SUPPLY PARTNERSHIPS AND SUPPLY CHAIN POWER

Text : Siti Aisah binti Ehsan Helmi
Images : Google images

In the name of ALLAH, The Most Gracious and The Most Merciful,

For our eleven post, we would like to share about supply partnership and supply chain power.

What is supply chain partnership?

Supply chain partnership is a relationship formed between two independent entities in supply channels to achieve specific objectives and benefits, and it is these partnerships that form the essential building blocks of supply chain management. Partnership is a type of business organization in which two or more individuals pool money, skills, and other resources, and share profit and loss in accordance with terms of the partnership agreement. In absence of such agreement, a partnership is assumed to exit where the participants in an enterprise agree to share the associated risks and rewards proportionately.

The benefits of partnership ?
* The main benefit of partnership is IMPROVE QUALITY.

1) To obtain competitive advantage by good collaboration.
2) Improve communication.
3) Company stability increase.
4) Better product design.
5) Reduce time.
6) Easy to make decisions.
7) Improve reaction to the customer changes.
8) Reduce cost.
9) Reduce risk.
10) Increase profitability.
11) Increased shared technology.

Many types of relationship intensity such as Discrete arm's length transaction, Special influence transaction, Partnership 1,2,3, Joint venture and Vertical integration.

1) Discrete arm's length transaction.
  - short term relationship.
  - open to many supplier.
  - relationship incurred during transaction.

2) Special influence transaction.
  - special treat to the regular customer.
  - for example : customer A and customer B, a company B always buy things with a lot of close             company, so the company is providing more services to the company B against a company because     there is a good relationship between each other.

3) Partnership 1
  - short term relationship.
  - single scope.
  - 3-5 years.
  - handle only one task.

Partnership 2

 - multiple scope.
 - relationship between up to 10 years.
 - two different company merge and work together.
 - control not only transportation, but also control packaging, warehousing, etc.

Partnership 3
 - when a partner he had a problem he will help to solve the problem.
 - combine two company.
 - no has limit time.
 - no contract.
 - need each other.
 - independent and difficult to replace extension and themselves.

4) Joint ventures
 - collaboration to each other.
 - for example : The company has share with the other company such as Proton has a share with            Mitsubishi.

5) Vertical integration
 - whole process to be operate.
 - take over the transportation process either direct purchase or create your own.
 - for example : Either buy direct tiong nam own or manage transport tiong nam.
 - control their own.

The risk of supplier relationship :

• Loss of partnership control.
• Unlimited liability.
• Lack of harmony.
• Disagreement.
• Partnership may actually open the weaker party up to negative.
• Heavy reliance on one partner can be disastrous if the partner does not meet expectations.