ABSTRACT
The following case studies have been chosen to reflect partnering activities in small to medium-sized enterprises, principally in the UK. Generally, they reflect successful instances of partnering where some considerable obstacles or challenges were overcome. There were a number of reasons for choosing this particular sector:
to show that partnering is an activity that can be practised by businesses of any size;
to show how the common success factors recur regularly in practical examples;
to give a sense for how practitioners deal with everyday problems (wherever possible, in their own words);
to showcase partnering success stories.
Mercedes-Benz (UK) Ltd – Alliances in the Supply ChainMercedes-Benz (UK) Ltd, is a subsidiary of one of the most prestigious vehicle manufacturers in the world. Mercedes-Benz AG, has recently introduced partnership sourcing into some of its core manufacturing activities.
A few years ago demand on the company’s commercial vehicle import centre at Barnsley in the UK was beginning to outstrip capacity, leading to an expansion and rethink of operations. As well as increasing capacity, the company wanted to become faster at developing new solutions and products.
It was an ideal opportunity to seek closer involvement from certain key suppliers. ‘The general thrust was to outsource non-core activities, and thereby increase the capacity of existing operations,’ said David Duke, Purchasing Manager. ‘We chose existing suppliers who had indicated a desire to co-operate in solving our problems.’ These included Jost (GB) Ltd and Eberspächer (UK) Ltd – both companies that knew Mercedes-Benz’s products and the relevant market.
Jost took on responsibility for designing, developing and installing fifth wheel couplings for commercial vehicle tractor units. Eberspächer undertook a similar role for air and water heaters.
Meanwhile, another partnership with Mailcom resulted from an opportunity identified when reviewing an existing subcontract, of bringing an activity in-house while retaining the benefits of subcontracting. Looking for a company to receive, store, pick and dispatch its marketing and customer information, Mercedes-Benz found Mailcom.
The alliance has:
cut warehousing and distribution costs by around £70,000;
reduced lead times by 40%;
led to a closer working relationship with the users of the system.
Duke believes that the partnerships with Jost and Eberspächer helped the revised operations at Barnsley: ‘We’ve increased capacity, become more flexible and reduced inventory redundancy.’
BAE Systems – Effective Communication in Alliances (O43)Kembrey Wiring has a long-standing relationship with BAE Systems (BAES). But until late 1998, when it was awarded Strategic Partnership status with BAES, Kembrey was only one of a number of subcontractors. It was used mainly as a tactical supplier to meet surges in demand across a variety of military aircraft projects. Work was therefore spasmodic, and the relationship was underpinned by a traditional type of contract.
The reason why Kembrey had not been used more frequently was mainly because of its problems in adhering to schedules that were sometimes unattainable and in meeting deadlines. This situation was very much a reflection of the nature of the old-fashioned type of contract, which was specification-driven and did not encourage communication between client and supplier. The reasons for Kembrey’s difficulties had never been investigated.
In 1999 BAES was asked to help trial a new Relationship Evaluation Tool (RET), which had been jointly developed by the Department of Trade & Industry (DTI) and the Society of British Aerospace Companies (SBAC) out of the Supply Chain Relationships in Aerospace (SCRIA) initiative – a system to evaluate supply chain relationships that was originally devised within the aerospace industry. It was decided to use the relationship between BAES and Kembrey as a candidate for this work under the guidance of Glenn Whitley, the BAES contract officer responsible.
This was a top-down initiative facilitated by Jeanette Medati, the SCRIA champion within the company. It involved joint workshops between customer and supplier, as a result of which it was possible to identify the root cause of the difficulties.
It was down to one thing – poor communication, both inside BAES and externally to and from the supplier. One individual within BAES had been responsible for writing the work packages against which Kembrey manufactured and supplied components. This person had no experience in writing such packages, but understandably did not want to admit this. He simply did his best. Kembrey struggled to understand the requirement, and in turn did not want to reveal its difficulties to the client, so deadlines for production were missed.
As a result of the evaluation Kembrey offered to show the person concerned how to write work packages. This led to barriers between client and supplier breaking down, with consequent improvements in communications and trust. Thus the partnering relationship began.
Although a partnering relationship is not specified in the contract, nor formalised in any charter or agreement, it is underpinned by joint top-level quarterly review meetings, supported by an informal network of ad hoc joint working groups that take forward particular issues and troubleshoot problems as required. A set of joint values defines the day-to-day working relationship. Part of the partnering initiative includes regular reviews (using RET principles) of the success of the arrangement.
Kembrey can now provide a much more efficient service, with schedules being adhered to and deadlines met. Trust and communications, which were almost non-existent before partnering, have greatly improved, and this has led to a culture of innovation, improvement and a joint approach to seeking better value, based on the sharing of technical information.
