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NAPM InfoEdge
March 1999, Vol. 4 No. 7

Alliances: How to Maintain an Alliance Relationship


Table of Contents
  • The Basics of the Alliance Members Only Content
    Strategic alliances are important because they allow the purchaser and the supplier to form a relationship in which both can pursue specific business objectives in a mutually beneficial relationship. These defined business objectives are a critical factor in determining whether the alliance will be a success or failure. All of the time to be invested in the relationship by both parties must be directed by those objectives which initially formed the alliance. Purchaser and supplier expectations will be shaped by the alliance objectives and will be further refined to provide milestone performance measurements. Most importantly, the alliance objectives must be modified and updated to reflect changes in both the purchaser's and supplier's market environment.

  • Making the Alliance a Success Members Only Content
    Like any successful process, a strong strategic alliance has many contributing factors including adequate skills, effective planning, proper management support, clearly defined communication processes, and strategic directions.

  • How Successful is the Alliance? Members Only Content
    Performance measurements are an inherent part of any strategic alliance. Ultimately, the success of any alliance will be gauged by the fulfillment of the original business objectives and the resulting benefits realized by the purchaser and supplier. However, these objectives and benefits will never be achieved if interim performance measurements are not made a part of the alliance process during the maintenance period. Interim performance measurements measure progress to the various goals that have been developed from the broader business objectives of the alliance. Although these measurements may be used for the duration of the alliance, they are interim in that the quantitative performance goal is periodically raised as the improvement process is implemented and the alliance matures. Both the purchaser and the supplier should jointly establish a measurement process that integrates performance accountability, defect identification, cost improvement commitment, problem solving, and two-way communication.


AUTHOR(S)

William S. Wehr, C.P.M.
William S. Wehr, C.P.M., is the corporate director of quality systems for Lewis-Goetz and Company, a diversified multi-location industrial rubber products distributor with headquarters in Pittsburgh, Pennsylvania. He has 32 years of purchasing- and quality-related experience during which his responsibilities included developing, implementing, and maintaining partnering agreements with both customers and suppliers. A graduate of the Air Force Institute of Technology with a master’s of science degree in logistics management, Mr. Wehr is a frequent speaker at purchasing association and trade group meetings. He has been a frequent workshop presenter on supplier relationship topics at NAPM Annual Conferences and a featured speaker at the National Industrial Belting Association (NIBA) and National Association of Hose and Accessories Distributors (NAHAD) annual meetings.



REFERENCES
  • Bechtel, C. and Easton, L., "Developing Trust in Strategic Alliances: Concepts and Best Practices," 83rd Annual International Purchasing Conference Proceedings, NAPM, 1998
  • Bechtel, C. and Hoover, D.J., "Are Your Alliances Strategic?," Purchasing Today®, May 1997
  • Gentry, J. and Dobler, D., Glossary of Key Purchasing Terms, Second edition, NAPM, 1996
  • Harris, G.L. "Partnering with the Best Suppliers," 83rd Annual International Purchasing Conference Proceedings, NAPM, 1998
  • Hendrick, T. and Ellram, L., "Strategic Supplier Partnering: An International Study," Center for Advanced Purchasing Studies, 1993
  • Leenders, M. and Fearon, H., Purchasing & Supply Management, Irwin Publishing, 1997
  • Veates, C.Q. and Lee, C.E., "Managing Successful Supplier Alliances," NAPM InfoEdge, November 1996


FOR FURTHER READING
  • Akacum, A. and Dale, B.G.,"Supplier Partnering: Case Study Experiences," International Journal of Purchasing and Materials Management, Winter 1995
  • Burnes, B. and New, S.,"Collaboration in Customer-Supplier Relationships: Strategy, Operations and Function of Rhetoric," International Journal of Purchasing and Materials Management, Fall 1997
  • Edwards, J.K. and Dansereau, D.,"Supplier Partnerships as Illustrated by the GN/GM Locomotive Power-By-The-Mile Agreement," 83rd Annual International Purchasing Conference Proceedings, NAPM, 1998
  • Parker, G.,"How to Succeed as a Cross-Functional Team," 79th Annual International Purchasing Conference Proceedings, NAPM, 1994
  • Patton, M.G.,"Outsourcing — A Strategy Whose Time Has Arrived," 83rd Annual International Purchasing Conference Proceedings, NAPM, 1998
  • Smeltzer, L. and Roberts, R.G.,"Identifying, Developing, and Managing Service Alliances," 83rd Annual International Purchasing Conference Proceedings, NAPM, 1998

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