Conflicting Objectives

A partnership with the appropriate fem. can help add value to existing products. For example, partnerships that improve time to market, distribution times, or repair times help to Increase the perceived value of a particular firm, Similarly, between companies with complementary product lines can add value to both companies’ products. Improving market access. Partnerships that lead to better advertising or increased access to new market channels can be beneficial. Strengthening operations.

Alliances between appropriate firms can help to improve operations by lowering system costs and cycle times. Facilities and resources can be used more efficiently and effectively. Adding technological strength. Partnerships in which technology Is shared can help add to the skills base of both partners. Also, the difficult transitions between old and new technologies can be facilitated by the expertise of one of the partners. Enhancing strategic growth. Alliances provide a tremendous opportunity for organizational learning.

In addition to learning from one another, partners are forced to learn more about themselves and to become more flexible so that these alliances work. Building financial strength. In addition to addressing these competitive Issues, alliances can help to build financial strength. Income can be Increased and administrative costs can be shared between partners or even reduced owing to the expertise of one or both partners. Of course, alliances also limit investment exposure by sharing risk (D. Smirch-Levi, Samisens ; E. Smirch-Levi, 2008, p. 248).

If these mutual partnerships are to succeed there needs to be a mutual business understanding built up of respect, honesty, trust, communication and a desire for each party to profit by recognizing that the success of one partner helps with the success of the there (Rioter, 2007). Of course there needs to be compliance with all laws but also within the partnership between buyers and suppliers there needs to be respect, honesty, open communications and strategic financing that benefits all the parties involved (Rioter, 2007). Types of RSVP There are three types of Retailer-supplier Partnerships (RSVP) Strategies.

They are the: Information sharing/quick response strategy – supplies receive point of sale (POS) data from retailers and use this Information to synchronize their production Ana Inventory actively wilt actual sales at ten retailer. In tons strategy ten retailer still prepares individual orders, but the POS data are used by the supplier to improve forecasting and scheduling and to reduce lead time. Continuous replenishment strategy (rapid replenishment) – vendors receive POS data and use these data to prepare shipments at previously agreed-upon intervals to maintain specific levels of inventory.

Suppliers may gradually decrease inventory levels at the retail store or distribution center as long as service levels are met. Inventory levels are continuously improved. Inventory levels could be based on sophisticated models that change appropriate levels based on seasonal demand, promotions, and changing consumer demand. Vendor-managed inventory (VIM) (vendor managed replenishment) (VIM) – the supplier decides on the appropriate inventory levels of each of the products (within previously agreed upon bounds) and the appropriate inventory policies to maintain these levels.

In the initial stages, vendor suggestions must be approved by the retailer, but eventually the goal of many VIM programs is to eliminate retailer oversight on specific orders (D. Smirch-Levi et al. , 2008, p. 254). Requirements of RSVP As with any venture, there are requirements that must be met in order for the Retailer-supplier Partnerships (RSVP) Strategies to succeed. The most important requirement for an effective RSVP is to have advanced information systems on both sides of the supply chain.

Electronic data interchange (DEED’) or Internet-based private exchanges are essential to cut down on data transfer time and entry mistakes. Bar coding and scanning are essential to maintain data accuracy. And inventory, production control, and planning systems must be online, accurate, and integrated to take advantage of the additional information available. Such a partnership may shift power within the organization from one group to another which in turn might cause conflict within the organization itself. However, RSVP requires partners to develop a certain level of trust without which the alliance is going to fail.

Confidential information is provided to the supplier. The top management at the supplier must understand that the immediate effect of decreased inventory at the retailer will be a one-time loss in sales revenue (D. Smirch-Levi et al. , 2008, p. 256). Issues with RSVP “One major issue is the decision concerning who makes the replenishment decisions nice inventory ownership issues are critical to the success of this kind of strategic alliance effort (D. Smirch-Levi et al. , 2008, p. 257). ” Conflicts may arise about ownership issues.

Ownership of goods are transferred to the retailer when originally received but more of a consignment relationship is needed with this type of alliance which leaves the supplier still owning the goods until the goods are sold (D. Smirch- Levi et al. , 2008, p. 257). Since the supplier owns the inventory, they might be a bit more concerned on how the buyer handles the management of said items. The errs and suppliers at this point might not agree on the way the inventory is handled at said location(s) and the buyer might feel that their toes are being stepped on in their own house.

This might cause a bit of conflict and tension for both parties. In Vendor Managed Inventory (VIM), one tries to optimize the entire system by coordinating production and distribution. The supplier can decrease their total costs by coordinating production and distribution for several retailers. However, the supply contract must be negotiated so that the supplier and the retailer share overall system savings (D. Smirch-Levi et al. 2008, p. 257). Performance measurement criteria must De agree o at . Polyglot sale (POS) accuracy, Inventory accuracy, shipment Ana delivery accuracy, lead times, and customer fill rates are commonly used.

Confidentiality is an issue. A retailer who deals with several suppliers within the same product category may find that category information is important to the supplier in making accurate forecasts and stocking decisions. In many cases, the supplier in a partnership commits to fast response to emergencies and situational changes at the retailer (D. Smirch-Levi et al. , 2008, p. 257). The buyer of course is cooking to get a fair price but the supplier has to make sure he is covering all of his costs while still managing to make a profit. It is not always in the buyer’s interest to negotiate down to the very lowest price; the result can be less trust or loyalty from the vendor (Rioter, 2007). ” Trust and constant communication are the key factors in any alliance being business or otherwise. A sustainable relationship cannot exist if those key elements are missing. In this way, clear concise contracts are needed for all parties so that there is no deviation from the norm and each party knows what its unction and objectives are within the partnership so that conflicts can be minimized and profits maximized.