Supply Chain Partnership Thoughts....

Guy's,
Here's a few advantages and disadvantages of MMP forming some type of partnership with their suppliers. It's not in a SWOT format but it may put some thoughts in our heads....

Some advantages:

If MMP were to form some type of a retailer-supplier partnership they will be able to share information, which helps their supplier plan much more efficiently. This can aid the suppliers of MMP with knowledge of their lead times and production capacities. MMP can still produce their own batch/individual orders but the data provided by MMP to their suppliers will allow the supplier to improve their forecasting and scheduling and reduce overall lead time. In turn, inventory will be reduced significantly and this helps to improve their economy of scale by reducing their input cost and hopefully increase their production.

By having better forecasting, any possible bullwhip effect may be minimized, which can have devastating effects on the supply chain. Tragic events such as September 11 can keep customers from buying any product. By having centralized information sharing with their suppliers, and having it in real time, suppliers and distributors will allow MMP to reduce their production capacity immediately and help minimize the variability of the orders placed. The supplier can immediately adjust for the decrease in customer demand and reduce costs for both MMP and themselves.

By improving forecasting and sharing information with their suppliers, MMP will be better able to focus on their core competency. And maybe they will be able to devote some time to other parts of their business like marketing of their product.

A couple of disadvantages:

One problem that I see with having a partnership with their suppliers is that MMP will have to spend a significant amount of money in employing new and advanced technology. They currently don’t have any system in place to coordinate their demand information and to do so would mean that they would also have to employ additional help to start and run it.

Currently, they do not have any type of relationship with their suppliers that would entail any trust. If anything, their relationship with some of their suppliers may have been more of an adversarial relationship, because they’re just trying to get the most amount for the cheapest price. There will have to be much courting among management for the company’s to develop trust in each other. Being that MMP is a smaller company than most of their suppliers, it may behoove them to make the initial attempt of forming some type of partnership.

On that note who’s to say that their suppliers are willing to form this type of relationship with MMP? MMP would have to show the benefits of this to their suppliers, which may be a hard sell because it will require more responsibility on the suppliers part. Some of their suppliers and distributors may consider MMP to be too small of a company for them to invest their resources in. If they do decide to form this type of a partnership, their commitment may be based solely on a short-term basis. This may hurt MMP especially in a slow economy.

Hope this helps a little bit. So far I'm still good for tomorrow...
Forrest