Supplier Alliance Partnerships

Unit TutorDr Neil Towers

Supply Chain ManagementN.Towers@manchester.ac.uk

Learning Objectives

Understand the relevance of strategic alliance partnerships

Recognise the concerns and benefits of a strategic alliance

Working Definition

Outsourcing is the delegation to a third party of the provision of an activity governed by a formal contract and/or service level agreement

It may involve the transfer of manpower, assets or intellectual property rights

(BG Group Guidelines, 2000)

Alliance Characteristics

Technology transfer Increased communication channels Intensity of use of comm. channels Risk sharing of cost based on fairness

Strategic Considerations

Core Activities Products and Services

Core Competencies Skills, Knowledge and Technologies

Trust in buyer-supplier relationships

Goodwill trust Developed mutual expectations

Competence trust Operational reliability

Contractual trust Abide by written or oral obligations

Sako, 1992

Factors affecting supplier alliance development

Desirability Selecting appropriate targets for supplier

alliances

Feasibility Whether such a relationship is possible

Asset specificity is the degree by which the skills are sunk within the business

Alliance Concerns

Difficult to manage Inappropriate relationship Constrained by resource availability and

ability to operate on basis of trust

Alliance Benefits

Reduced transaction costs following initial development costs

Improved response times and service flexibility

Better access to technologies Improve inter-firm boundaries

References

McCutcheon, D and Stuart, F (2000) “Issues in choice of supplier alliance partnerships”, Journal of Operations Management,18, pp 279-301

Sako, M (1992) Prices, quality and trust: inter-firm relations in Britain and Japan, Cambridge Univ. Press, Cambridge

Cox, A (1996) “Relational competence and strategic procurement management: towards an entrepreneurial and contractual theory of the firm”, European Journal of Purchasing and Supply Management, 2 (1) pp57-70