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4 October 2006
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05 October 2006 | Paul Snell

The growth of supplier/buyer partnerships does not spell the end for competition, according to a leading academic.

Speaking at a panel discussion on partnering in London last month, Andrew Cox, professor of business strategy and procurement at Birmingham Business School, said: "Partnering does not mean dealing exclusively with one company."

Prof Cox said a buyer's firm could collaborate with several suppliers. It could form partnerships with a number of suppliers who would each be guaranteed a proportion of work, with the best-performing vendor then being offered more.

However, he accepted there might be some cases in which this model might not be appropriate or possible, such as for a particular market in which a limited number of suppliers operate.

Prof Cox also warned buyers against forming partnerships with the purpose of transferring risk.

"Clients often want to pass risk on to suppliers," he said. "Partnering does not avoid risk. It is a relationship or agreement to deal with risk together when it comes."

Prof Cox said partnerships could bring about innovation, but that buyers were often put off by a lack of certainty over the long-term cost of such relationships.

"You cannot innovate without taking risks," he said.

A purchaser in the audience asked how buyers and suppliers could know how each other was performing - since in longer-term joint ventures it is not always easy to measure progress against key performance targets.

Another panel member, Jaap Marijt, senior contracting and procurement adviser at Shell exploration and production, said partnerships should not be viewed as an "us and them" situation.

"You win and lose together," he added.

SMoct2006

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