3.1 - Analyse the concept of partnering and where it is a suitable approach Flashcards
Name the 3 stages of the CIPS Partnering Spectrum
- Independent
- Collaborative
- Integrated
Describe an independent partenring agreement (3)
- Tends to be shorter-term and smaller in scope
- There are likely to be fewer functional departments involved in the partnership
- Performance metrics, risk sharing and reward opportunities are limited to the activity or project which is included in the partnership
Describe a collaborative partnering agreement (2)
- It tends to be longer term and cross functional
- There is likely to be a wider degree of performance monitoring and management
Describe an integrated partnering agreement
- It embraces synergy across the two organisations, to the extent they could be considered as functions within the same organisations
Why is it important for procurement professionals to be able to distinguish between strategic, collaborative style relationships and true partnerships
It is possible for buyers and suppliers to reduce costs and waste, minimise social impacts and increase performance without developing a parternship-style relationship
Name 9 characteristics of true partnerships
- Time
- Resources and skills
- Cost
- Number of functional departments
- Number of activities
- Location of partner
- Sustainability
- Risk
- Culture
Name 7 characteristics that differentiate between having a partnership relationship with a supplier and having a traditional contracting relationship
- Early supplier involvement
- No tender process or win-lose negotiations
- Shared costs and benefits
- Greater levels of information sharing and transparency
- Joint performance measurement and KPIs
- No defined end period or parties may choose to use an evergreen contract. Generally partnerships run over a longer period than traditional relationships
- Less stringent terms and conditions
Describe ESI versus buyer-developed specifications
In a traditional contract situation a buyer will develop a specification for the required products and services by working with internal user departments. this specification will then be used as part of the competitive tender process. However with partnerships the supplier will be involved at a much earlier point - some products are likely to be developed jointly by a buyer and supplier
Describe tradition versus partnership sourcing
Before a traditional contract is entered into with the supplier, it will have been involved in a competitive tender process which involves supplier selection, evaluation and negotiation. The suppliers offering is compared against those of other suppliers in the marketplace. However, with partnership sourcing, the supplier is generally not ‘selected’. The supplier is usually known to the buying organisation. they generally have an existing long-term relationship, and the buyer will have identified the supplier as a suitable candidate for partnering
Describe negotiation, traditional versus partnership
Following a formal tender process, negotiation is often undertaken with suppliers, which may result in a win-lose situation. However, in the case of partnerships, these discussions will be based on a win-win situation.
Describe joint performance measurement, traditional versus partnership
As part of a traditional contract and contract management process, a buyer will measure the success of a supplier by including key performance indicators in the contract. These will measure operational elements such as the percentage of deliveries on time and in full, or the number of non-compliant products in a delivery. Only the suppliers performance is measured. However, with a partnership agreement, aspect of both the buyers and suppliers performance will be measured and shared between the parties
Describe timing, traditional versus partnership
Partnership relationships are mainly longer-term, some without a defined end period. Traditional contracting agreements will typically last from one to three years having a defined term.
Name 11 drivers for partnerships
- Cost reduction
- Improved products or services
- Changing unstable or new markets
- Improved performance
- World class standards
- Reduce waste
- Customisation or complexity
- Market competition
9 Security of supply - Business development
- Sustainability measures
Name 10 advantages of partnerships
- Cost saving
- Competitive advantage
- Investment
- Reduced risk
- Access to new markets
- Shared resources
- Information and knowledge sharing
- Reduced waste
- Innovation
- Shared investment
Name 4 partnership advantages for the buyer only
- Price stability
- Cost savings
- Continuity of supply
- Improved service levels
Name 3 partnership advantages to the supplier only
- Certainty of business
- Increased volume of business
- Supplier initiatives
Name 5 joint disadvantages of partnership sourcing
- Over-dependence
- Incompatibility
- Intellectual Property Risk
- Unrealised benefits
- Flexibility
Name 2 disadvantages of partnership sourcing for the buyer only
- Complacency
- Lock-in
Name 2 disadvantages of partnership sourcing for the supplier only
- Over-dependence
- Unethical buyer risk
Name 5 financial benefits of partnerships
- Unit costs may be reduced for the buyer due to economies of scale achieved from placing all volume with one supplier
- Costs may be reduced by removing waste from the supply chain
- Profitability for the buyer may be increased as a result of the cost base being reduced and the selling price to consumers remaining the same
- Value-sharing models may be used.
- Savings could also be made on stock holding if the partners developed Lean or just in time stock holding , this would improve cash flow of the buying organisation
Name 2 tasks that can help a buyer to act quickly to develop a partnership
- Periodic scanning of the marketplace to understand new supplier entrants and the products or services they offer
- Undertaking research on what competitors in the buyer’s marketplace are doing
Name 6 reasons why a marketplace may be restricted
- High financial investment is required to enter the market
- Some markets have low levels of profitability, and as a result, new suppliers are not tempted to enter the marketplace
- In markets where brand loyalty is high, it would be difficult for a supplier to break into a marketplace and compete with strong, established brands
- Some markets are heavily regulated by governments and legislation
- In some markets, obtaining access to distribution channels is difficult due to pre-existing relationships
- In some markets, existing companies collude in order to deter new entrants, for example by undertaking aggressive marketing strategies
Restricted marketplace
A market where there are only a small number of capable and competent suppliers, for example military, medical and oil markets
