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In today's competitive marketplace, companies can meet or exceed customers' expectations of quality, cost, and time­liness only with the close support of suppliers. Supplier partnerships are long-term strategic marriages between a company and key suppliers which will reduce total costs and will simplify business operations. This case study is applicable to all companies who regularly purchase goods and services from suppliers. The objective of this paper is to define a process which any company can use for develop­ing a supplier partnership program.

Supplier Partnership Program Process Overview

The first step in the process is to define the company's current status. This prepartnership status serves as an important baseline for measuring progress and achieve­ment of goals.

After the company's current status is defined, goals and expectations of the program must be identified. Goals quantify what the company is trying to achieve. Expecta­tions must not only include what your company is trying to accomplish, but must also reflect what a supplier can expect from investing in the partnership.
The next step in the process is to identify suppliers for consideration in the program. These suppliers can cur­rently be doing business with your firm, or can be prospec­tive suppliers, or even past suppliers.

Once prospective partners have been identified, a commu­nications strategy must be created. The supplier sympo­sium is an effective means of launching a supplier partner­ship program. Written correspondence and requests for information are also necessary.

Suppliers must be evaluated for consideration in the pro­gram . Evaluation methods include supplier questionnaires and site surveys. During this step in the process, cross-functional teams play an important role in defining evalu­ation criteria and selecting suppliers. During this time, suppliers will also be evaluating your company to deter­mine if they want to invest in the partnership.

After suppliers have been selected, the partnering process starts to solidify. During this step, volume purchase agree­ments are used to define many aspects of the partnership. Business reviews, performance reporting, and site audits are used as communication tools and feedback methods for the ongoing partnership.
The final step in the process is the a war ding of certification to a supplier partner. Partners who become certified have achieved the ultimate objective of a supplier partnership program.

Current Status

The first step in defining current status is to understand your company's purchases of materials. Part numbers should be grouped according to commodity category codes. A commodity category code should reflect materials which are manufactured using similar processes, technology, and equipment. A goal for assigning part numbers to a commod­ity category code is to maximize the percentage of part numbers within a commodity category code which is ca­pable of being purchased from the same supplier. A com­modity category code chart is shown in Figure 2.

The next step in assessing your current status is to deter­mine purchase order volume by commodity category code. It is helpful to create a chart and sort it in descending annual dollar purchase volume as illustrated in Figure

To be Continued