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Basics Of Partnering

Partnering divides the business world into two basic groups. The first group are the people and companies we expect to work with in a cooperative manner. We are (or will be) "on the same team".

While the second group is perhaps not actually adversarial, everyone is looking out for themselves. This group defines the old "dog eat dog" style of doing business.

Obviously, not every business relationship fits clearly into one group or another. The first step to partnering, however, is to recognize the different styles and their impact on how business is conducted. The second step to successful partnering is to recognize that no two day session conducted by a highly paid consultant, bringing together your company, your suppliers, and/or your key customers is going to result in a partnering relationship.

Partnering cannot simply be imposed on a business relationship, it takes time for the individual players to become ready, and partnering requires the involvement (not mere participation) of both sides.

Partner In Their Shoes

Partnering is a bi-directional process. Most companies buy and sell, so they have opportunities to partner with their suppliers as well as with their customers. This is an important point, because by paying attention to your own thoughts, concerns, and suspicions when you are in the buyer and seller roles you can better appreciate what your supplier and customer partners are thinking and feeling.

When your supplier says "Trust me", you can better appreciate how your customers feel when you say "Trust me".

Trust You Or Not?

You would probably love to have the benefits of a partnering relationship with your customers, but do you appreciate that partnering requires you to actually look out for their best interests? That might occasionally involve recommending that they buy from your competitor when that is their best choice. After all, you know that your products are not best for everyone all of the time - if you tell them when you are not the best choice, they will have good reason to believe you when you tell them you are the best.

The alternative is that they should always suspect everything you tell them, knowing that you are putting your short term gain over their best interest. Partnering is a process of building (and deserving) trust. You cannot partner with all customers. Sometimes the way they have decided to purchase (or generally do business) makes partnering virtually impossible.

Purchasing Partnering

One of the fallacies of traditional purchasing logic has been the obsession with multiple sources of supply. Another fallacy has been "purchasing the specs". Let's look at each fallacy and an innovative alternative from a partnering perspective.

Multiple Sources Of Supply

Everyone knows that you need to have multiple sources of supply constantly competing with one another in order to beat the best prices and service out of them. An alternative perspective is to single source whenever possible.

As insane as this may sound at first, it makes pretty good sense when you think it through. With your volume for an item split between numerous suppliers, your volume from any one of them is not great enough to justify great treatment (sort of like frequent flyers with 7000 miles on ten different airlines, lot's of flying but not enough to be loved by any airline).

Sole Source Strength

By consolidating your purchases you become a much larger account. No supplier wants to lose a big account, so now you get their attention when you need some special help. On the other hand, competition doesn't go away, it gets more intense because every other supplier is eager to seduce that larger account away from your current supplier.

You aren't much of a partner if you constantly play one supplier against another, but you aren't much of a business person if you don't remind your partner that since you don't want to change suppliers, you need them to stay competitive (reminding them that partnering goes both ways).

With a stable supplier/customer relationship both parties are better able to work together to develop products and programs to improve their mutual competitive positions because neither has to worry about their ideas leaking to the competition - after all, you are partners!

"Purchasing The Specs"

All too often buyers have taken the position of developing specs, accepting bids, and then selecting the low bidder. This process sounds both wise and fair, but it can actually be bad for the best supplier as well as the purchasing company. This is how.

First, the specs are always incomplete. Numerous intangible factors are frequently overlooked (R&D support, stocking programs, etc.) that make a real difference.

Secondly, the specs establish a minimum standard that you will accept, and a supplier offering twice the product at a price ten percent higher than the lowest bid would lose - and so would your company.

Third, hard specs discourage suppliers from discovering and presenting better alternatives since only the specified products are likely to receive due consideration.

Purchasing Research

A good purchasing person is a researcher, always trying to discover a better product, one that will benefit the company, not just meet the specs. Sometimes that product will have a higher initial price but a lower long term cost, or it can be processed faster or with less waste.

Good supplier / customer relationships make it possible for the supplier to invest in the time necessary to understand what the buyer really needs instead of just what he or she asked for, and this provides an opportunity for both parties to benefit.

Being The World's Greatest Customer

Honest communication can make a world of difference. If you take the time to learn more about your suppliers, you might be able to buy a lot smarter by taking advantages of your natural synergies.

Do you have a lot of credit and storage space? If you are in a cyclic business, your supplier's whole production facility may be earning nothing during the down period, and a discussion of marginal costs could help both companies.

Large companies are famous for "stringing out" payments to small suppliers, enabling the big company to "use their money". That sounded smart in business school, but it plays poorly in the real world. Those small suppliers (1) are not stupid, (2) cannot borrow as efficiently as the larger company,  and they (3) need their money. The big companies have access to the cheapest money, and if they knew how much the small suppliers had to increase their prices in order to carry the bloated receivables, the big companies would be pre-paying their orders and negotiating discounts!

Partners -Vs. - Parasites

Take a look at what you can do to buy in a manner that will benefit your suppliers. Some will respond with appropriate concessions - those companies are partnering. Some will just think your purchasing is convenient. Those companies should be replaced with partners.

Partnering is a continuous process of working together to get good mutual deals. Some companies are good at the partnering process, recognizing the opportunity for everyone to benefit, others are locked into an adversarial business style. Recognize when partnering works, and with whom.

Partnering makes the most sense when the relationship has a strong potential of being reasonably long term. This is because it is a process, it takes time. Regardless of the potential duration of the relationship, however, some people cannot partner well. They tend to have difficulty seeing through your eyes, instead viewing the negotiation from the perspective of maximizing their short term gain. That short term gain may be accomplished by appearing to get involved in the partnering process.  If so, they will put up with the process, learn the jargon, and then conduct business as usual.

Some Folks Just Don't Get It...

After a consultant friend had finished a two day partnering workshop for a group of contractors I had the opportunity to talk to one of the subcontractors who had attended. I asked him for his opinion of the project and the partnering program. He was looking forward to the project because the general contractor really believed in "all that partnering nonsense", providing this subcontractor with an opportunity to grab some windfall profits. Like I said at the beginning of this article, partnering does not happen because of a two day meeting.

Best Picks...

....If you are in a hurry and can only read a few articles, the following five are the ones we hear the most about...

They are a bit longer than most of the others, but they will give you something to think about....

Could You Run A Winning Football Team Like You Run Your Company?

Teamwork - Coaches and players speak to business professionals, encouraging them to build teams that can win.  Let's compare your company to a professional football team....

Eating The Heart Of The Watermelon

The heart of the watermelon is the sweetest and lowest hassle part - so why bother with the rest?  You may not want to follow this thinking at your next picnic, but it sure works when making customer and product decisions!

Quit Your Company - An Exercise

This exercise will force you to see your company and the competitive landscape differently than ever before.  It will help you decide what needs to be done in order to stop the competition you don't even have yet...

Dealers And Distributors (Short Version)

You may need dealers and distributors- or not.  The real issue is whether your end users feel that they need your dealers and distributors!  Companies win when they offer end users what they want....

Dealers And Distributors - And "Going Direct"

If you have a dealer and distributor network, should you consider "going direct"?  Let me ask you this - if a major competitor did, what would happen to you?  That's your answer - this will help you see how to do it....

Management Theories

Not all management theories work - and this section discusses some theories that have problems

Reality Instead Of Theory

You can't believe everything you have been taught about business.  Most of it is true, good information - the trick lies in knowing which parts to believe, and which parts to reject.

Positive Reinforcement Myths

Positive reinforcement can result in training and motivational miracles - but there is one little catch...everyone in the "real world" seems too well fed for it to work!

Truth About Advertising - What Advertising Awards Mean To You

Advertising awards are something ad agencies love to display - perhaps it gives them a feeling of credibility.  It's a shame those awards don't reduce their client's advertising costs or increase their client's sales...

"One Size Fits All" Management Fads

Management fads do a lot of damage - they send companies off in wrong directions, and they erode the confidence of managers.  How?  Managers try the latest fad, and when it doesn't work, they assume it is because they were not good enough - it's a shame, because their instincts are almost always more effective than the fads...

TQM - The Quality Myth

TQM has been a major force for a number of years.  Although it has lost some of its luster in many circles, its proponents (consultants getting wealthy, perhaps) continue to re-invent it under a constant flow of new names....

Your Departments

The last group of articles in this section apply to sales and marketing.  The reason this area is receiving so much attention here is that there seems to be more confusion in that area.  Let's just take a quick look at some of your key departments...

Accounting Excitement

If business was a sport, the accounting department would be keeping score.  Unfortunately, the accounting department seldom provides the kind of information managers need in order to make good decisions....

Purchasing

Purchasing is more than "buying what you said you wanted", it is a proactive role that investigates better products and anticipates demand.

Engineering And R & D

Engineering creates your "new and improved" products - you need to make sure they know what your company and your customers want from them.

Manufacturing

Manufacturing - Manufacturing efficiencies largely determine your costs - and costs largely determine your competitive position!  Efficiency requires great management, management willing to do what it takes to attract and retain the very best people.

Entering New Markets - Then Closing The Door Behind You

Entering new markets - you couldn't do it if the companies already in those markets were staying in touch with their customers!  Remember that after you enter a market - or you may become someone else's "new market"!

Innovate, Renovate, But Satisfy Your Customers

Things have changed faster than most companies have changed - the web, overnight delivery, long distance charges, longer lasting products, direct (to consumer) sales - there are many ways to combine these things to satisfy your customers - and gain market share.

A Winning Marketing Campaign - Lousy Sales

Heartbeat Of America.  The ad campaign won awards, but market share slipped.  Winning companies match great marketing with great products - then the competition loses while consumers win.

Strong Companies Win In Efficient Markets

Marketing is not the art of lying without getting caught.  When your product is the best choice, there is no need to lie.

Applied Market Research - Satisfied Customers

Market research can come from a consultant, but it should also come from your own employees.  Having market research means nothing, however, if you don't use it to make customer driven decisions.

Selling To People - Not Markets

Sometimes we can forget that markets don't buy anything, people do.  Market research is valuable, but make sure it tells you about real people.  Nobody wants your product - they want a way to solve a problem or meet a need - perhaps your product can help them accomplish that.

Advertising For Sales, Not Awards

Advertising - why are you doing it?  If it is for sales, you may need to make sure your agency understands your priorities - instead of pursuing "awareness" and "impressions" - if you want sales, hold them accountable for sales!

The Rest Of It...

Not everything fits into a file, box, or compartment - this is the rest of it....

StrategiesThatWork.com Homepage

Marketing should not be a lie - build a company with productive labor, efficient purchasing, great design, accurate accounting, rational distribution - and the result is a truth you are proud to tell.  Marketing becomes a simple matter of telling the truth to people who are interested!

Eating The Heart Of The Watermelon

The heart of the watermelon is the sweetest and lowest hassle part - so why bother with the rest?  You may not want to follow this thinking at your next picnic, but it sure works when making customer and product decisions!

Dealers And Distributors - And "Going Direct"

If you have a dealer and distributor network, should you consider "going direct"?  Let me ask you this - if a major competitor did, what would happen to you?  That's your answer - this will help you see how to do it....

Dealers And Distributors (Short Version)

You may need dealers and distributors- or not.  The real issue is whether your end users feel that they need your dealers and distributors!  Companies win when they offer end users what they want....

Quit Your Company - An Exercise

This exercise will force you to see your company and the competitive landscape differently than ever before.  It will help you decide what needs to be done in order to stop the competition you don't even have yet...

Three Kinds Of Employees

The right employees are one of the most important resources a company has. Most employers are quite aware of how valuable a great employee can be, but have a difficult time figuring out who the great ones are.  It helps to divide the work force into three groups.... 

Your Mission Statement - What It Means

A mission statement is not something you can carve in a plaque next to your door, because it needs to change.  Mission statements establish priorities, and if customer satisfaction is not at the top of those priorities, you may have a problem.

Could You Run A Winning Football Team Like You Run Your Company?

Teamwork - Coaches and players speak to business professionals, encouraging them to build teams that can win.  Let's compare your company to a professional football team....

Performance Reviews

Performance reviews.  Yawn.  While performance reviews are not exciting, few things can do more to shape your company.  Done right, they can make a big difference...

"Honey, We Need To Talk"

"Honey, we need to talk" are terrifying words when they come from your spouse.  You may feel that you have an "open door policy", but walking in that door feels a lot like "Honey, we..." to most employees.  You need an easy way to stay in touch - like lunch!

Partnering And Sole Sourcing

Partnering - we hear a lot about it, but if you aren't willing to be a partner in your purchasing, you are not ready to ask your customers to trust you in that role....walk in their shoes for a moment.

Customer Focus

"Customer Focus" is something we hear a lot, but seldom results in much action.  Funny, isn't it, that customers are the only people who leave money in your company - everyone else is there to take some out....

Science Of Yourco

You don't have to look further than the nearest business magazine to find a few easy steps to management success - so why bother to develop a "Science Of Yourco"?