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Part - III

Operational. These relationships blossom when a component is so critical that any interruption of supply will be costly to the user, but where, at the same time, the market is unsophisticated, with most end users indifferent to the brand of component used. Take personal computer monitors. Companies must coordinate operations with one or a very few suppliers to ensure reliable, smooth and uninterrupted supply, but they are free to choose their collaborators from a number of prospective suppliers. Operational relationships are among the most suitable for collaboration.

Integrated. Integrated relationships, like good marriages, make one working unit out of two. Collaborators in these relationships share risks, costs, profits and information almost without restriction because the market is sophisticated and the nature of the product demands the close coordination of operations and constant communication.

Clearly, there are certain circumstances under which collaboration with a supplier has the potential to cut costs, increase revenues or lower risk. Under some market and operating conditions, suppliers deserve a great deal of attention and consideration. Under other circumstances, suppliers will provide their goods and services without any expectation of commitment or cooperation beyond timely payment of the invoice. There is no point in investing more than is necessary in any supplier relationship-or, conversely, less than enough.

Paths of Least Resistance

Instead of subjecting the decision of whether to collaborate to a careful analysis of market and operating conditions, many companies opt for an easier course and decide to collaborate with the suppliers of whatever product they use the most of, or pay the most for. In extreme cases, they may not bother to make a decision at all and instead just accept a supplier-proposed arrangement. This can be a costly mistake.

The framework of transactional, unique, operational and integrated collaborative relationships can be used to analyze every link in the supply chain. Relationships with suppliers ought to be dictated by operating and market conditions; this framework can define the appropriate relationship-the bounds of intimacy, if you will-for each component supplier. Setting these bounds is the critical first step in any human relationship, but where supply chain collaboration is concerned, this is only the first step.

Next, to increase the likelihood of success, it is necessary to define the details of how the collaboration will work. The details may be grouped into four main categories: business objectives and strategies, technology infrastructure, process integration and organization.

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* Timothy Mould is a Boston-based senior manager in the Accenture Strategic Services practice. His work focuses on developing and implementing integrated value-chain strategies through eCommerce capabilities.
Edwin Starr, a partner in the Accenture Supply Chain Strategy practice, leads the firm's eProcurement and Strategic Sourcing practice. He is based in Chicago.