TermiKnowledge - Supply Chain, Procurement and Inventory Terminologies
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Partnering for growth in the US warehouses has become a more significant part of the supply chain management strategy adopted by many corporations in recent years. Many large and medium sized companies have established strategic partnerships with fulfillment companies that have enabled them to achieve far greater cost savings, increased flexibility, productivity, and market share advantages. Partnering is often the first step towards accomplishing specific long-term company objectives, such as increasing sales or market share percentages for the company through better distribution and more efficient handling of inventory. The objective of partnering with a third party is to provide that third party with the same benefits enjoyed by the company, without having to invest additional capital into the organization. In short, this means that both companies share in the cost reductions and market share boosts achieved through the partnership.


Partnering Relationships can also be a means of achieving synergies within a business. When establishing a strategic partnership or acquisition of another firm, it is important to establish synergies between the acquiring entity and its existing vendors. Often, a company will engage in strategic partnering relationships when it is looking to take advantage of an emerging market, expand its product offerings, reduce costs, improve customer service, or attract new clients. These synergies are especially important to companies that are new to the marketplace or to those that are rapidly expanding, as they can create a means of reducing the cost and risk of introducing new products and services, while also minimizing the time necessary for users to transition to new ownership and control.


There are many benefits associated with entering into a strategic partnering relationship or acquisition arrangement, but there are a few potential drawbacks as well. For one, partnering relationships may not always pay off, especially if the goals are not aligned with the corporate objectives. Also, when companies are not actively involved in executing their own missions, the result may be less than optimal for overall company performance and may affect the company's profitability.

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