Many organisations purport to work in ‘partnership’ with their distributors or suppliers. In the following examples, command-and-control thinking turns the ‘partnerships’ into rip-offs:
In 1986 an IT manufacturer declared its intent to work in partnership with its chosen resellers. But company salesmen rode roughshod over the partners when it suited them to take any particular deal directly.
Many local authorities have entered ‘partnerships’ with private-sector providers and have based the contracts on activity volumes. It incentivises ‘partners’ to increase the volume of failure demand. The supplier wins and the local authorities (and citizens, who pay for it all) lose.
Food retailers bully suppliers to deliver exactly what the buyers say they want and to deliver it exactly at the appointed time. Suppliers don’t get to know what is required until the evening, for delivery that night. It means over-producing lest you get fined for failure to deliver to specification.
Smart retailers give the suppliers access to their point-of-sale data. In that way suppliers know as early as possible what has been sold and thus what needs to be produced. Working this way obviates the need for conventional ‘buyers’.
In the last twenty years motor manufacturers have placed greater and greater pressure on suppliers to cut costs. Trading around for lowest cost has weakened the supplier base in the UK to the extent that foreign suppliers have grown a significant share of the component market. Manufacturers and suppliers could have worked together to reduce costs – it would have meant not trading around and not putting the squeeze on suppliers.
Compare these common examples with the work of Perfect Flow: they have developed a materials provisioning system that only provides what will be used, helping their customers drive costs out of their system. That’s a partnership.