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UltraCAD Design, Inc's

Views On Partnering Relationships

A group of purchasing managers met one day to talk about partnering agreements and relationship building between themselves and their key suppliers. They developed a working definition of partnering to help focus their discussion:

Partnering:

A long term relationship based on mutual trust, honesty, integrity, and cooperation between buyer and seller designed to facilitate improved total quality and reduced total cost.

Each of the key words was carefully selected:

bulletLong Term
bulletMutual Trust
bulletHonesty
bulletIntegrity
bulletCooperation
bulletTotal Quality
bulletTotal Cost
The managers then began to list the benefits that they believed would result from such relationships. A few that came to the minds of the people in the room at that moment --- probably reflecting the problems they were currently having at that moment --- included:

  1. Information Sharing:
    The sharing of information regarding requirements and resource loading, resulting in scheduling visibility for both parties.
  2. Reliable Supply:
    Knowledge that the supply would be available when needed as a result of loyalty and information sharing.
  3. Improved Product Performance: As suppliers become more involved with the customer, they begin to see and suggest improvements to those products. "If we have the right suppliers, they know more about that product than we do."
  4. Improved Quality and Technology: Progress brought about through continual incremental improvement based on feedback on each order.
  5. Reduced Product Cost: Economies that result because people become very familiar with the capabilities and requirements of each party, and suppliers gain the kind of visibility that can lead to cost reduction suggestions.
  6. Performance Feedback: Two way report cards on how each side felt about "things" to ensure problems were brought to the surface and dealt with quickly.

Then the managers began discussing some of the problems they had establishing such partnering relationships. Interestingly enough they felt that the single greatest barrier to establishing partnering relationships with suppliers was their own higher level managers! The purchasing managers were all graded on objective measures of performance related to economies --- which generally translated to achieving the lowest prices. So if they recommended a supplier who was not the lowest bid price (even though through a carefully developed partnering relationship the supplier might be the lowest total cost), they felt personally threatened by their own management.

The problem, fundamentally, is that there is a mutually exclusive relationship between the philosophies of lowest (bid) price and the benefits to be obtained through partnering.

Lowest bid philosophies tend to work best for commodities, which can be specified exactly. In those types of markets, partnering is not as important. For services, however, it is very difficult to objectively specify the creativity and effectiveness of the people providing the service ... which is exactly why partnering relationships are more important in service related acquisitions.

We at UltraCAD have always valued relationships with our customers very highly. We are pleased that we have been able to build such relationships with many of our customers, as evidenced by their long term, continued repeat business. And we try hard to take good care of those customers:

Although we don't pretend to be a low price supplier, (we believe we are the lowest TOTAL COST supplier), we look for ways to reduce bid prices wherever we can.

bulletWe guarantee our work and fix problems without question.

bulletWe guarantee our deliveries and reduce prices automatically if we miss a premium delivery (although that only happens about once per year!)

bulletWe support our customers after the order is completed as economically as possible:

  1. No charge for extra sets of drawings if the first set is lost or damaged.
  2. No charge for another copy of the database or Gerbers.
  3. No charge for support for the board house that builds the boards we have designed.
  4. We don't even charge for engineering changes during the design phase unless they require us to really back up and do a significant amount of work over again.

bulletWe have even designed small boards for our customers at no cost.

That's what we believe partnering is all about!

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