strategic relationship

Terms like quality management and partnering, or strategic relationship with suppliers are unavoidably linked. Quality guru Dr. Edward Deming has recommended limiting the supply base and forming single source relationships to reduce the sources of variance in incoming product quality. In past several case studies have appeared in the literature that highlight the benefits of that can accumulate from the supplier partnerships.

For example Cambell Soup Company case study, but unfortunately those case studies do not necessarily prove that supplier partnerships are the cause of improvement. The purpose of this study is to examine the interrelationship between Total Quality Management (TQM) and supplier partnering activities outside of the automotive sector. In this study a carton manufacturer was involved in a TQM program that included supplier partnering activity with a buyer. In this study, carton supplier was subjected to traditional purchasing practices by the buyer when the alternate supplier was temporarily utilized.

The implications of utilizing traditional purchasing practices are explored, as are the difficulties in developing purchasing partnerships without the commitment of top management. Partnership involves elements such as the use of long term contracts, a reduced number of supply sources, and a high degree of mutual trust between two parties. One researcher has defined strategic partnership as a ” mutual ongoing relationship involving a commitment over an extended period, and a sharing information and the risk and rewards of the relationships. There are five attributes of buyer-supplier relationships as researched by some scholars, as given below:- 1 . A supply pool consisting of one or a preferred few suppliers. . An alliance incorporating a credible commitment between the buying and selling firms. 3. Joint problem solving activities. 4. An extensive exchange of information between firms. In contrast with the partnering approach, for a number of reasons, traditional purchasing methods typically involve the use of multiple sources for major materials, with relatively short term contracts awarded on the basis of competitive bidding.

Multiple sources can provide quick recovery in the event of supply problems or sudden schedule changes. They can also used to provide competitive price pressure. On the other hand multiple sources can be costly to maintain simply because of the repetitive nature of the bidding process. In this method technology and information sharing is limited. Join development towards continuous improvement is virtually nonexistent. Investment by supplier in research and development and process improvement usually limited to that which can be economically Justified within duration of contract.