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NAPM InfoEdge
February 1999, Vol. 4 No. 6

Alliances: How to Enter an Alliance Relationship


Table of Contents
  • Getting Started with Alliances Members Only Content
    Alliances, partnerships, strategic supplier relationships…the list is endless as purchasing and supply professionals implement programs to get closer to their suppliers. No matter what your business, manufacturing or service, for profit or not, government or private, every business requires the purchase of goods, services, and intellectual products. At all times, you will be looking for supplier relationships that provide reliability, quality, and affordability. At certain times, you will be looking to extend relationships with certain suppliers to meet the objectives of supply assurance, new innovations, or integrated relationships.

  • Putting the Alliance Gears in Motion Members Only Content
    When considering strategic alliances as a supplier model, the big questions are: "What products or services are ripe for an alliance? Which suppliers will make the best alliance partners? How should a purchasing organization structure its effort to evaluate and consider this type of model?" All of these issues will have to be examined thoroughly. In the article, "A Case Study of Successful Partnering Implementation," Lisa M. Ellram and Owen R.V. Edis offer a five-phase process which illustrates the development and evolution of purchasing relationships. See the box below.

  • Formalizing the Alliance Agreement Members Only Content
    Initial supplier contact is very critical to the success of the alliance. Senior management will play the key roll initializing the process both internally and externally. Having formed the team (see the box "Who’s on Your Team?" on page 9), determine a list of potential issues to explore with the supplier. Again, input from your senior management will be required. The team or team leader of the purchasing organization should meet with counterparts at the supplier organization. The objective is to gain support and resources as they move into the next desired action: contact with the supplier. As a matter of fact, the senior manager can speak to the benefits of bringing the two organizations together in the broad sense. The team, when they meet, will focus on operational, tactical, and perhaps some strategic issues. Depending on the supplier size, product type, and level of sophistication, the supplier may require some assistance in forming the team, identifying issues, and setting expectations.


AUTHOR(S)

Paul A. Ries, C.P.M.
Paul Ries is manager of purchasing at Solvay Pharmaceuticals, Inc., at their manufacturing plant in Baudette, Minnesota. Mr. Ries has over 25 years of purchasing and materials management experience including work at Economics Laboratory, Inc. and the University of Minnesota. He has also consulted on many purchasing projects for various organizations. Mr. Ries is a graduate of the University of Minnesota Business School and received his Certified Purchasing Manager certification in 198l. In addition to teaching purchasing classes for two and one-half years, he has presented seminars at NAPM—Twin Cities, Inc. monthly meetings.



REFERENCES
  • Akacum, A. and Dale, B.G., "Supplier Partnering: Case Study Experiences," International Journal of Purchasing and Materials Management, NAPM, Winter 1995
  • Burns, B. and Whittle, P., "Supplier Development: Getting Started," Logistics Focus, February 1995
  • Ellram, L.M. and Edis, O.R.V., "A Case Study of Successful Partnering Implementation," International Journal of Purchasing and Materials Management, NAPM, Fall 1996
  • Veates, C.Q. and Lee, C.E., "Managing Successful Supplier Alliances," NAPM InfoEdge, NAPM, November 1996
  • Hughes, J. and Michels, W.L., "The Reality of Strategic Relationships: Ten Keys to Success," 81st Annual International Purchasing Conference Proceedings, NAPM 1996
  • Bechtel, C. and Hoover, D.J., "Are Your Alliances Strategic?," Purchasing Today®, May 1997


FOR FURTHER READING
  • Burnes, B. and New, S., "Collaboration in Customer-Supplier Relationships: Strategy, Operations and Function of Rhetoric," International Journal of Purchasing and Materials Management, NAPM, Fall 1997
  • Droesser, W., "Finding the Perfect Fit," NAPM Insights, October 1995
  • Ricker, J., "The Synergy of Strategic Sourcing," Purchasing Today®, May 1997

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