Traditional supply relationships may be pressured to meet new low entry competition, although customers may resist alternative sourcing. However, the short-term impact may force established suppliers to withdraw. Sharing knowledge and risk will provide different options, where the benefits of a wider supply network can both maintain relationships and reduce the cost base.
An example of this 'pull through' concept, created within an enhanced style of relationship, is when overseas customers favour increased levels of localisation. Working with long-term suppliers and supporting their deployment of localisation provides a platform that can be mutually beneficial, at the same time building on historical patterns and knowledge to ensure continuity and enhanced management of change and risk.
Michael Dell's perspective from the Harvard Business Review was: 'Until you look inside and understand what's going on by business, by customer, by geography, you don't know anything.'
Developing a wider perspective, which vertical trading alone does not deliver, will enable the creation of innovative thinking within stable relationships. Recognising the longer-term implications for all parties ensures that greater flexibility can be maintained, together with a continued and sustainable focus on competitive edge.
Copyright Partnership Sourcing Ltd 2001. All rights reserved.