How Distributors Profit from the Partnering Trend (1470 Words)

distributors profit from strategic alliance relationships

Distributors Profit from the Partnering Trend

Yes, distributors profit from embracing the new era of collaboration. We need banking, but do we need banks? We need groceries but do we need supermarkets? We need services and consumables but do we need to receive these things in traditional ways? Do we need distributors?

Distributors Profit

The answer is: Only if distributors truly create value in the process of getting stuff from the source to the user. At my seminars, when I ask distributors what their product is—the usual answer is service. WRONG! Your product is logistics. WalMart has done an excellent job of disintermediating those that Sam Walton believed did not add enough value to the chain. What about your customers and suppliers? What do they say about you?

My research indicates that for you to cost effectively achieve world-class levels of logistic services, you must adapt Total Organizational Partnering. I realize partnering is a term that has been grossly abused over the last decade, none-the-less; it is what you must achieve.

Partnering Defined

Partnering is an idea that is loosely used to describe anything from teamwork to alliances to contractual partnerships. Partnering, as I define it, is the process of two or more entities coming together for the purpose of creating synergistic solutions to their mutual challenges. Again, I recommend you adopt Total Organizational Partnering as your business strategy. Today’s distributors profit through embracing this paradigm.

Partnering is not a flavor-of-the-month management strategy to be hastily adopted and then as quickly abandoned, rather a long-term strategy for success. Partnering is not instant gratification! To adopt Total Organizational Partnering, distributors will need to understand the Partnering Pentad Model. A pentad is simply the name given to a group of five. The Partnering Pentad represents the five key areas of your business. In each of the five areas you must develop outrageously successful relationship (alliance) strategies. It is the quality of these relationships that hold all the areas together. Distributors profit from Total Organizational Partnering.

External Strategic Alliances

This is the area of your business where you develop alliances with outside entities for activities where you have core competencies that complement one another. For many distributors, these include buying/marketing groups and targeted specialty alliances for software/technology development. Distributors profit from sharing core strengths, tow or more can create an environment of synergy yielding all involved more than the some total of their collective contributions. Land mines to watch out for are core values of alliance members being too different; circles of interest overlap being too little, and continual management change of one or more alliance partners.

Partnering with Suppliers

Many distributors are most concerned with this area—no supplier, certainly no customer. Just-in-time delivery (JIT) and electronic data interchange (EDI) ordering have become commonplace today. Eventually, you will have these relationships both up and down the supply chain—providing you are still in business. Frequently, what I here from suppliers about their customers is, “They’re talking marriage but acting one night stand.” Not long ago I delivered an opening keynote presentation to an association of industrial distributors. Unfortunately, upon visiting the Website of one of that industry’s major suppliers, I noticed that very few of their distributors had hyperlinks to the distributors’ own Websites. I call that incredibly stupid—missed opportunity. To successfully compete in the world of B2B e-commerce, you must adopt alliances. The biggest land mine in this area is to neglect reviewing the quality of the relationship and exploring areas for improvement. What is it that you do that your suppliers cannot? Which of your activities actually adds value to your suppliers’ efforts and desire to get their goods to the end user?

Partnering with Customers

Distributors profit from incredibly close relationships with their customers. In this area, distributors profit from being externally driven. Your customers will consider you an important vendor as long as they feel they’re receiving good value. Value-added is a term that much is being written about. Integrator, Applied Distributors, is now documenting their value-added services with their customers. Agriculture and food processing conglomerate, Cargill has moved to value-based purchasing. They measure the total value proposition of their suppliers rather than just buy on price alone. You must be value driven rather than product driven to understand what your customers want. What they perceive as value is their reality. The important land mine to watch out for is short-term thinking on your part when making customer relationship decisions.

Distributors Profit from Employee Alliances

For many distributors is, erroneously a non-issue. Meaning, they don’t. What motivated the WWII generation is different from what motivates baby boomers and is different from what motivates the GenXers, and especially the Millennials. Just because something motivates you, it doesn’t necessarily mean it will motivate those of a different generation than yours. If you want your employees to have an ownership in your business—even though they don’t have a legal ownership and to hold sacred the business as you do—you must empower your employees.  Empowering means giving them the authority and encouraging them to accept the responsibility to do the job. Then acknowledge their successes and failures in an environment of safety—one where you encourage and reward risk taking. The major land mine to watch out for is the Ego Trap, yours of course. To give power, you must be a powerful person, one who possesses personal power rather than power simply acquired from your position. Permission cards and employee recognition certificates are a great start. More on these ideas are available at: https://rigsbee.com/articles/strategic-alliance-success/

Owners or CEOs as the Optimal Partner

This is the final and in many ways the most important leg of the pentad star. Not the most important from the perspective that all revolves around the CEO, but rather distributors profit from that of having a culture of true partnering. True partnering start at the top. You must lead the charge and show by your actions, more than your words, that Total Organizational Partnering is truly your preferred and accepted business strategy. The critical land mine here is when you arrogantly believe that you are at the center of the pentad and that all the alliances should revolve around you. The coveted center of the pentad star is reserved for all the relationships that bind the separate legs.

distributors profit from total organizational partnering

Distributors Profit from Partnering

Globalization

The Partnering Alliance driver for distributors profit in this new era. Large multinational companies are building alliance relationships to gobble up market shares in every conceivable industry and location. Large families of businesses are competing against one another. As such, smaller organizations feel the pressure and the Partnering trend becomes monkeys see, monkeys do. A secondary driver is based on the fact that organizations generally adopt a new paradigm based on the recommendations of others. Change evolves through one’s witnessing the success of others. Organizations and leaders with strong reputations within an industry or economy have immense influence over their contemporaries.

While I have witnessed many companies profit handsomely from alliance relationships, I have also seen them scramble to get on the partnering bandwagon with little regard for the quality of partners they select. Admirable businesses like Timex have discovered that the wrong partner can cost millions of dollars. Creating successful Partnering Alliances that will pay off in terms of increased market share, know-how or earnings diversification is no easy chore.

Today, consolidations and roll-ups are of great concern to many distributors. In the Industrial Distribution, Bill Wade stated, “The basic premise couldn’t be any simpler. Take a highly fragmented industry—like distribution—facing technological change, customer upheaval or chronic financing difficulties. Add in a few well-healed foreign firms or, worse, a couple of previously unknown competitors from outside the business. Since the industry leaders are probably family-run businesses with limited succession strategies, the next step to protect profit and continue growth is clear: consolidate.”

A consolidation or rollup, as it’s frequently called, generally occurs when an organization or individual with deep pockets sets out to buy several small companies in a fragmented industry and rein them in under a new or collective pennant. Does this sound familiar? A while back the National Association of Wholesale-Distributors reported that 42 of the 54 industries they studied had been significantly affected by consolidation. Frequently a professional management and buying strength create economies of scale that allows the consolidator to pluck the low hanging fruit in the industry. Distributors profit form significant investment in systems to eliminate the duplication of effort and inefficiencies that exist within the industry being consolidated.

If your organization is sick and bleeding, this plan will not deliver the quick results you most likely desire. As I stated, this is not a quick fix. If you lead a healthy organization, your best strategy to remain profitable and independent is Total Organizational Partnering. To protect against being disintermediated, stable and incremental improvement in all five pentad areas will deliver the most successful long-term results. Total Organizational Partnering will assist distributors profit in becoming a world-class distributor—one that adds value to the chain and understands logistics.

Community Partnering For Greater Retail Success (1526 Words)

Car DealerWalking to my car, I heard loud music. This was not exactly what I expected in Grants Pass, Oregon on a warm Saturday July evening. I had just returned from an exhilarating jet boat excursion to Hellgate Canyon and enjoyed a ranch style dinner on the Rogue River.

The music was getting louder and louder as I approached the parking lot. It was coming from across the street. It was an automobile dealership, Mock’s Ford, and it was alive with action. There was a band playing, with folks of all ages dancing to the music, a barbecue filling the area with its popular aroma, and yes, people were buying cars. The excitement and activity drew me like a magnet to metal.

In front of the sales office, a local radio station, Cruisin’-FM, was conducting a live-remote broadcast allowing all in attendance to be involved. I located the dealership president, Don Carr, and during our chat he told me that they had sold almost as many cars so far that weekend as they usually sell in a month. To top it off he said, “We’re not giving these cars away.” Carr created a weekend partnering alliance with his community and won big.

How would you like to sell your products at that rate and still make a profit? You might be saying, “That’s great for selling cars, but what about me?” The answer is to get involved with your community in a way that serves people and created high-level exposure for your business. You’ll need to be creative and develop some fun, helpful, exciting community activities. Remember, being unique is not an absolute necessity, but it’s very helpful.

Creativity in Retail

Creativity has always been, and will always be, the retailer’s call to battle. Creativity is also one of the key ingredients necessary to create value in the eyes of your customers. The way the national big box category busters (i.e., Wal-Mart, Circuit City, and Office Depot) develop perceived value is through selection and low price, not necessarily service. If you are an independent retailer and you’re trying to do battle in their arena, they will clean your clock. But, creativity is not necessarily a word that big boxes, at the local level, understand.

For years, Baby boomers have been the pig in the python in our economy. They were heavy-duty consumers in the 1980s, buying their first houses and filling them up, buying luxury cars and all the outward trappings of success. In the 1990s they traveled and purchased RVs. Now, with most of the Boomers having grandchildren, they will buy almost anything if they perceive it’s a good value. Also, determine what they perceive as value-added in how you run your business and give it to them—they’ll reward you with profits through their loyalty. Don’t forget about the X and Y Generations. While many were part of the dot com bust, they still seem to spend freely.

Create a unique position for your business in the minds of your customers and your competition in the marketplace is greatly diminished. Remember though, unique means one of a kind, (not just a bit different) and that’s what you must be if you plan to survive and prosper throughout this decade and beyond.

Earl Nightingale, co-founder of Nightingale-Conant Corp., at the time the worlds largest producer and distributor of audio and video learning systems continually offered this suggestion for creativity: take a yellow pad each morning and spend a quiet hour thinking about the major challenges for the day. He would go to work listing all ideas he could think of—no matter how crazy, impossible, wacky or boring the idea might appear. “Some ideas you’ll use and many you’ll toss out,” he would say. The important thing is to capture the ideas and take action on the ones you believe will assist you in achieving your goals.

So, how does all this creativity and uniqueness talk help you to partner with your community? You can’t just copy what others have done and make it work for you. You can, copy the process used but not the results. Your community is uniquely different, your neighbors have special needs, and you must use your creativity to find a winning combination.

Get Started

Here’s how to get started. Head for your chamber of commerce, if you’re not a member yet, and join! Ask for their list of clubs and organizations. Do any interest you? I know you don’t have time for that kind of stuff. Trust me, you do! It’s all in how you choose to participate. There are more ways to participate than just showing-up to their meetings and events, be creative.

Volunteer to chair a fundraiser, one that you can have at your location—yearly! The event can be in your store, in your mall or center, on the sidewalk in front of your store or in your parking lot.

  1. Flea market or rummage sales are about the easiest to put on and quite profitable, find an interesting twist though. You can arrange to have leftovers picked up by a local charity.
  2. Community holiday theme party such as a Halloween costume party. Do this after hours, charge for attendance and give the profit to your organization. During the day offer a discount for those who shop in a costume.
  3. If you are on a busy street try a Saturday barbecue, possibilities are endless.

You might be wondering why you need to have these activities in conjunction with a community organization—for PUBLICITY! In the example I mentioned at the beginning of this article, Carr paid for all the advertising. When you work in conjunction with a local group you get public service announcements (PSA) free of charge and you ALWAYS mention the location (yours) in the news releases.

If you want more help in doing news releases or publicity, head for the public library and go to the non-fiction # 659 section. While you are at the library, stop by the reference desk and ask to look at the Gale Directory of Print & Broadcast Media, you’ll find the address and phone number of all the media in your area. They are whom you notify for your up-coming event.

Another idea might be to head a local organization that you care about from your place of business. Be sure it’s a high profile organization; this can bring you closer to your community. It will give many potential customers another reason to visit you.

Local Exposure Without Joining Community Organizations

For you die-hard’s who want exposure to the community but refuse to join a local organization, here are some ideas. Hold a parking lot aerobics class (in warm weather) three days a week at no charge; allow everybody to participate. The ones who enjoy the benefits will love you and who knows how many hundreds of people will take notice as they drive by.

Try working with the local city government and have a bus stop in front of your store or better yet, as one ski shop in Camarillo, California did, organize a city sponsored bus service to the beach in the summer (the pick-up was at the shop). Be creative and have a winter service too.

Work with your school district; offer incentives to students who achieve high grades, as does a surf shop in San Diego, California. Many schools and cities have work programs for youth; get signed up with these kinds of programs. Go to the source, ask local school principles how you might assist, let them know that you want some exposure in trade. Many of the franchise chains have jumped all over that idea. Also, don’t forget about sponsoring youth sport teams.

Take notice as to what your community does already. Ask yourself, “How can I add to the activities currently in place?” Take time every morning to view and list your options in solving your challenges and things will appear simpler and solutions will become known. Be sure to understand the value your customers are looking for in that which you offer and find your uniqueness. Achieve these things and you will get a greater piece of your area’s retail pie.

Six Additional Ideas To Partnering With Your Community:

  1. Show the community that you care by words as well as deeds.
  2. Write articles that will be of interest and assistance to your community in your business area of expertise. Then offer the articles to the print media.
  3. Get on a local radio or TV show and talk about the state of the swimwear industry or how the different styles flatter different shapes.
  4. Use the Public Access equipment that the federal government requires cable TV businesses to provide and produce a video for broadcast. The cable companies will teach you how to use their equipment. Remember the production needs to be “informational.”
  5. Contact your state highway department and join their “adopt the road” program. Your store cleans a mile-section quarterly and you get your name on a sign on the highway for all who drive by to see.
  6. Hold pasta feeds for sports teams. Consider local high school or college teams, and remember to tell the media.

Developing Strategic Alliances–What’s In It for Me? (2513 words)

Reasons for Developing Strategic Alliances for Business Success are Plenty

Developing Strategic Alliances by Ed Rigsbee

(Chapter 1: Developing Strategic Alliances, featuring strategic alliance examples)

“Almost all of our relationships begin and most of them continue as forms of mutual exploitation, a mental or physical barter, to be terminated when one or both parties run out of goods.”  -W.H. Auden

Reasons and Benefits of Developing Strategic Alliances

The reasons for developing strategic alliances become apparent when you understand the benefits. This applies to businesses and organizations of all sizes. Your reason for developing an alliance could be for research, production, marketing, distribution, or management. Your increased capability for success through alliance relationships will encourage your continued embracing of the practice. The same holds true, regardless of whether you enter strategic alliances as an individual or organization. Many of the benefits create high value for different segments of the distribution chain rather than all the segments.

I’m not going to specifically tell you which benefits from developing strategic alliances relate to manufacturers, wholesale distributors, retailers and service organizations. The reason is that I do not want you to limit yourself.  As I regularly share in my seminars, innovation can be creating a new wheel or adapting another’s idea to your situation. What’s in it for you? Maybe everything listed below or maybe only a few benefits. How much benefit you receive will be a function of your self-imposed limits, or hopefully a lack them.

In developing strategic alliances, you are only limited to the quality of your alliance relationships and your imagination—be limitless!  There are seven general areas in which you can profit from building alliances.  They are as follows:

  1. Products
  2. Access
  3. Operations
  4. Technology
  5. Strategic Growth
  6. Organization
  7. Finance

Your core strengths may lend you to develop alliances in only a few areas, and that is just fine. Or, you may desire to develop alliances in many areas over time. Work hard to develop Outrageously Successful Relationships (OSRs) in all your alliances. Following, you will discover what’s in it for you, if you develop the right alliance, with the right people. You will also discover quite a number of strategic alliance examples.

Developing Strategic Alliances for Technological Sophistication

  • An exchange of technology to compliment your core strengths shores up your core weakness and improves production capabilities to better serve customers. An example of this type of alliance is the alliance of Kinko’s Service Corp. of Ventura (now FedEx copy centers) and Xerox Engineering Systems to establish a nationwide network for faxing large-format documents. This service is especially valuable to architects, contractors and advertising agencies. Kinko’s gets a revenue boost and Xerox gets additional placement and unit sales.
  • Technical hotlines and on-site technical support are regularly available from suppliers with whom you’ve developed alliances.
  • To receive a technological contribution or possibly a technological edge in your industry like the alliance between IBM and Apple to develop a new computer operating system that allows both hardware formats to communicate, or like Nynex Corp. and Philips Electronics who joined to develop screen telephones for residential use.

Developing Strategic Alliances for Training

  • Learning curve commitment. Cost savings are passed along as experience is gained in producing a new product, and discounts are available on start-up products to encourage early sales.
  • Better sales and technical training for your employees is an important benefit in partnering with your suppliers. More manufacturers and distributors are developing training programs for dealers. Guggenheim Dental, a dental supply distributor inHawthorne , CA is now regularly offering training programs for their top customers. Recently, at a seminar I delivered for the National Nutritional Foods Association, I suggested to the retailers that they only buy their nutritional supplements from suppliers that offer training videos. This is an added benefit in the seller/buyer relationship.

Developing Strategic Alliances to Increase Market Share

  • Co-branding such as snack manufacturers who are now mixing two nationally known names and logos on a single product. Examples of this are Betty Crockers’ Soda-Licious, soda pop fruit snacks, made with 7UP and 7UP Cherry.  Also, is the popular milk chocolate-covered Pretzel Flipz by Nestlé featuring Rold Gold pretzels.
  • Access to new markets both domestic and international. Copeland Corporation joined with the largest compressor manufacturer inIndia , Kirloskar, to bring air conditioning to a growing middle class.
  • You will find that partnering can provide the benefit of positioning for future needs not yet known to you or your industry. An example, a lead-user firm is one whose present needs will reflect its segment’s needs in future months or years. Through partnering, one company can assist another in leapfrogging current industry leaders. Cooperating with newer firms more willing to pursue a riskier development strategy to gain market shares does this. This strategy can aid companies, large and small, in more rapidly and efficiently reaching their collective goals.
  • Additional business to justify operating a production facility. In developing strategic alliances with competitors, you might do the production for both.  This is similar to retailers that have a store brand developed by the recognized national brand manufacturer.
  • Opportunity to develop a private labeling or branding identity. American Dental Cooperative in Nashville has been successful in this area as has Power Heavy Duty in the heavy-duty truck repair industry.
  • Sales lead and help in procuring new business. Brian Potts, a VP at 3M recently made this offer to his strategic building service contractor customers at their CEO retreat in Mexico . He detailed how other 3M divisions are most likely are selling the customers that the contractors seek and how they could take advantage of those already established relationships.
  • Opportunity to expand business with new or related product innovations and service offerings. Later in the book I’ll tell you about how Helen Chavez at La Tapatia Tortilleria did this.
  • Preferred supplier status as Steelcase in Grand Rapids , MI , awards to suppliers that have proven their performance abilities.
  • Reduce direct competition as the Sun/IBM alliance has attempted in creating the Java operating system to keep Microsoft at bay.
  • To gain market share, Lexus and Coach, the New York-headquartered manufacturer of fine leather products teamed up in an exclusive partnership to produce the Limited Lexus ES 300 Coach Edition.
  • Geographic expansion is what happened to Ronald Fink’s West Palm Beach , FL company, RGF Environmental Group, following a trip to Asia with other local CEOs and Ray Reddish, a senior management analyst at Florida ’s commerce department. Within 18 months of his trip he had hired 14 new employees just to handle his Pacific Rim business. Some states aggressively partner with local manufacturers to expand exporting there by increasing state revenue.
  • Create marketing synergism to the consumer through cross promotion like Blockbuster and Dominos did. Blockbuster held a promotion that required a customer to rent three movies and in return receive a $10 savings book for Dominos Pizza. Both partners received increased traffic through the joint promotion. This can easily be done at the local level between, as an example, the drug store and the dry cleaners.
  • Barriers to market entry by a new player. This protects the current players as with GTE and Pacific Bell in Los Angeles . They partnered to serve UCLA in a method that closed an opportunity to a new provider attempting to enter their market.
  • Marketing assistance to support order volume for products as when a small company develops an alliance with a large company.

Developing Strategic Alliances for Improved Customer Service

  • Improved attitude toward customer service. This starts from top management on down the chain of command. Many manufacturers are partnering with their dealers and retailers. When the dealer makes a long-term buying commitment to the manufacturer, the manufacturer helps the dealer in customer service tools and training.
  • Improved customer loyalty was developed by United Airlines through their alliance with Starbucks. United now serves Starbucks gourmet coffee to their passengers at 30, 000 feet. And they do it in cups bearing the logos of both companies.
  • Improved product offering becomes possible through alliance buying cooperatives. Additional product lines become available to the members because of the cooperative’s buying strength.
  • Barnett Gershen, CEO of Associated Building Services in Houston builds alliances with his customers through his quarterly review method.  Once a quarter he sits down with his customers and asks for a grade or score as to the quality of service his company delivered. He then looks for tactics and strategies to improve his service.
  • Through alliance relationships, many businesses have found strategies to provide better and quicker customer service while keeping their costs manageable. Look for companies that have a similar customer base to yours and enter into a discussion about how to work together.

Developing Strategic Alliances for Innovation

  • The computer and electronics industries have profited greatly from alliance relationships. Innovation has become commonplace for firms that have chosen to work together. The University of Toronto ’s Innovations Foundation signed an agreement with Northway Explorations Ltd. and Polyphalt, a private Ontario , Canada company, to deliver polymer-modified asphalt materials technology for longer lasting roads to the commercial market.
  • To differentiate oneself from the competition. Steelcase’s alliance with Peerless Lighting, located in Berkeley , California , offers state-of-the-art office lighting. The relationship has brought Steelcase an additional $15 to $35 million in annual furniture sales. Also, they received additional dollars from the light fixture billings.

Developing Strategic Alliances for Cost Savings

  • In manufacturing elements of your product or entire product that could be built in plants (owned by others or in joint venture) with up to date technology, cost savings can be great.  Sharing resources, or outsourcing, rather than owning and operating a manufacturing plant, will allow a synergistic partnering agreement allows you concentrate on your core strengths. This is the idea behind the Donnelly Corporation and their venture with Applied Films Laboratory, Inc. for manufacturing and supplying the world market in display coated glass for liquid crystal displays (LCDs).
  • In distribution, access to orders that can be economically and efficiently produced also that generates reasonable profit through alliance relationships.
  • Shared locations such as Bank of America and many other banks across the country are that are locating branch offices in suburban supermarkets. They are saving resources while simplifying the lives of their consumers by reducing the amount of their consumers— daily running around.
  • Wal-Mart has a partnering alliance with Ronald McDonald, in their recently completed Wal-Mart store in Oxnard , California . Proudly displayed, are signs on the store’s entrance doors announcing, McDonald’s inside and a life-size plastic Ronald, who sits inside on a bench to greet customers.  Stores within stores have become commonplace through alliance relationships.

Developing Strategic Alliances for Financial Stability

  • Partnering in a poor economy or recession makes good sense especially, when sales are flat and prices are deflating.  Continental Airlines accessed optical industry consumers by partnering with Swan Optical, Inc., an industry supplier, to increase business through an air travel discount certificate program for purchasers of optical frames supplied by Swan.
  • Access to capital is a primary reason for smaller organizations developing alliances with larger ones.  An example on a huge scale was when Chrysler went to the U.S. Government seeking loan guarantees. On a smaller scale, Bruce Bendoff, CEO of Craftsman Custom Fabricators, Inc., Schiller Park, IL, a 275-employee sheet-metal bending company learned how to grow through trusting a corporate behemoth—Motorola.
  • Achieving economies of scale is possible in alliance relationships when partners share facilities, equipment and employees.
  • Prompt payment per agreed terms is a standard in customer/supplier alliance relationships.
  • More potential profit is generally the outcropping of shared resources.
  • Alliance relationships allow partners to share the financial risks associated with developing new products and entering into new markets.

Developing Strategic Alliances for Buying Parity with Giants

  • Working together, American Dental Cooperative members, dental distributors are successfully purchasing goods in parity with the two giants in their industry.
  • Additional discounts and services for in depth marketing and technical expertise.  Win/win pricing becomes possible in long-term buyer/seller alliance relationships.

Developing Strategic Alliances for Supply Chain Improvements

  • Just-in-time inventory purchasing and supplying as exemplified by the famous relationship between Wal-Mart and Procter & Gamble.  Home Depot and Dell Computers have also built powerful alliances with their suppliers for cost saving just-in-time inventory.

Additional supply chain improvement areas available through strategic alliance relationships:

  • Management of supply channel conflict
  • On-time product delivery
  • Prompt response to complaints
  • Greater consistency in parts, supplies, semi-assembled, and completed products
  • Detailed agreement as to handling of product problems and customer complaints
  • Improved supply chain productivity
  • Specific (quarterly, yearly, etc.) volume commitments
  • Key contacts that are dedicated to your account
  • Improved supplier loyalty
  • Prompt response to quote requests and price problems
  • Confidentiality of shared business strategy

Developing Strategic Alliances for Productivity Increases

  • Productivity increases are also achieved through partnering alliances.  In a three-year study of Brown & Root/Braun’s alliance with Union Carbide Corp., Danbury , Conn. , B&R/B concluded from 18 projects that productivity on partnering jobs was about 16% to 17% better than previous levels.
  • The Arizona and California Departments of Transportation have so successfully discovered that the partnering approach benefits many industries’ experience, especially, the construction industry, by eliminating the tangle of claims, litigation, and adversarial relationships through a concept of cooperation throughout the life of a project. Identifying potential relationship hazards early was another benefit. Bench marking (companies sharing information on what they do best), especially in the aerospace industry, has shown increased productivity and decreased costs across the board.
  • Putting some pleasure and fun back into business. Jim Eisenhart, president of Ventura Consulting Group, Inc., Ventura , California, says that the big benefit of partnering is it puts pleasure and fun back into the construction business.  He says people are now open to partnering because they recognize the limits of old adversarial paradigms.

Some additional productivity increases that are available through strategic alliance relationships:

  • Market intelligence relating to new products, processes, and competitive technologies and markets.
  • Market forecasts for large orders to allow intelligent production schedules
  • Improved product quality
  • Improved working relationships
  • Improved communications through structure to promote operating efficiencies
  • Improvement of products/services
  • Sharing of information
  • Improved culture and business philosophy
  • Recognition, award and/or reward system for meeting and/or exceeding established goals
  • Reduced Paperwork

Ultimately the benefit to developing strategic alliances with others is for solutions through mutually beneficial efforts.  Together you can solve your problems, those of your customers’ suppliers’ and employees’.  Be sure you know what it is that you are want to get out of each of your alliance efforts!  It’s rare that a company can be all things to all people.  Working in cooperation with others is the solution.  Adopting the paradigm of strategic alliances will get you much closer to your goals than without these valuable relationships.  Finally, and decisively important, when a company embraces the philosophy of strategic alliances, the result will be improvement in quality, productivity and profitability.  And yes, this is done through cooperation and collaboration.

“Togetherness, for me, means teamwork. It makes us reflect how completely dependent we are upon one another in our social and commercial life. The more diversified our labors and interests have become in the modern world, the more surely need to integrate our efforts to justify our individual selves and our civilization.”    -Walt Disney