Chapter Five: Partnering and Strategic Alliances

1. Chapter Five:Partnering and Strategic Alliances MAJOR TOPICS • Partnering or Strategic Alliances • Innovative Alliances and Partnerships • Internal Partnering • Partnering with Suppliers • Partnering with Customers • Partnering with Potential Competitors • Global Partnering • Education and Business Partnerships

2. Partnering or Strategic Alliances • Partnering means working together for mutual benefit. • The purpose of partnering is to enhance competitiveness. • It involves pooling resources, sharing costs, and cooperating in ways that mutually benefit all parties involved in the partnership. • Partnerships may be formed internally (among employees) and externally with suppliers, customers, and potential competitors. • The maximum benefits of partnering are realized when all parties in the chain of partners cooperate.

3. Intro Oct 01 ipod dominated market for portable media players Constant renewal of product; new generation every year Partnering with suppliers Capable of quantity and quality Global Rapid response Partnering with logistics & retailers Walmart/Best buys Without extra cost Without extra inventory Informational supply chain Download music & videos Download software & upgrades Apple ipod

4. Partnering or Strategic Alliances • The formation of partnerships should be a systematic process involving such steps as • development of a partnering briefing, Making sure all those involved understand the concept of partnering, determine the level of commitment, develop a mission statement and objective • identification of potential partners, Chose partners determined by how much value they can have towards enhancing quality, productivity and competitiveness • identification of key decision makers,Identify those key people and decision makers; their support is necessary for the partnership

5. Internal Partnering • The purpose of internal partnering is to harness the full potential of the workforce and focus it on the continuous improvement of quality. • Internal partnering is also called employee involvement and employee empowerment. • Successful internal partnering requires a supportive environment, structured mechanisms, and mutually supportive alliances.

6. Internal Partnering • Internal partnering operates on three levels: • management-to-employees • team-to-team partnerships • employee-to-employee partnerships.

7. Internal Partnering Successful internal partnering requires a supportive environment, structured mechanisms, and mutually supportive alliances • Supportive environmentIf the environment is conducive to internal partnering, then it is encouraged and even rewarded • Structured MechanismsThere needs to be systems in place for employees to funnels improvement ideas, and HR considerations for meetings • Mutually Supportive AlliancesInternal partnering alliances must support each other and NOT be building individual fiefdoms. They must ALWAYS be for the improvement of the organization. Facilitates turning good ideas into improvements Pg 152

8. Partnering with Suppliers Traditional supplier relationships have been adversarial • The goal is to form a mutually beneficial relationship which promotes continuous improvement of quality, productivity and competitiveness. • Stages of development • Uncertainty & tentativeness • Short-term pressure • Need for new opportunity • Adoption of new paradigm • Awareness of potential • Adoption of new values • Mature partnering See Quality Tip page 156 Pg 156

9. Partnering with Suppliers Requirements of Supplier Partnerships • Supplier should meet and develop relationships with the users of their product, rather than just the purchasing people • Price-only approach should be eliminated. Price still needs to be considered, but along with aspects such as product features, quality, delivery, etc. • The quality of the supplier’s product must be guaranteed by the supplier’s quality programs – they need to have adopted TQM as a business practice. • Supplier needs to understand and practice JIT. Buyers should not maintain inventories • Information needs to be shared electronically Pg 154

10. Partnering with Suppliers Emerging issues in Supply-Chain Management • SecurityThe world has changed since 911, that includes the business world. Terrorism is a real threat, especially within certain industries, such as the food industry. • Adaptability & ResponsivenessAn organizations competitors improve using these methods as well. To stay competitive a company…and it’s suppliers…must be able to rapidly adapt to a changing competitive environment • GlobalizationGlobalization has changed the customer base, making the need for adaptability a necessaity. This would also include the size, type and location of suppliers they partner with. • Misalignment of material technologies and product life cyclesHigh Tech products (computers, ipods, phones, etc) have a life cycle which continually changes • Transition and Crisis ManagementOrganizations need to the ability to recover quickly from disasters which may strike their suppliers Pg 157

11. Partnering with Customers • The rationale for forming customer partnerships is customer satisfaction and increased competitiveness. • The best way to ensure customer satisfaction is to involve customers as partners in the product development process. • Doing so is, in turn, the best way to ensure competitiveness. Customer-defined quality is a fundamental aspect of total quality.

12. Partnering with Customers The rationale for forming customer partnerships is customer satisfaction and improved competitiveness. A company needs to ask these questions • Who knows better what the customer wants, your organization or the customer? • What makes more sense, guessing what a customer wants, or asking them? • Can a manufacturer benefit from seeing how the product is used by the customer? • What costs more, making design changes early in the development phase, or recalling faulty products which have been already made and delivered? The further along in the product devlopment cycle a product is, the more costly the changes can be Pg 159

13. Partnering with Customers Case– Threadless.com

14. Partnering with Potential Competitors Increased competitiveness • Competitors may ban together to improve domestic manufacturing to improve their competitive position over foreign imports. • Competitors may produce products for one another when facilities and equipment are not available • Competitors may share information on safety, regulatory controls, education, training, etc • This is especially prevalent with small and mid-sized enterprises (SMEs) Pg 160

15. Partnering with Potential Competitors • Small- and medium-sized enterprises or SMEs, even those that compete in the same markets, can benefit from partnering. • The most widely practiced form of partnership among SMEs is the manufacturing network. • A manufacturing network is a group of SMEs that cooperate in ways that enhance their quality, productivity, and competitiveness. Mutual need and interdependence are the characteristics that make manufacturing networks succeed. • Widely practiced network activities include joint production, education and training, marketing, product development, technology transfer, and purchasing.

16. Education and Business Partnerships • Education and business partnerships are formed to help organizations continually improve their people and how well they interact with process technologies. • Services provided include on-site customized training, workshops, seminars, technical assistance, and consulting.