Table of Contents
Alliance on the Rocks
Strategic supplier alliances are like a living entity. They begin with much planning and preparation. While they exist, they can be modified and evolve as the business relationship evolves. But just like anything that has a natural life cycle, there will be times when an alliance must come to an end. Some may say that by the sheer nature of alliances, an "ending" isn't in the game plan. And in an ideal world, an alliance would continue, benefiting both parties, forever. But to not plan and be prepared for what might eventually happen is a mistake. Even if it's your intention to continue the relationship indefinitely, if the alliance evolves to an ending point, it's best for purchasing and supply professionals to be prepared.
Ending the Relationship
As in many long-term business relationships, the decision to end an alliance cannot be made in a vacuum nor can it be made by one party without the input of the other. These determinations need to be made not only by the partners but also by the end-users of the product or service. It is hard to imagine that you may have a problem with the supplier without him or her also being affected. Chances are your discussions with the supplier are based on or were initiated by conversations of incidents described by your end-users. If you are considering significantly changing or eliminating the alliance, it is imperative that you have the buy-in of your customers or end-users. They will be very interested in the alternatives you will be describing to them. If they do not buy in to your alternative(s) and it adversely affects them, you will become the focal point of the problem. See the box on this page.
Looking Forward After an Alliance Ends
As difficult as terminating an alliance relationship might be, it is sometimes a necessary action. Along with that action are other steps that a purchasing and supply organization must take for the health and future of the organization.
Lorrie K. Mitchell
Lorrie K. Mitchell, supplier alignment leader, has worked in the supply chain management department of BellSouth Telecommunications, Inc. for 12 years. Ms. Mitchell has negotiated all types of product, software, service, and outsourcing agreements specializing in corporate licenses and maintenance agreements, performance-based agreements, supplier relationships/alliances, and measurement of supply chain management's financial contribution to the corporation. She has a bachelor's degree in mathematics from the University of Miami and a master of science in technology management from the Stetson School of Business and Economics at Mercer University. Ms. Mitchell served as a full-time faculty member at the Keller Graduate School of Management where she taught contracting and procurement management. She has presented sessions at NAPM's 82nd and 83rd International Purchasing conferences and appeared in several publications, including Supplier Selection & Management Report, Purchasing Management Bulletin, Electronic Components magazine, Sales & Marketing Executive Report, and Purchasing Today®. In addition, Ms. Mitchell was profiled in the book The Titan Principle The Number One Secret to Sales Success.
- Babbio, L.T., "Alliances, Partnerships - Making the Marriage Work," America's Network, July 1, 1996
- 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
- Mitchell, L.K., "Buyer/Supplier Performance Based Contracts - Maximizing Success and Sharing Risk," 82nd Annual International Purchasing Conference Proceedings, NAPM, 1997
- Mitchell, L.K., "Having It ALL - Select the Right Supplier AND Develop and Maximize the Relationship," 83rd Annual International Purchasing Conference Proceedings, NAPM, 1998
- 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
Back to Top