Following on to my previous article Strategic Sourcing: Enabling the Enterprise we now look at the next phase of partner advancement, creating Strategic Partnerships. As noted, assigning business value to the relationship is critically important to creating value for your organization and establishing a partnership hierarchy. In this article, we will look at the tiers of partners, aspects of what strategic partnerships are, and how they are the cornerstone of running and growing your enterprise. In a multi level supply chain, this practice can apply to both sourcing and client fulfillment. Let’s first look at the four basic tiers and criteria of partnerships.
A good definition of Strategic Partnerships, in the simplest terms, is doing the difficult well, making sure easy goes as planned.
The following are examples of how utilizing the Supply Chain Management Process can advance partnerships from the volume side of the table to the strategic.
Starting with a sourcing relationship, focusing on a commodity partner, one of largest providers of technology hardware, software, and services in the world, we mutually created a strategy to focus on process improvements and system automation to reduce the cost associated with the procurement and fulfillment of their portfolio, increasing our ability to be efficient and profitable.
The first area of focus was on how we do business together:
1. Portfolio: E catalog of offerings with associated data- SKU, Cost, UPC, additional meta data
2. Quotes: Price and lead time
3. Orders: Electronic submission and validation
4. Data/ Heuristics: Measurement of accuracy/KPI’s and validation of SLA’s
5. Remittance: Systematically matching on multiple levels, electronically clearing AP
Once these practices were formalized and implemented both parties recognized an amazing reduction in the cost associated with goods and services including vast improvements in the fulfillment cycles. Net of this is, together, the creation of a real time system that leveraged automation processing hundreds of daily transactions with less than a 2% failure rate. The partnership saw an ROI in less than 9 months. This success further enabled the relationship and redirected efforts on expanding the client base through the confidence and capabilities we created, introducing business scale to a magnitude that would rival anyone in the market.
From a client perspective, I was recently reminded by a Fortune 50 Chief Procurement Officer of the value of our Strategic Partnership.
Similarly, when we started the relationship we were classified as a commodity partner. They were looking for a partner that would invest in the relationship and create a streamlined procurement system. We started by leveraging the blueprint and lessons learned from the above mentioned project and architected a roadmap that included all of their aspects of procurement, implementation and support of technology in their enterprise. This endeavor included systematic integration into their ERP and Call Ticketing application.
The results were multifold: We achieved fulfillment cycle improvements of 60% to a 2 day SLA, measuring from order to deployment, enabled using that strategic partnership, improving their employee satisfaction and productivity. They still hold this as the gold standard of what a strategic partnership is to this day. In these experiences, we took two separate frameworks of Supply Chain Management and melded these together to get the results that we did. This is another example of the benefit of strategic partnerships; evolving through best practice adoption.
While results may vary, a key aspect of success comes from a perspective of empathy, looking at what success means to each party and how the outcome will mutually benefit the partnership.