General Negotiation March 8, 2013

Supplier Customer Partnerships

The difference between openness and penetrability can be seen in the accounting statements of the great savings and loan failures like Lincoln Savings and Loan. The government regulators and the public had access to their records, but they could not penetrate the reality of what was going on. Many of these failed savings and loan institutions actually looked good on paper only days before they failed. Only after they failed did the harsh truth reveal itself.

At this stage in the American development of partnering, there is still a big gap between openness and penetrability, especially as it applies to buyers and sellers of goods and services. Hopefully the jungle will become more penetrable, but it is likely to take much more time in the United States and Europe than in Japan.

Supplier-consumer partnerships continue to grow worldwide for good reason. They are effective in reducing cost even if they raise quality. However, this only happens when both the supplier’s and the buyer’s highest level executives participate in nuturing the new arrangement. The partnership must be organized into joint company mandating committees whose job is to search for better ways to do things. Partnerships are still strange relationships in the business world. Buyer and seller organizations have been conditioned to be adversaries in our culture. People have to be restrained to share sensitive information about cost, profit, and strategy. Both sides will need help in working together and negotiation how contributions and benefits will be shared.

As a consultant I have found that partnering is not an easy relationship to maintain. Those involved do not know how much to share or how trusting they should be. Only after considerable time do joint company committees learn to work together. It is then that a true win-win, long-term relationship of the highest order emerges.