Print This ArticleMost companies invest a significant level of resources in activities designed to identify business partners and secure a relationship with them. Sales leaders typically identify the strategic targets that they want to win over in each year’s annual plan. Strategic sourcing leaders place a critical importance on finding those suppliers that can make a difference to their organization’s success and bringing them onto the team. Executives responsible for numerous business functions – from R&D to logistics to information technology – look to identify partners that can help them solve their most challenging business problems. But all too often, these same firms think that they have achieved success once handshakes are exchanged and contracts are signed. In truth, that’s when the real work begins.
Part of that reflects the characteristics of strategic business relationships between suppliers and their customers. Most are large, but that is the least important and least discriminating characteristic of such relationships. Higher-level strategic business relationships are complex and multi-dimensional, which is why such effort is required to ensure that they deliver value to the shareholders of the firms involved. The table below provides some perspectives as to such complexity and dimensionality:
It is a major challenge to progress to even the Strong Preferred Supplier-Customer Relationship level shown in this table. In fact, we find that only about 30% of large supplier-customer relationships ever progress beyond the traditional transactional, on-again and off-again, relationships that are common in business markets. Those organizations that move beyond that level typically realize great benefits along multiple dimensions, providing the motivation driving firms to identify and implement such relationships.
