it is
  encouraged and even rewarded
• Structured MechanismsThere needs to be systems
  in place for employees to funnels improvement
  ideas, and HR considerations for meetings
• Mutually Supportive AlliancesInternal partnering
  alliances must support each other and NOT be
  building individual fiefdoms. They must ALWAYS be
  for the improvement of the organization.

Facilitates turning good ideas into improvements
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Partnering with Suppliers
Traditional supplier relationships have been
adversarial

• The goal is to form a mutually beneficial
  relationship which promotes continuous
  improvement of quality, productivity and
  competitiveness.
• Stages of development
• Uncertainty tentativeness
• Short-term pressure
• Need for new opportunity
• Adoption of new paradigm
• Awareness of potential
• Adoption of new values
• Mature partnering

See Quality Tip page 156
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Partnering with Suppliers
Requirements of Supplier Partnerships

• Supplier should meet and develop relationships
  with the users of their product, rather than just
  the purchasing people
• Price-only approach should be eliminated. Price
  still needs to be considered, but along with
  aspects such as product features, quality,
  delivery, etc.
• The quality of the suppliers product must be
  guaranteed by the suppliers quality programs
  they need to have adopted TQM as a business
  practice.
• Supplier needs to understand and practice JIT.
  Buyers should not maintain inventories
• Information needs to be shared electronically

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Partnering with Suppliers
Emerging issues in Supply-Chain Management

• SecurityThe world has changed since 911, that
  includes the business world. Terrorism is a real
  threat, especially within certain industries,
  such as the food industry.
• Adaptability ResponsivenessAn organizations
  competitors improve using these methods as well.
  To stay competitive a companyand its
  suppliersmust be able to rapidly adapt to a
  changing competitive environment
• GlobalizationGlobalization has changed the
  customer base, making the need for adaptability a
  necessaity. This would also include the size,
  type and location of suppliers they partner with.
• Misalignment of material technologies and product
  life cyclesHigh Tech products (computers, ipods,
  phones, etc) have a life cycle which continually
  changes
• Transition and Crisis ManagementOrganizations
  need to the ability to recover quickly from
  disasters which may strike their suppliers

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Partnering with Customers

• The rationale for forming customer partnerships
  is customer satisfaction and increased
  competitiveness.
• The best way to ensure customer satisfaction is
  to involve customers as partners in the product
  development process.
• Doing so is, in turn, the best way to ensure
  competitiveness.

Customer-defined quality is a fundamental aspect
of total quality.
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Partnering with Customers
The rationale for forming customer partnerships
is customer satisfaction and improved
competitiveness.

• A company needs to ask these questions
• Who knows better what the customer wants, your
  organization or the customer?
• What makes more sense, guessing what a customer
  wants, or asking them?
• Can a manufacturer benefit from seeing how the
  product is used by the customer?
• What costs more, making design changes early in
  the development phase, or recalling faulty
  products which have been already made and
  delivered?

The further along in the product devlopment cycle
a product is, the more costly the changes can be
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Partnering with Customers
Case Threadless.com
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Partnering with Potential Competitors
Increased competitiveness

• Competitors may ban together to improve domestic
  manufacturing to improve their competitive
  position over foreign imports.
• Competitors may produce products for one another
  when facilities and equipment are not available
• Competitors may share information on safety,
  regulatory controls, education, training, etc
• This is especially prevalent with small and
  mid-sized enterprises (SMEs)

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Partnering with Potential Competitors

• Small- and medium-sized enterprises or SMEs, even
  those that compete in the same markets, can
  benefit from partnering.
• The most widely practiced form of partnership
  among SMEs is the manufacturing network.
• A manufacturing network is a group of SMEs that
  cooperate in ways that enhance their quality,
  productivity, and competitiveness. Mutual need
  and interdependence are the characteristics that
  make manufacturing networks succeed.
• Widely practiced network activities include
  joint production, education and training,
  marketing, product development, technology
  transfer, and purchasing.

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Education and Business Partnerships

• Education and business partnerships are formed to
  help organizations continually improve their
  people and how well they interact with process
  technologies.
• Services provided include on-site customized
  training, workshops, seminars, technical
  assistance, and consulting.