What Are the Different Types of Business Partnerships?

Partner suppliers are suppliers that reach certain commitments and agreements with their customers on certain products and services within a specific long period of time, including information sharing, sharing and sharing of benefits and risks due to partnerships.

Partner suppliers

Right!

Partner suppliers are suppliers that reach certain commitments and agreements with their customers on certain products and services within a specific long period of time, including information sharing, sharing and sharing of benefits and risks due to partnerships.

A partner-type supplier relationship is the highest level of cooperation reached between an enterprise and a supplier. It refers to a long-term cooperative relationship in which risk is shared and benefits are shared by both suppliers and buyers in order to achieve a common goal based on mutual trust .

Chinese name

Partner suppliers

Relationship

long term collaboration

Purpose

Achieve common goals

Features

Joint development, creation, etc.

Specifically, partner supplier relationships include the following characteristics:

1. Develop long-term, interdependent partnerships.

2. This relationship is determined by a clear or verbal contract, which is confirmed by both parties and communicated at all levels.

3 Both parties share common goals and develop challenging improvement plans for common goals. 4 Both parties trust each other, share risks, and share information.

5. Joint development and creation.

6. Measure the performance of cooperation with strict standards and keep improving.

An important concept in partnership-type supplier relationships is the early involvement of suppliers and the early involvement of purchasers. In the early stages of the procurement process, the opportunity to influence value is much greater than later. Early joint involvement of suppliers and purchasers will greatly improve activities such as process, design, redesign, and value analysis. The benefits of shortening the cycle time, increasing competitiveness, and reducing costs are enough for many companies to include suppliers into their functional cross-functional teams. Suppliers will participate in activities to save the business, or voluntarily become part of the continued development of partnerships and alliances.

By establishing a long-term partnership with suppliers, you can shorten the supply cycle of suppliers and increase the flexibility of suppliers; you can reduce the inventory level of raw materials and parts of enterprises, reduce management costs, and accelerate capital turnover; Can enhance communication with suppliers, improve order processing, and increase material requirements. Deer can share supplier's technology and innovation results, speed up product development, shorten product development cycles, and share management experience with suppliers. Promote the improvement of the overall management level of the enterprise.

The selection of supplier partners is an important part of supply chain management. It is also a key problem to be solved in the manufacturer's management practice. A proper selection of suppliers will have a certain impact on the quality, cost and reliability of the manufacturer's products. Manufacturers select and select suppliers. Specific steps are as follows:

I. Analysis of market competition environment

Establish long-term cooperative relationships with partners and suppliers based on trust, cooperation and open communication. The market competition environment must be analyzed first. The purpose of market analysis. It lies in judging the market demand for products and the importance of suppliers to products and the possible support. To analyze the specific needs of current products and confirm customer needs. It is necessary to estimate the extent to which the introduction of supplier partnerships can improve corporate performance. Can improve the level of customer satisfaction and promote the speed of product development. Confirm whether to establish a supplier cooperation relationship and analyze the current status of existing industries. Analyze and summarize the problems existing in the enterprise.

The analysis of the supply market helps companies understand the overall level of risk in the supply market. Can help companies identify and select the supplier market segmentation (such as country, technology, and supply channels) that best suits their needs. This lays the foundation for companies to determine in which market segments to look for suppliers

Establishing Supplier Selection Goals

The company must determine the supplier evaluation process. Clarify the implementation link, information flow, and the person responsible for each link. And substantive goals must be established. Cost reduction is one of the main goals. Supplier evaluation and selection is more than a simple evaluation and selection process. At the same time, it is a business process re-leasing process within and between enterprises. An optimized business process can bring a series of benefits in itself

Supplier selection goals are nothing more than the following: to obtain products and services that meet the company's overall quality and quantity requirements: to ensure that suppliers can provide the highest quality services, products and the most timely supply: to strive for the best at the lowest cost Products and services: Eliminate unqualified suppliers, develop potential suppliers, and constantly innovate: maintain and develop good, long-term and stable supplier cooperation relationships.

Establishing supplier evaluation standards

Index system for comprehensive supplier evaluation. It is the basis and standard for enterprises to comprehensively evaluate suppliers. It is an index reflecting the different attributes of the complex system formed by the enterprise itself and the environment. An ordered collection of membership relationships and hierarchies. According to the principles of comprehensiveness, simplicity, science, stability, comparability, flexibility, and operability. Establish a comprehensive evaluation index system under an integrated supply chain management environment. Different industry, business and product needs. Supplier evaluation standards in different environments should be different. but. Supplier evaluation standards relate to industrial performance, equipment management, human resource development, quality control, cost control, technology development, risk management, and customer satisfaction, which may affect supplier cooperation relationships.

In the past research on supplier selection and evaluation. Quality, delivery speed, and past performance were considered to be the three most important. Wilson's comparative study of supplier selection criteria in recent years and supplier evaluations from the 1970s to the 1960s showed that. The relative importance of quality and service is increasing. The relative importance of prices and services has gradually diminished.

Some scholars have pointed out. Quality is the most important selection factor for suppliers. Quality is also the most important performance standard in traditional procurement. It is believed that the traditional purchasing decision emphasizes unit price, quality and delivery speed in terms of supplier selection criteria. From the perspective of the supply chain. More extensive evaluation criteria must be included. Including total cost, quality record, TOM awareness and implementation level, ability to produce and deliver in a timely manner, financial stability, environmental standards, flexibility of after-sales service, guarantee, technical support, corporate contribution, organizational culture, risk The innovation ability points out that quality-oriented procurement is part of the domestic implementation of TQM. In December 1997, the School of Management of Huazhong University of Science and Technology did a questionnaire survey on the selection of suppliers. The industries of the surveyed enterprises include machinery, electronics, light industry and other industries, and the production types include mass production, batch production and multi-variety small batch production. The statistical results show. The evaluation index when an enterprise selects a supplier in order of importance is product quality, price, early delivery, batch flexibility, variety diversity, etc. At present, companies have not formed a comprehensive evaluation index system when selecting suppliers.

Setting up an evaluation team

Companies must establish a team that controls partner supplier evaluations. The members are mainly from the departments that work closely with suppliers, such as procurement, quality, production, and engineering. Each member must have a team spirit and have certain professional skills. The evaluation team formed must be able to obtain the support of the top leadership of both the manufacturer and the supplier. The successful evaluation team must designate a person in charge. Take full responsibility for supplier selection. Incorporate supplier performance into year-end performance indicators. Other members of the evaluation team must also assume corresponding responsibilities and rights. Those who have an interest in participating suppliers should avoid it. This is mainly because once the partner and supplier are identified, they will cooperate with the company for a long time. The wrong choice will have a large impact on the performance of the company. The evaluation of the performance of the evaluation team members and the supplier performance will promote the fairness and objectivity of the selection .

V. Supplier participation

Once the company decides to implement supplier evaluation. The evaluation team must contact the initially selected suppliers. To confirm whether they are willing to establish a cooperative relationship with the enterprise. Is there a desire to achieve a higher level of performance? Enterprises should involve suppliers as soon as possible in the design of the evaluation process. Because the power and resources of the enterprise are limited, the enterprise can only maintain close cooperative relations with a small number of key suppliers. Therefore, the number of suppliers involved in the evaluation should be as small as possible. The enthusiasm of suppliers and enterprises to establish cooperation is more important here. The enthusiasm of the supplier can be judged by the two factors of the value of the business of the company to the supplier and the level of attraction of the company's business to the supplier

1. The value of an enterprise's business to suppliers. The more important a business opportunity is to the supplier. The higher the supplier's interest in engaging in this business, but obviously the size of the supplier's own size determines its different views on the same specific amount of business. A different business is very large for supplier A. It is likely to be insignificant for Supplier B. Use to compare the purchase amount with the turnover of the supplier. Observing this relative value can better obtain the procurement business. Large and small companies that are valued for a particular supplier can generally judge the supplier's own annual report or obtain supplier turnover information from other sources

2. The level of attractiveness of the company's business to suppliers. In addition to the purchase amount. For other reasons, different suppliers have different views on the attractiveness of an enterprise's business. When an enterprise evaluates the attractiveness of a procurement business. Here are some factors that may be considered: Is the business strategy of the company consistent with the business strategy of the supplier? Is it easy for the supplier to conduct business with the company? What is the general record of the company's payment history and financial stability? Does the supplier get any other form of business benefits from the business with the company? Does the company show potential for future business development and expansion in front of the supplier?

Evaluation of suppliers

One of the main tasks of evaluating suppliers is to investigate and collect information on the production and operation of suppliers on the basis of collecting supplier information. Can use certain tools and technical methods to evaluate suppliers, and then make supplier selection decisions based on certain technical methods. In order to establish a partner supplier relationship with qualified suppliers, if there are no qualified suppliers to choose from, you need to adjust the supplier selection goals.

When companies evaluate suppliers. There are two important factors to consider: the ability and motivation of the supplier. Supplier Performance = Supplier's Capability × Supplier's Motivation

The ability of the supplier represents the ability of the supplier to supply products and services to the enterprise. Supplier enthusiasm indicates the supplier's interest and the possibility of completing supply tasks. This formula means that a qualified supplier partner should have the above two conditions at the same time. A supplier who very actively requires cooperation with the enterprise. Will complete the supply task better than a supplier without much interest. The type of relationship the company is trying to establish with the supplier is different. The requirements for the capabilities and enthusiasm of suppliers are also different when the cooperation relationship is closer. Positive factors are issues that enterprises need to consider.

Implementation of supplier partnerships

Due to the changing needs of the market. In the process of implementing that supplier relationship. You can modify supplier evaluation standards in a timely manner according to actual needs, or restart supplier evaluation selection. When re-selecting suppliers. Suppliers should be given appropriate time to adapt to this change.

Establishing long-term partnerships with suppliers must first receive the attention and support of the company's senior leaders. The senior management of the enterprise must realize that supplier management is the most important organic part of the entire company's business management, and must be determined to support procurement and other departments to develop long-term partnerships with suppliers before they can carry out specific work. There are several steps to building a long-term partnership:

1. Purchasing departments should analyze and classify the procurement items of relevant departments based on the research on the supply market, and determine the partner-type supplier objects based on the supplier classification module.

2. According to the requirements of partner-type supplier relationships, clear specific goals and assessment indicators, and develop an action plan to achieve the goals. These action plans must be fully communicated and agreed in the relevant departments of the company, and at the same time, the participation of the supplier must be fully recognized and signed by the representatives of both parties.

3 Organize and follow up on the implementation of the plan through supplier meetings, supplier visits, etc., including tracking and reviewing improvements in quality, delivery, cost reduction, new products, new technology development, etc., and regularly checking progress in a timely manner Adjust actions.

4 Within the company, it is also necessary to track the supplier's comprehensive performance through mechanisms such as monthly supplier evaluation and system audit, and provide timely feedback and put forward improvement requirements.

Research and experience on partnerships show that a number of key factors will affect the success of partnerships. These factors are very important, and the absence of any of them may hinder the development of the partnership and even lead to its failure.

1. The commitment of senior management is at the core of a successful partnership. Senior management has the authority to designate the resources, personnel, information, and budgetary resources required to support partnerships. This process is important. Without the support of resources, the chances of successfully establishing a partnership will be greatly reduced. The commitment of senior management to transmit an information cooperation agreement to each organization is important and should be supported. Partnerships cannot succeed without organizational guarantees.

2. Rigorous supplier selection process. Because the workload of establishing and managing partnerships is very large, and the cost of supplier conversion is particularly high, so choosing a suitable alliance partner is the most important decision for the purchaser. It usually takes a lot of time to identify a candidate supplier, and the performance management system helps the purchaser to "remove" the candidate with poor performance from the existing supplier. In addition, a site visit to a new supplier or a better understanding of an existing supplier is also an important part of the selection process.

3 Continuous efforts to improve. For various reasons, cooperative behavior is perhaps the most critical benefit pursued by partnerships. The two sides provided an opportunity for joint strategy and cooperative action for the formation of partnership efforts. These efforts also promoted the common problems and mutual dependence of both sides and strengthened mutual communication. In turn, it has greatly helped mutual understanding and trust between partners.

4 The goals are the same. The reason for the goal is the first. It implies that the partner spends time and effort to establish the goal, and with the actionable goal, it increases the possibility of success. Second, it means that both parties are working hard to meet each other's needs and Claim. In many cases, it is simply because the goals are inconsistent that it leads to irreconcilable contradictions, which ultimately leads to the failure of the alliance under discussion.

5. Partnership support system and documentation. Cross-functional teams are often used to help establish partnership agreements, but regardless of the group, the cross-functional alliance team must show that they can effectively cooperate with each other. Many affiliate companies use one or more formally signed documents to guide their relationship, which may be a long-term purchase agreement, for example. These agreements highlight a variety of non-price issues, including performance improvement requirements, conflict resolution mechanisms, the designation of specific asset relationships, and incentives that encourage suppliers to further invest in partnerships.

6. Keep an eye on win-win opportunities. The core of a win-win relationship is to understand the needs and expectations of each other. The two parties can enhance their respective values through cooperation, rather than competing with each other in order to divide a fixed market.

7. Communicate and share information widely. Alliances and partnerships have a wider scope than traditional agreements, and therefore require extensive communication and information sharing. For example, purchasers can share their future product plans with suppliers and determine how to integrate them with their technology development plans. In a partnership, communication and information sharing can be carried out in a variety of ways, including the point-to-point or parallel communication between the function managers of the partnership and regular meetings between meetings; email; television or teleconferences; and current affairs reports. Frequent communication should directly promote the further deepening of mutual trust.

8. establish trust. Trust means the prospect of a successful partnership. There are many ways to deepen trust, including open communication between organizations; fulfilling commitments and obligations made; following the principles of ethics and honesty; considering for each other, not just their own interests; publicly publishing events about successful alliances , Especially those events that can strengthen the alliance partner's market position; strictly maintain confidentiality of internal information and data related to the relationship between the two parties; and regularly hold inter-organizational meetings.

9. Resource concessions. Companies can support alliances and partnerships in a variety of ways: travel expenses and conference budgets; formation of teams to formulate and implement agreements; provision of appropriate information; provision of competent personnel; guarantee of team training for internal clients, etc. Among them, senior management has an important role to play in ensuring that the supporting partnership can successfully obtain the required resources.

10 Internal education on the goals and expected benefits of alliances and partnerships. For most organizations, establishing a cooperation agreement means something different. To avoid resistance from business units or production departments, aggressive organizations educate internal customers to focus on the benefits of using partners.

11. The ability to maintain alliances and partnerships when personnel changes. When the original participants are relocated or other personnel changes occur, perhaps the alliance and partnership will face the biggest challenge. Only those companies that maintain organizational continuity when people change can be successful alliances, meaning that every possible organizational structure that changes can accept partnerships. Research on the relationship between supply chain alliances and partnerships shows that maintaining higher trust, more communication and information sharing, has a lot to do with whether the cooperative relationship is satisfactory; the development of cooperative strategies and continuous improvement are also related to cooperation Relationship success and satisfaction are highly correlated. Organizations must pay close attention to the factors that will affect the success of partnerships.