Supply Chain Partnerships:
The Model to Move Your Company Ahead of the Game Now

By Bruce Tompkins
Principal, Tompkins Associates

We hear a great deal today about "partnerships." Supply Chain Partnerships (SCPs) can and should occur within each supply chain process, but until now, there has never been a comprehensive model to maximize partnering.

For companies engaged in supply chain activities, the effectiveness of partnerships is essential to the effectiveness of their overall business. Consequently, organizations without a culture and methodology for partnering put themselves at a disadvantage -- and potentially at great risk for failure -- in a volatile economy.

The Role and Context of Supply Chain Partnerships

Supply chain strategy is an integral part of a business: It really supports and feeds the overall company business strategy.

The supply chain strategy must include plans for all elements of the chain: Buy, Make, Move, Store and Sell.

Partnerships can develop, and may even be required, between companies and individuals across the entire supply chain, or they can be focused in specific areas depending on a company's competencies and philosophy.

Defining the Relationships of the Supply Chain

You will notice that "relationship" is spelled here with a capital "R." This is to emphasize that it is the actual "Relationship" that is the most important, not the tools that support it. Most supply chain "Relationship" scenarios have not been fully developed or have been insufficiently nourished.

Supplier Relationship Management - The process used in partnering with companies and individuals who provide you with products and services needed for a company's sustainability and success. As you can see from the SCP chart, this typically includes suppliers, contract manufacturers and co-packers.

Service Provider Relationship Management - The process used in partnering with companies and individuals who provide supply chain services to prepare your products for delivery to the marketplace. Typically, logistics service providers, carriers and managed services providers fall into this category.

Customer Relationship Management - The process used in partnering with companies and individuals such as retailers, distributors and internet service providers who purchase your products.

Eight Pillars of SCP

To support relationships across the supply chain, there are eight primary principles upon which partnerships should be based:

1. Organizational Alignment
2. Relationship Development
3. Communications Protocol
4. Transparency
5. Ongoing Collaboration
6. Continuous Improvement
7. Integrated Key Performance Indicators (KPIs)
8. Sustainability and Risk Management

Add these pillars to the model above, and you have a complete picture of the ideal SCP strategy.

Conclusion

The Complete SCP Model

Below is the complete SCP Model, with a view of the corporate structure from the Boardroom and its business strategies down to the execution and relationships that make the supply chain operate effectively.

Regardless of the supplier, service provider or customer, sound relationship management is critical to the success of your supply chain. Any organization that does not recognize the people side of SCPs is missing out on the biggest area of potential for supply chain improvement.

To fully tap into business opportunities today and in the future, you cannot simply rely on technology and internal planning -- it is more about the big "R" in "Relationships." The key is to use this model and move from software tools that give information and status updates to true partnerships built on sound relationships and collaborative tools.

More about Supplier Relationship Management is available in the Global Supply Chain Podcast, "Supply Chain Partnerships and Supplier Relationship Management in Asia."

Bruce Tompkins is a Principal for Tompkins Associates, the leading provider of global supply chain services, distribution operations consulting, technology implementation, material handling integration, and benchmarking and best practices. His expertise includes traditional industrial engineering and manufacturing, materials management, logistics, and benchmarking/best practices. Bruce is also Executive Director for the Supply Chain Consortium, the premier source for supply chain benchmarking and best practices knowledge.