Partnering Pitfalls and Success Factors

INTRODUCTION While the manner in which buying and supplying organizations interact has long been a topic of interest, in recent years the focus has shifted. Today, buyer-supplier "partnerships" or "strategic alliances" are a popular topic of coverage in both the popular and the academic press. Because "partnering" is a very popular, widely used term with a variety of definitions, it is important to begin this article with a definition. For the purpose of this research, "partnering" is defined as: ...an ongoing relationship between two organizations which involves a commitment over an extended time period, and a mutual sharing of the risks and rewards of the relationship. For the purpose of this study, it is also assumed that partnership arrangements do not involve ownership, such as subsidiaries, joint ventures, or equity interests. Many articles have been written that cover various aspects of buyer-supplier relationships. Some of the topics studied include the use of partnerships to support the organizations' strategic objectives,(2) partnering selection factors,(3) partnership development and implementation) trends in types of partnerships,(5) and partnership success factors and barriers.(6) One potential shortcoming of much of the previous research on partnering is that it has been anecdotal/looks at partnering from the "outside," is based on secondary data,(8) explores partnering relationships from only one side of the partnering dyad,(9) or that it uses a very small sample or a case study approach.(10) This study provides a contribution beyond much of the previous research in that it looks at the issues associated with buyer-supplier partnering from the perspective of both the buyer and the supplier simultaneously. In addition to looking at both buyer and supplier perspectives, this research used "matched pairs" of buyers and suppliers that mutually agreed they were involved in a "partnering" relationship, as defined by the preceding definition. To provide a balanced perspective on the why, how, and what to avoid in partnering relationships, this research explores the following questions: 1. Why do buyers and suppliers become involved in partnering relationships? 2. What are the key issues that make those relationships a success? 3. When previous partnering relationships have not worked out, what have been the key factors that contributed to that failure? By definition, a "partnership relationship" is a two-way relationship involving a mutual exchange of ideas, information, and benefits. Yet, limited research has been done to explore whether there is truly a "meeting of the minds" in successful relationships, and what the concurrent perceptions of the participants reflect. In addition, it is of interest to find out why partnerships fail from the perspectives of both the buyer and the seller, particularly to obtain some insight from the perspectives of buyers and sellers who have been able to make such partnering relationships succeed under different circumstances. DESIGN/METHODOLOGY This study used a survey methodology to provide a broad range of responses. A survey questionnaire package was developed based on previous research.(11) It was pretested, and resulted in a buyers' questionnaire and a companion "near mirror image" suppliers' questionnaire. "Near mirror image" means that nearly all the same questions were asked of specific pairs of respondent buying firms and their counterpart supplying firms, but from each organization's perspective. This method enabled the researchers to make a direct comparison of the responses from the buying community with those from the supplying community. The Sample More than 300 Fortune 500 firms' purchasing organizations were invited to participate in the study. This was a "convenience" sample that came from two sources: (1) participants in previous Center for Advanced Purchasing Studies (CAPS) purchasing performance benchmarking studies and (2) participants in the CAPS-sponsored Executive Purchasing Roundtable. …