Relationships: Transactional or Strategic, which is Preferred?

September 12, 2011 by 4 Comments

The preferred relationship type is both!  Both transactional and strategic relationships have the potential to bring value to our organizations.  When determining which relationship types we prefer, the essential question is: “what business results are we looking to achieve?”

When focusing on the ability to obtain OEM and product components better cheaper, and faster, a transactional relationship may be preferred.  On the other hand, when focusing on broader business goals such as creating new revenue streams, increasing market share, increasing productivity and improving customer service, a strategic relationship may be preferred.

There are points along our supply chain that require different types of relationships.  The key is to understand what type of relationship works best given the specific business need.  The table below may help to identify which relationship type might work given differing situations.

Situation

Transactional

Strategic
Fix an immediate problem

X

  
Generate New Revenue Streams  

X
Increase core competencies  

X
Product pricing pressures

X

X
Leverage resources  

X

Once a relationship type is matched to a particular need within our organization, it may be useful to explore the attributes associated with the two different approaches to relationships.  The table below lists attributes of both relationship types.

Strategic Relationship Attributes

Transactional Relationship Attributes
High relationship participation Limited relationship involvement
High commitment Specific requirements
High level coordination Easy Role definition
High level of trust Contract driven
Collaborative problem solving Little training needed to purchase
Conflict resolution Concrete outcomes
Open communication Limited communication
Shared risk Low risk
Complex information sharing Simplistic information sharing

Interestingly, when examining business needs, matching relationship types and reviewing relationship attributes; it may be possible that a combination of both is the best option.  Understanding what kind of relationship works best for our specific business need enables us to include characteristics and attributes from both relationship methods into our selection processes.

Combining desired business outcomes and relationship types into selection processes has the potential to help our businesses operate more effectively.

What have your experiences been with strategic and transactional business relationships?

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Create A Conduit For Cost Savings Within The Supply Chain

December 16, 2010 by Leave a comment

Information sharing within the supply chain is a great strategy for cost savings. Often, organizations working with one another have redundant systems creating double entries of the same information, duplicate paper work and double handling of the product.

The reproduction of tasks costs both entities money, increasing costs to produce a product. Additionally, the opportunity for errors amplifies at each step in a process where duplication is present.

Information sharing can be as simple as referencing order information, such as purchase order numbers, in the subject line of an email or referencing design specifications by including drawings and or specification numbers, in proposals and estimates. Sharing and referencing information helps reduce the amount of administrative time taken to locate and refresh memories regarding the details of a project or product.

While these simple steps may make our jobs easier, the real opportunity for cost savings is in integrating information technology systems. Allowing business partners within the supply chain, to complete work directly within Enterprise Resource Planning (ERP) systems has many advantages.

One set of advantages is in the quality of the information. Work performed directly in ERP systems has the following benefits:

  • Relevant information is delivered to the appropriate people. Layers of people within an organization are accessing information contained within an ERP; each with particular tasks or decisions to make based on information obtained from the system. Often it is difficult to understand who needs which components of various information. Less time is consumed figuring out who needs what and ensures relevant information is shared with appropriate departments and personnel.
  • Timely work directly performed in an ERP means that real-time information is in the system. Time sensitive information necessary for processing proper accounting functions is available. Timely information also reduces wait time for professionals to keep projects moving forward and focus on their primary work load functions.
  • Accuracy increases as dual data entry points decrease, by limiting the number of times the same information is entered.

Integrating information systems with business partners increases the quality and efficiency of information, leading to cost savings by reducing additional steps in business processes.

 

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What You Should Know About the Basics of Prototyping

July 28, 2010 by Leave a comment

By David Clark, New Business Development Manager, the Malco Design & Deliver Group

When it comes to designing and preparing a prototype, the first questions we ask is, “What is the goal of the prototype?” The answer is not as obvious as you might think.

 

The design and production of prototypes in the product development process creates compelling opportunities for patenting, licensing, investor relations, market research, product refinement and ease of manufacturing. Deploying the right prototype at the right time for these uses saves time, saves money and enhances the end-user experience while increasing the chance of a successful new product launch.

In the product development life cycle, three basic varieties of prototypes build on one-another to reach the point of manufacturing. Increasing in sophistication and capital investment, these prototypes can be thought of as three distinct design processes.

  1. Conceptual Drawing and Virtual Prototypes
  2. Working Models
  3. Pre-Production Samples

Conceptual drawings and virtual prototypes are the most cost effective prototypes in the design process. Conceptual drawings and virtual prototypes are used the early stages of market research and to gather customer feedback. Additionally, they are used to gauge investor interest and for selling or licensing a patent.

Once market interest is solidified and investors commit, the working model prototype further refines the product to demonstrate the proof of concept, size, fit and functionality. Working model prototypes provide investors and the target market a hands-on working model for feedback and critique to further the design process.

Often confused, a working model prototype differs significantly from a mock-up. Mock-ups, while useful, are made in the earliest stage of product development using convenient materials at hand. Working models are prototypes made of materials that closely resemble and are consistent with design specifications. Working model prototyping creates a product ready for real life testing.

 

The pre-production sample is the most costly prototype to make. Therefore, it is produced only when the majority of design decisions have been made. Using the information gathered in the previous stages, the final stage of prototyping uses the pre-production sample to study and enhance the Design for Manufacturability (DFM) of the product. For more information read:Benefits of Design for Manufacturability.

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David Clark holds a BS degree from Minnesota State University, Mankato and an MBA from the University of St. Thomas. He has over 20 years of sales, marketing and product development experience. Dave has worked for Malco Products, Inc. for eight years.

 

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Collaboration as a Process: Synchronize Systems

March 11, 2010 by Leave a comment

The subject of my last blog, Collaboration as a Process, provided a model for thinking about collaboration as process where creating client-centered dialogue is the first step. Shifting our internal paradigm from “Let me tell you about me and my products” to focusing on our client’s paradigm by asking “What are your goals for your products and services?” leads to creating client-centered dialog, which helps to begin uncovering true needs for our clients and end users.

collaborationClient-centered dialog and active listening facilitates the free flow of information. We learn about our client’s core competencies. We learn about our client’s strategic objectives and vision for success in the market place. We learn what our client’s are really good at producing, and how they go about bringing their products and services to market. Then, together we can move to problem solving and synchronizing systems.

The goal of synchronizing systems in the collaborative process is to align all stakeholders within the supply chain to efficiently meet end user requirements. This outcome is achieved by exploring the client’s and the supply chain’s systems, processes and core competencies to consider how the combined services can serve to strengthen the client’s positioning to deliver on its strategic objectives.

The process of examining key components uncovers gaps between the client’s strategic objectives in meeting end user requirements and how it delivers on those objectives. These gaps are value creation opportunities. Value creation opportunities include the ability to align stakeholder systems and processes, to reduce or eliminate redundancies, while each stakeholder works within its core competencies. When organizations collaborate within their respective core competencies, organizations can provide efficient solutions to the end user at reduced unit prices and at significantly lower investment cost.

Once the value creation opportunities are identified, supply chain resources are qualified and the systems are synchronized, then the next step in the collaborative process begins. This next step, integrating operations, is critical in delivering the promises of meeting target price points and lowered investment costs.

Continue the conversation with me on my next blog post, where I discuss methods on how to integrate operations within collaborative relationships.

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