Partnership Sourcing

TermiKnowledge - Supply Chain, Procurement and Inventory Terminologies
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The global supply chain has developed various strategies to address challenges of the modern market and these strategies have evolved due to changing demands and new business models. In the last decade there has been a paradigm shift in the philosophy of supply chain management. Production processes are now being restructured to create value added services for customers. Companies are increasingly using strategic alliances to improve efficiency and productivity and reduce costs. These alliances are primarily based on a mutual understanding of the company's products, capabilities, and business model and the ability to cooperate in the delivery of necessary resources.

Research into the supply chains would show that only a few suppliers can satisfy all of the requirements of a particular company. The sourcing model proposed by the VSM ( Supply chain management) addresses this problem by enabling organizations to identify the right supplier who would then be required to develop and implement customized solutions for their products and deliver those solutions in a timely manner. Defining the partnership relationship also becomes easier with this concept as it would allow companies to put in a contract or franchise agreements with suppliers who agree to deliver these goods and services in exchange of regular supplies of raw materials and parts at wholesale prices. The VSM model would also allow organizations to specify what they require from the suppliers. For instance, the VSM might define the partnership as a means to achieve cost savings through procurement of generic goods at competitive prices.

Although this example of Partnership Sourcing may seem very simple and may seem like an off the wall proposal, the VSM model has many advantages and merits that make it a very compelling case study for the modern business environment. The paper goes on to point out some of the main disadvantages associated with implementing the partnership model as well. It would therefore be prudent for managers to consider whether there are other viable options available when formulating a strategic partnership agreement.

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