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Types of Relationships

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Investment may occur because there ... conflict management, ... skills Develop trust and partner-style relationships LESSONS LEARNED: PRACTICAL TIPS BASED ON ... – PowerPoint PPT presentation

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Title: Types of Relationships


1
Types of Relationships
  • Source An Assessment of Supplier-Customer
    Relationships, Rinehart, Handfield, Atkins, and
    Page, 2004, Journal of Business Logistics

2
Relationship Continuum
3
NonStrategic Transaction (16)
  • These situations included one-time as well as
    multiple transactions between parties.
  • Little to base a relationship on.
  • This may be partly due to the limited
    communication that occurs, restricting
    opportunity for the parties to get to know one
    another on a personal basis.
  • 10 of these exchanges involved capital assets
    and equipment transactions.
  • Examples?

4
Administered Relationships (14)
  • The most basic cluster that can be classified as
    a true relationship.
  • These situations also can include one-time or
    multiple transactions between parties, but there
    is a stronger emphasis on attempting to manage
    the relationship through non-formalized influence
    strategies.
  • These would include efforts related to
    merchandising support or business process
    consulting by representatives of one party with
    the other.
  • Can you think of any examples?

5
Contractual Relationships (18)
  • Reflect the need for formalized control over
    business activity between suppliers and
    customers.
  • At the organizational level, managers recognize a
    strong supply or market-based need for the
    relationship based on the business volumes
    conducted with the other organization, without a
    desire to raise the level of required investment
    in the relationship.
  • Can you think of any examples?

6
Specialty Contract Relationships (6)
  • Contracts for unique products or services that
    are exchanged between suppliers and customers.
  • In these situations, few alternatives exist in
    the supply/customer base.
  • Another unique element of these relationships is
    that they seem to be less formal than other
    relationships (67 of responses indicated no
    formal written agreement between the parties).
  • Can you think of any examples?

7
Partnerships (12)
  • Higher levels of personal character (4.72),
    organizational capability (5.19), and
    organizational investment (3.51).
  • Communication frequency (2.96) and perceived
    dependence (3.06) are at the median relative to
    the other relationships, and business volume
    (2.71) in Partnerships is below the median.
  • Span a wide range of product-oriented
    transactions (An example might be a supplier of a
    critical component for a product that delivers on
    a weekly basis.
  • Do not always have formalized controls over
    business activity (43 of the use a standard form
    contract 44no written agreement or agreements
    designed by non-legal personnel)
  • The lack of a formal agreement may at times
    create confusion between the parties
  • Can you think of any examples?

8
Joint Ventures (27)
  • Joint Ventures are generally associated with some
    form of financial investment by the parties in
    the relationship to achieve mutual benefits.
  • 17 percent of Joint Ventures have some form of
    ownership investment,
  • Perception of dependence by one party upon the
    other is greater in Joint Ventures than
    Contractual Relationships.
  • Low levels of personal character and
    organizational capability.
  • Investment may occur because there is a lack of
    trust in the other party, and the firm uses the
    investment as a mechanism to maintain control
    over the relationship
  • Can you think of any examples?

9
Alliances (18)
  • 28 of Alliances involve some form of investment
    by the parties to achieve joint benefits.
  • However, Alliances reflect different behavioral
    dimensions relative to the other relationships.
  • Alliances indicate a high level of importance in
    the personal character of the other party and
    greater communication frequency between the
    parties.
  • In addition, Alliances demonstrate the second
    highest level of importance to be perceived
    dependence, business volume, and investment.
  • Can you think of any examples?

10
Trust
11
Dependence
12
Interaction Frequency
13
Questions to consider
  • What does it take to manage a long-term
    relationship?
  • What types of behaviors are important?
  • What are the guiding principles?

14
Basis for a Successful Relationship
Open Communication
Mutual Trust
Common Goals
Commitment to Mutual gain
Organizational Support
Source Weitz, et. al., 2004
15
Basis for Successful Relationships
  • Trust is a belief by one party that the other
    will fulfill its obligations in a relationship
  • Where trust exists, partners are more willing to
    share relevant ideas, clarify goals and problems,
    and communicate more effectively
  • Shared information becomes increasingly
    comprehensive, accurate and timely
  • Less energy on checking up and proof testing
    because both parties believe one will not take
    advantage of the other.

Mutual Trust
16
Basis for Successful Relationships
  • A key building block for development of
    successful partnering relationships
  • Partners need to understand what is driving each
    others business and what are respective
    underlying interests.
  • Commitment to address concerns and complaints to
    mitigate conflict escalation
  • Commitment to sharing business information that
    facilitates communication and builds trust
  • Acknowledge cultural differences can be easily
    misconstrued in an age of globalism learn to
    critically reflect on assumptions

Open Communication
17
Basis for Successful Relationships
  • Shared goals create a strong incentive to pool
    strengths and abilities
  • Partners can focus on exploiting opportunities
    rather than debate who benefits most from the
    relationship
  • Identify SMART common goals if possible
    specific, measurable, achievable, realistic and
    linked to timelines
  • Incentive to cooperate because partners know they
    can achieve higher levels of performance and
    result attainment
  • Can help sustain the partnership when expected
    benefit flows are not attained as initially
    envisioned.

Common goals
18
Basis for Successful Relationships
  • Crate win-win relationships by looking for
    overlapping areas of opportunity in which both
    can prosper.
  • Facilitate strategic integration by sharing
    appropriate information with key suppliers to
    improve product quality, sales, and total supply
    chain cost reduction.
  • Interdependence and mutual dependence drives
    high-performing relationships it facilitates a
    cooperative spirit and collaborative culture
    through credible commitments to each other.
  • Partners search for ways to expand the pie and
    minimize time spent resolving conflict over how
    to split it.

Commitment to Mutual gain
19
Basis for Successful Relationships
  • Organizational systems, processes, and structures
    must support partnering relationships (early
    focus on barrier reduction and enabling
    celebrate early wins.
  • Investment in building a partnering culture.
  • Special competencies in partnering are essential
    interest-based negotiation, conflict
    management, relationship aptitude and
    sensibility, and open communication skills
  • Management recognition of the hidden by real
    valuation in relational capital as an emerging
    form of intellectual capital
  • Consulting skills sales and other people need
    to be taught how to identify customer needs,
    design solutions, and work to improve
    performance.

Organizational Support
20
LESSONS LEARNED PRACTICAL TIPSBASED ON
COMPANIES EXPERIENCES
  • INTERNAL REQUIREMENTS
  • Top-level executive commitment and visible
    support
  • Company-wide education, training and
    understanding
  • Cross-functional collaboration
  • Clear empowerment and realistic targets
  • Integration of purchasing into new product
    development
  • SUPPLIER SELECTION
  • Complete a strategic supplier selection process
  • Integrate only critical strategic suppliers
  • Know the marketplace
  • Know the limitations of suppliers capabilities
  • Avoid integrating direct competitor suppliers in
    the same development
  • Specify required supplier skills
  • Develop trust and partner-style relationships

21
LESSONS LEARNED PRACTICAL TIPSBASED ON
COMPANIES EXPERIENCES (cont.)
  • MULTI-FUNCTIONAL, CROSS-ORGANIZATIONAL TEAMS
  • Establish common goals and objectives based on
    buying companys new product development needs,
    clearly specified and communicated to all parties
  • Educate and train all involved to understand the
    process
  • Encourage teams to establish clear, achievable,
    realistic goals with delegated authorities and
    accountabilities
  • Remove internal boundaries and perceptions of
    traditional departmental/functional roles
  • Clearly establish roles and responsibilities to
    maximize exploitation of total potential
    capability
  • Ensure continuity of key individuals throughout
    the project
  • Capitalize on supplier technical knowledge,
    skills and experience

22
LESSONS LEARNED PRACTICAL TIPSBASED ON
COMPANIES EXPERIENCES (cont.)
  • PROCESS DEPLOYMENT
  • Work from a clearly established set of
    expectations and specifications
  • Develop a formal, measured process to record and
    communicate impact
  • Monitor performance against targets
  • Be prepared to end the integration effort if
    targets are not met
  • Be prepared to change suppliers who dont perform
    or improve as expected
  • Allow suppliers to use their expertise, standards
    and products
  • Seek a balance of give and take
  • Encourage management reviews on pre-established
    criteria
  • Learn and provide experience feedback to transfer
    improved process to other products
  • Establish contingency plans around people and
    technology
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