Supplier Partnership Agreement

“Supply chain partnerships run into problems because the criteria for success are focused on time, cost and quality, while your perspective is likely to focus on revenue and revenue. A supply chain partnership only works if each party involved can meet the expectations of end customers in terms of quality and price while remaining profitable. Based on my previous contribution to supplier relationship management, I introduced a three-step model for supplier segmentation and management. Generate a positive return for your business and a carefully selected supplier by providing and promoting its products in exchange for exclusive sales rights or cash charges. The establishment of a successful legal relationship begins with the negotiation of a formal partnership agreement acceptable to both parties. To this end, people management is essential to establishing a collaborative customer-supplier relationship, says Barratt. It is therefore essential to put the right people in the right positions. “The term “partnership” of the customer supplier has been used very easily over the years. I`ve heard it`s called “P-word” with a negative connotation,” says Sherry Gordon, author of Supplier Evaluation and Performance Excellence and president of the Value Chain corporate consulting group.

“Suppliers are sometimes cautious when some customers use this term, because client companies mistakenly see partnerships as a way out of the supplier” — price facilitation, for example — without giving and receiving each other. A strategic partnership is a mutually beneficial agreement between two separate companies that are not directly competing. Blancero, D. and Ellram, L. (1997), “Strategic suppliering: a psychological contract perspective,” International Journal of Physical Distribution – Logistics Management, Vol. doi.org/10.1108/09600039710188684 As part of a strategic partnership, two companies are interweeding their efforts in a particular area, such as marketing, supply chain, integration, technology, finance or a combination of them. In any case, a basic strategic partnership agreement should include: what are the essential attributes of a true partnership between a supplier and its customer/partner? Let`s start with a simple framework for stratifying a supply base, and then look at the attributes of the partnership segment. Such a partnership with a long-term customer is based on an always green contract, which is automatically renewed each year for two years. This means that it takes two years for the contract to escape without a mutual decision of the parties. “If someone decides not to perform, you have to live with the other for two years. That means you`re going to solve the problem,” Says Peplin. Overall, the “human” aspect can be a challenge and, to some extent, it is because people “are not the rational beings that most employers present to us,” Barratt suggests.

For example, he asks how often people in personal relationships react more quickly to someone they don`t like. “In a supply chain context, a lot of things happen,” he says. “Relationships with customers and suppliers are very different and the way they act and respond varies accordingly. And it`s not always the biggest customer or supplier that gets preferential treatment. Be prepared to develop new types of partners on the international stage. This advice is provided as a final thought, as it speaks more than building relationships with traditional partners. In this case, it is the need to extend supplier relations to non-traditional partners as well as to foreign governments.

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