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Collaborating Partnerships Within an Organization

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Understanding the principles of effective collaboration with other organisations is important in an organisation as the current stakeholders have an active interest, the interests could be financial, environmental or charitable within the organisations. Within an organisation building relationships with stakeholders can prove to help your business by using their expertise’s and knowledge.

Collaborating partnerships within an organization can be done in many ways and can prove to be very beneficial. Within an organisation collaborating with partnerships can allow you manage potential risks and manage strategies based on the findings. Collaborating within an organisation has many benefits as more the more people involved can mean more input, more ideas and solve more problems.  Collaborating and working together in partnerships can be rewarding, an example of this being able to share a vision and spread the responsibilities out, although this could also become an disadvantage as to many managers or leaders could create a problem, the problem being not enough people taking the orders and responsibilities. Being involved within knowledge management allows you to gain access to confidential and sensitive information which will help to gain a better understanding of the risk or vision and how to best deal with it, although it becomes a disadvantage for us as the stakeholders now know our weaknesses.

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Globalisation and the internet have had a dramatic impact on supply chains. They have provided buyers with access to a wider array of options, and helped them to seek out the lowest prices available. They have, however, brought with them a raft of new challenges, one of the most pressing being the management of supplier relationships and collaboration.

Close relationships can make the difference between long term sustainability and short run dissolution. Organisations build relationships with their supply in order to gain flexibility, efficiency and a competitive edge. An advantage of collaborating effectively with chain suppliers can help create reductions in cost, improvement in speed, improve service levels and help develop better customer services. These advantages are achieved in a number of innovative ways over the life of the collaborative relationship—for example, by increasing sales volume from downstream buyers, lowering operational costs within the relationship, word-of-mouth referrals, and new product and process innovations borne from the working relationship between trusting partners. 

One of the greatest benefits from long-term supply chain collaboration (and one that consistently delights operationally oriented managers) are the cost savings that result from routinised procedures over the life of the relationship. When buyers and suppliers begin a relationship, there interactions often are fraught with inefficiencies and expensive organizational idiosyncrasies, adding to the cost of doing business in year one. In year two, however, procedures typically become more streamlined, kinks in IT are worked through, and interpersonal relationships between organizations become more efficient. 

The longer the relationship, the more indirect costs—operational and otherwise— are reduced. These cost savings are shared by both buyers and sellers, increasing the benefits to both. They can also be passed on to customers in the form of lower prices, thereby increasing the supply chain’s position in the competitive landscape. Better, more collaborative relationships, which are more fulfilling and successful to work within, lead to people and organisations wanting to work together again in the future.

Creating relationships with chain suppliers should allow you to maintain your customers and be able to negotiate demands. A disadvantage of having close relationships with the chain supplier could be that it’s a too close relationship to be in, not wanting to put prices up and not wanting to upset or break the relationship, which can lead to having to pay the higher prices, waiting longer for delivery’s and having to pay full price outright rather than an account.

The importance of building strong relationships has come as firms have moved away from the traditional American model for supply chain, and towards a Japanese model. The Japanese supply chain model places importance on long-term positioning over short term profitability. It also means dramatically reducing the number of suppliers they have. Whereas the traditional American model has been to have as many suppliers as possible, the Japanese have always looked to have just 2 or 3. This idea follows the train of thought that with multiple suppliers, both buyers and suppliers experience a high level of uncertainty, and therefore there are multiple controls to ensure successful transaction. These controls can be costly, and often decrease the efficiency of relationships. On the other hand, good supplier relationships cut down on such uncertainty, reducing the need for controls and increasing the efficiency of transactions.

Trust is key to any buyer-supplier relationship, but building it must be done without encouraging complacency on the part of the supplier. However, buyers have traditionally been more than willing to change suppliers, and they have to demonstrate a firm commitment. This can be done by involving themselves in the firm’s growth, which has the additional benefit of helping them to cater specifically for the buyer’s needs.

The global nature of supplier relationships also throws up a number of issues, particularly around communication. There are the obvious language difficulties, but more than this there is the differences between business cultures to consider. This is especially true when dealing with somewhere like China, and firms must often change their entire way of thinking when working in other markets. More than just causing offence to a supplier or being shortchanged in the dealmaking process, failure to understand the environment you are moving into can also have dramatic legal consequences. For example, in some cultures reciprocity is illegal and unethical, whereas in others it is the preferred way of doing business. An agency fee in one country could be seen as a bribe in another, and subject to prosecution under the anti-corruption laws in another.

There is also the issue of working practices and regulation. Mattel notably fell foul of this when lead was discovered in paint used in its toys. Mattel’s main supplier of the Cars products, Early Light Industrial, had subcontracted out the painting of the toys to another company, Hong Li Da. Hong Li Da, rather than use paint supplied by Early Light, instead used paint that contained potentially poisonous lead. This also shows the importance of looking past your immediate supplier down the chain, to ensure that such damaging incidents do not occur. 

It is also necessary to think hard about contracts. It should never be assumed that all parties will read the fine print. Making sure that all contracts are read and understood can help prevent disputes further down the line. Achieving such strong partnerships with suppliers is fraught with challenges and is often resource-intensive and costly. Therefore, it can be only really be justified when the costs of extended involvement are exceeded by relationship benefits. 

An exit strategy is a means of leaving a current situation in order to minimise risk and disruption. An exit strategy is a plan that is executed by a trader, business owner or investor, it is used to liquidate a position or minimise a risk. Exiting from an organisation can cause many different problems such as financial, regulatory or legal, which is why an exit strategy should be in place to help support such problems and protect assets. The likely effects when invoking an exit strategy is that a few problems may occur and effect the running of the organisation, the place in the market could change, the reputation could be damaged and trading could be effected or even changed.

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