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Partnering and Strategic Alliances
- 1. Partnering and Strategic Alliances Lebanon 2020 2021 Georges Y. Maalouf, PhD
- 2. Learning Objectives • Distinguish between partnering and strategic alliances. • Give examples of innovative alliances. • Describe the concept of internal partnering. • Explain the concept of partnering with suppliers. • Explain the concept of partnering with customers. • Explain the concept of partnering with potential competitors. • Summarize what is meant by global partnering. • Identify the benefits of education and business partnerships. Georges Y. Maalouf, PhD
- 3. Partnering or Strategic Alliances The simplest way to understand the concept of partnering or the strategic alliance is to think of it as working together for mutual benefit. Several benefits can be derived from partnering. Partnering can lead to continual improvements in such key areas as processes and products, relationships between customers and suppliers, and customer satisfaction. Internal partnering can improve relationships among employees and among departments within an organization. When taken as a whole, these individual benefits add up to enhanced competitiveness. Georges Y. Maalouf, PhD
- 4. Partnering or Strategic Alliances Partnering Model Establishing partnering relationships with suppliers or customers is a process that should be undertaken in a systematic way. Develop a Partnering Briefing To make sure everyone involved understands partnering as a concept. Identify Potential Partners Any external or internal supplier or customer is a potential partner. Georges Y. Maalouf, PhD
- 5. Partnering or Strategic Alliances Partnering Model Identify Key Decision Makers In every organization (unit, department, etc.), there are key people whose support is needed to make an initiative involving their organization work. Conduct Partnering Briefing Call a meeting of the key decision makers in both the organizations This briefing should answer such questions as the following: • How can we mutually benefit from a partnership? • What is expected of each partner? Georges Y. Maalouf, PhD
- 6. Partnering or Strategic Alliances Partnering Model Determine the Level of Commitment After the key decision makers have been briefed, gauge their level of commitment. Are they willing to commit to the partnership for the long term? Are they willing to make any and all procedural or philosophical changes that may be necessary for the partnership to work? Decide Whether There Is Sufficient Commitment If the key decision makers show noticeable reluctance, they are not likely to make a full commitment to the partnership. There is no need to proceed any further Georges Y. Maalouf, PhD
- 7. Partnering or Strategic Alliances Georges Y. Maalouf, PhD Partnering Model Identify Key Operational Personnel Identify the people who will be needed to put into action the commitment made by executive-level decision makers. Form the Partnership Team The key people identified as necessary to putting the partnership into operation should be formed into a team. They must be given opportunities to get to know and trust each other.
- 8. Partnering or Strategic Alliances Georges Y. Maalouf, PhD Partnering Model Develop a Mission Statement The mission statement should be developed by executive level decision makers from both organizations. Develop Objectives These objectives should be developed by the partners and ratified by the executive-level decision makers of both partnership organizations. These Objectives should be SMART
- 9. Partnering or Strategic Alliances Georges Y. Maalouf, PhD Partnering Model Prioritize Objectives and Begin It will typically take several objectives to completely translate the mission statement into measurable action. The objectives should be prioritized and listed in order from the most important to the least. After priorities have been established and confirmed by executive-level personnel, the work necessary to accomplish them begins
- 10. Innovative Alliances and Partnerships Partnering between and among companies can take many forms as follow: Type 1: A group of small and medium-sized companies might form a partnership to save money through consortium buying. This is a concept wherein two or more companies get together to purchase common items in bulk: by doing so, they gain the cost benefits of size. Type 2: Major customers agree to welcome an in-house supplier representative who works with the customer’s personnel to continually improve the supplier–customer relationship. Type 3: Another innovative partnership takes the form of the customer focus group. The customer focus group is an example of a partnership between a supplier and the users of its products or services. Georges Y. Maalouf, PhD
- 11. Innovative Alliances and Partnerships Examples: Coca-Cola and Nestlé formed a research partnership to develop a line of ready-to-drink teas and coffees. Procter & Gamble and Walmart formed a partnership to better serve their shared customers through improved shipping and receiving procedures. IBM has a formal partnering program called the Business Partner Program in which IBM and more than 1,000 partners share information of mutual benefit and develop strategies to better serve mutual customers. Partnerships among automobile manufacturers are now common: Ford partners with Mazda, and General Motors with Suzuki. Georges Y. Maalouf, PhD
- 12. Innovative Alliances and Partnerships Georges Y. Maalouf, PhD
- 13. Internal Partnering Internal partnering goes by a number of different names. It has been called employee involvement, employee empowerment, and various other terms. The key concepts in this definition are as follows: •Environment •Mechanisms •Mutually supportive alliances •Human resources Georges Y. Maalouf, PhD
- 14. Internal Partnering With internal competition, somebody within the organization loses. When this happens, the organization also loses. EMPLOYEES AND MANAGERS can work together as internal partners to continually improve quality and productivity. Such alliances will tap the creativity of all internal partners, allowing good ideas to be turned into improvements. Georges Y. Maalouf, PhD
- 15. Partnering With Suppliers Relationships between an organization and its suppliers have traditionally been characterized by adversarial activities such as the low-bid process, in which at least one and often both parties lose. Not all suppliers can participate in such relationships. In fact, suppliers should be required to qualify to participate. Qualifying a supplier shows that it can guarantee that its products will be delivered when and where they are needed in the specified quantities and without defects. Georges Y. Maalouf, PhD
- 16. Partnering With Suppliers Georges Y. Maalouf, PhD Stages of Development in Supplier Partnerships Successful supplier partnerships don’t just happen overnight; they evolve over time. According to Poirier and Houser, this evolution occurs in the following stages:
- 17. Partnering With Suppliers Uncertainty and Tentativeness: There is interest, but it is tentative and prefaced with uncertainty. Short-Term Pressures: The buyer will be under the usual pressure to cut costs. The supplier will be under the usual pressure to increase sales volume. Need for New Approaches: The buyer will press for price discounts, improved payment terms, freight allowances, and other concessions that save it money but cost the supplier. Georges Y. Maalouf, PhD
- 18. Partnering With Suppliers Adoption of New Paradigms: The key is for both partners to accept the principle that absorbing costs within the partnership (by either the supplier or the buyer) gives neither an advantage. Awareness of Potential: Both partners become fully aware of the possible benefits that can be realized from the partnership. Adoption of New Values: both partners adopt the new values inherent in a true supplier–buyer partnership. These values include trust, openness, and sharing. Mature Partnering: Each partner has a strong self-interest in the success of the other partner. Georges Y. Maalouf, PhD
- 19. Single sourcing A process for developing relationships with a few suppliers for long contract terms Strategic alliances Suppliers become de facto subsidiaries to their major customers Partnering With Suppliers Georges Y. Maalouf, PhD
- 20. Partnering With Suppliers Process-chain-network (PCN) diagram A flowchart that evaluates the interactions between service providers and customers PCN categories Direct interaction Surrogate interaction Independent processing Georges Y. Maalouf, PhD
- 21. Partnering With Suppliers PCN diagram for a pizza maker Georges Y. Maalouf, PhD
- 23. Partnering With Suppliers The goal of supply chain management is customer satisfaction. Segmenting the supply chain helps to define who is the customer. Georges Y. Maalouf, PhD
- 24. Partnering With Suppliers Managing Quality in the Supply Chain Because of the global nature of business, suppliers are just as likely to be located in foreign countries as they are in the home country. This globalization of suppliers just complicates the challenge of managing quality in the supply chain. To meet this challenge, world-class organizations use a variety of approaches. The most common of these approaches for managing quality in the supply chain are: • Supplier evaluations • Supplier certifications • Third-party filters • Supplier audits • Supplier development programs Georges Y. Maalouf, PhD
- 25. Partnering With Customers The rationale for forming partnerships with customers in this context is simple: It is the best way to ensure customer satisfaction, which is, in turn, the best way to be competitive. By involving customers early in the product development cycle, a manufacturer can make changes inexpensively and with relative ease. The customer feedback survey conducted by mail and telephone is a widely used strategy for measuring customer satisfaction. Georges Y. Maalouf, PhD
- 26. Customer rationalization Annuity relationship Active data gathering Passive data gathering Partnering With Customers Georges Y. Maalouf, PhD
- 27. Partnering With Customers Actively solicited customer feedback Includes all supplier-initiated contact with customers Examples: telephone contact, focus groups, surveys Types of data Soft data, hard data, and ordinal data Georges Y. Maalouf, PhD
- 28. Partnering With Customers Telephone contact: Convenience survey method Major issue is bias because major segments of the population of interest are often not available via telephone at certain times Georges Y. Maalouf, PhD
- 29. Partnering With Customers Focus groups: Allows a supplier to gather feedback from a group of consumers at one time Georges Y. Maalouf, PhD
- 30. Partnering With Customers Customer service surveys Used by marketers and quality professionals to define areas of strength and areas for improvement in quality systems Four steps to developing a useful survey: 1. Identifying customer requirements 2. Developing and validating the instrument 3. Implementing the survey 4. Analyzing the results Georges Y. Maalouf, PhD
- 31. Reliability – Consistency of responses; little variability Validity – Measuring the correct construct; centered Partnering With Customers Georges Y. Maalouf, PhD
- 32. Passively solicited customer feedback: Customer-initiated contact Examples: filling out a restaurant complaint card, calling a toll-free complaint line, submitting an inquiry via a company’s website Partnering With Customers Georges Y. Maalouf, PhD
- 33. Customer retention The percentage of customers who return for more service Will increase by application of service tools and concepts Customer loyalty Instilled by offering specialized service not available from competitors Can be intangible Partnering With Customers Georges Y. Maalouf, PhD
- 34. Systems created to mine data to improve customer service and retention Three phases of customer-relationship management: Acquisition Retention Enhancement Partnering With Customers Georges Y. Maalouf, PhD
- 35. Partnering With Customers The key to success in partnering with customers is to get them involved early in the product development cycle. Let them preview the design. Allow them to observe and even try prototype models. Get their feedback at every stage in the product development cycle, and make any needed changes as soon as they are identified. Georges Y. Maalouf, PhD
- 36. Partnering With Potential Competitors This is a strategy that applies more frequently to small and medium-sized firms, but it can also be used by even the largest organizations. For example, the leading computer companies in the United States may form a partnership to develop the next technological breakthrough before a similar team in Japan, Germany, or some other country beats them to it. The most widely practiced type of partnership among SMEs is the manufacturing network. Georges Y. Maalouf, PhD
- 37. Partnering With Potential Competitors Manufacturing Networks of SMEs A manufacturing network is a group of individual SMEs that cooperate in ways that increase their quality, productivity, and resultant competitiveness to levels beyond what the individual member companies could achieve by themselves. Manufacturing networks were originally conceived as a way to rebuild. Georges Y. Maalouf, PhD
- 38. Partnering With Potential Competitors Georges Y. Maalouf, PhD Networks activities The joint activities in which networks participate vary a great deal, depending on local objectives.
- 39. Partnering With Potential Competitors Georges Y. Maalouf, PhD
- 40. Global Partnering Companies that market to customers worldwide should examine the possibility of partnering with suppliers worldwide. A one-size-fits-all product will not fit in the global marketplace. Local on-the-ground interaction with both suppliers and customers is critical in gearing up for product design. Georges Y. Maalouf, PhD
- 41. Education and Business Partnerships To improve performance, organizations must first improve their people and the interaction of their people with process technologies. Individuals who lack fundamental work skills cannot perform at globally competitive levels, and people who lack process skills cannot get the most out of technologies available to them. The need to continually improve employees’ work skills is the primary force driving business and education partnerships. Georges Y. Maalouf, PhD
- 42. Review Questions Georges Y. Maalouf, PhD 1. Define the term partnering. 2. What are the benefits of partnering? 3. Describe each step in the partnering model. 4. Define the term internal partnering. 5. What is partnering with suppliers? 6. Explain the mandatory requirements of supplier partnerships. 7. List and explain the stages of development in supplier partnerships. 8. Explain the rationale for partnering with customers. 9. What is a manufacturing network? 10. What role does mutual need play in manufacturing networks? 11. List and explain the most widely practiced network activities. 12. What types of services do educational institutions typically provide to business and industry partners?
Editor's Notes
- Distinguish between partnering and strategic alliances. Give examples of innovative alliances. Describe the concept of internal partnering. Explain the concept of partnering with suppliers. Explain the concept of partnering with customers. Explain the concept of partnering with potential competitors. Summarize what is meant by global partnering. Identify the benefits of education and business partnerships.
- Distinguish between partnering and strategic alliances. Give examples of innovative alliances. Describe the concept of internal partnering. Explain the concept of partnering with suppliers. Explain the concept of partnering with customers. Explain the concept of partnering with potential competitors. Summarize what is meant by global partnering. Identify the benefits of education and business partnerships.
- The simplest way to understand the concept of partnering or the strategic alliance is to think of it as working together for mutual benefit. The maximum benefits of partnering are realized when all parties in the chain of partners cooperate Several benefits can be derived from partnering. Partnering can lead to continual improvements in such key areas as processes and products, relationships between customers and suppliers, and customer satisfaction. Internal partnering can improve relationships among employees and among departments within an organization. When taken as a whole, these individual benefits add up to enhanced competitiveness.
- Partnering Model Establishing partnering relationships with suppliers or customers is a process that should be undertaken in a systematic way. Develop a Partnering Briefing To make sure everyone involved understands partnering as a concept. Identify Potential Partners Any external or internal supplier or customer is a potential partner.
- Partnering Model Identify Key Decision Makers In every organization (unit, department, etc.), there are key people whose support is needed to make an initiative involving their organization work. Conduct Partnering Briefing Call a meeting of the key decision makers in both the organizations This briefing should answer such questions as the following: How can we mutually benefit from a partnership? What is expected of each partner?
- Partnering Model Determine the Level of Commitment After the key decision makers have been briefed, gauge their level of commitment. Are they willing to commit to the partnership for the long term? Are they willing to make any and all procedural or philosophical changes that may be necessary for the partnership to work? Decide Whether There Is Sufficient Commitment If the key decision makers show noticeable reluctance, they are not likely to make a full commitment to the partnership. There is no need to proceed any further
- Partnering Model Prioritize Objectives and Begin It will typically take several objectives to completely translate the mission statement into measurable action. The objectives should be prioritized and listed in order from the most important to the least. After priorities have been established and confirmed by executive-level personnel, the work necessary to accomplish them begins
- Partnering between and among companies can take many forms. Type 1: A group of small and medium-sized companies might form a partnership to save money through consortium buying. This is a concept wherein two or more companies get together to purchase common items in bulk: by doing so, they gain the cost benefits of size. Type 2: Major customers agree to welcome an in-house supplier representative who works with the customer’s personnel to continually improve the supplier–customer relationship. Type 3: Another innovative partnership takes the form of the customer focus group. The customer focus group is an example of a partnership between a supplier and the users of its products or services.
- Examples: Coca-Cola and Nestlé formed a research partnership to develop a line of ready-to-drink teas and coffees. Procter & Gamble and Walmart formed a partnership to better serve their shared customers through improved shipping and receiving procedures. IBM has a formal partnering program called the Business Partner Program in which IBM and more than 1,000 partners share information of mutual benefit and develop strategies to better serve mutual customers. Partnerships among automobile manufacturers are now common: Ford partners with Mazda, and General Motors with Suzuki.
- Internal partnering goes by a number of different names. It has been called employee involvement, employee empowerment, and various other terms. Internal partnering is creating an environment and establishing mechanisms within it that bring managers and employees, teams, and individual employees together in mutually supportive alliances that maximize the human resources of an organization. The key concepts in this definition are as follows: Environment Mechanisms Mutually supportive alliances Human resources
- With internal competition, somebody within the organization loses. When this happens, the organization also loses. Employees and managers can work together as internal partners to continually improve quality and productivity. Such alliances will tap the creativity of all internal partners, allowing good ideas to be turned into improvements.
- Relationships between an organization and its suppliers have traditionally been characterized by adversarial عدائية activities such as the low-bid process, in which at least one and often both parties lose. The goal is to create and maintain a loyal, trusting, reliable relationship that will allow both partners to win, while promoting the continuous improvement of quality, productivity, and competitiveness. Not all suppliers can participate in such relationships. In fact, suppliers should be required to qualify to participate. Qualifying a supplier shows that it can guarantee that its products will be delivered when and where they are needed in the specified quantities and without defects.
- Stages of Development in Supplier Partnerships Successful supplier partnerships don’t just happen overnight; they evolve over time. According to Poirier and Houser, this evolution occurs in the following stages:
- Uncertainty and Tentativeness There is interest, but it is tentative مؤقت and prefaced (Begin) with uncertainty. Short-Term Pressures The buyer will be under the usual pressure to cut costs. The supplier will be under the usual pressure to increase sales volume. Need for New Approaches The buyer will press for price discounts, improved payment terms, freight allowances, and other concessions that save it money but cost the supplier.
- Adoption of New Paradigms: The key is for both partners to accept the principle that absorbing costs within the partnership (by either the supplier or the buyer) gives neither an advantage. Awareness of Potential: Both partners become fully aware of the possible benefits that can be realized from the partnership. Adoption of New Values: both partners adopt the new values inherent in a true supplier–buyer partnership. These values include trust, openness, and sharing. Mature Partnering: Each partner has a strong self-interest in the success of the other partner.
- The theory behind the competitive model was that competition among the suppliers drives costs lower and quality higher. However, this theory ignores the costs associated with variability created by using multiple suppliers. This variability can be seen in process industries such as steel production, in which customers use sheet steel raw materials from suppliers. Even though the dimensions and specifications for sheet metal are the same, if different suppliers are used, there will be increased variability in the physical properties of the materials, such as tensile strength. For example, one manufacturer found that by limiting the number of suppliers of sheet steel, it reduced its defects by 40%. This demonstrated that variability in sourced materials was a major cause of defects. Today, many companies use single sourcing as a way to reduce the number of suppliers. Single sourcing is a process for developing relationships with a few suppliers for long contract terms. Historically, this was the Japanese method of purchasing. Increasingly, single-sourcing arrangements are developing into strategic alliances, in which the suppliers become de facto subsidiaries to their major customers. In these arrangements, not only are suppliers single-source providers but they also integrate information systems and quality systems that allow close interaction at all levels.
- Flowcharts are graphical diagrams with boxes that represent process steps. The steps are connected by arrows that represent process dependency; an arrow between steps suggests that accomplishing one step is dependent on accomplishing another step. A PCN diagram categorizes the flowchart steps according to whether they involve interaction between entities such as providers and customers. In PCN diagrams, an entity is either a service provider, customer, or supplier. Entities such as supplier’s suppliers or customer’s customers can also be further up or down the supply chain.
- Figure shows an example of a PCN diagram for a pizza restaurant. The pizza restaurant has a process domain, which is made of process steps that are the responsibility of the given entity (in this case, a pizza restaurant) as well as interactions with customers. A process domain has three regions: • The direct interaction region includes process steps that involve the pizza restaurant interacting with another entity, such as a local cheese supplier or a customer. • The surrogate interaction region includes process steps in which the restaurant is acting on the resources coming from another entity without direct interaction. For example, the restaurant may order napkins online. • The independent processing region includes process steps that the restaurant performs without interacting with other entities, such as developing recipes and turning on the ovens. PCN diagrams have been used in a variety of situations to improve customer service.
- Figure shows a picture of a supply chain for yogurt. Notice that the supply chain consists of several parts. In one, the farmers are providing product to a dairy. On another part of the supply chain, a chemical company provides plastic pellets to a converter who molds the cups. The label maker also provides labels to the converter. Do you suppose that the converter is primarily concerned with the final consumer who buys the yogurt? Likely not. The supply chain can be segmented. The chemical company is primarily focused on the converter. The dairy company schedules shipments to the distributors, and the distributors handle shipments to the store. The dairy works with the distributors and retailers to understand consumer preferences and to provide the flavors desired by the customers.
- Managing Quality in the Supply Chain Because of the global nature of business, suppliers are just as likely to be located in foreign countries as they are in the home country. This globalization of suppliers just complicates the challenge of managing quality in the supply chain. To meet this challenge, world-class organizations use a variety of approaches. The most common of these approaches for managing quality in the supply chain are: Supplier evaluations Supplier certifications Third-party filters (ISO) Supplier audits Supplier development programs
- The rationale for forming partnerships with customers in this context is simple: It is the best way to ensure customer satisfaction, which is, in turn, the best way to be competitive. By involving customers early in the product development cycle, a manufacturer can make changes inexpensively and with relative ease. The customer feedback survey conducted by mail and telephone is a widely used strategy for measuring customer satisfaction.
- Customer rationalization results from agreement between marketing and operations as to which customers add the greatest advantage and profits over time. This does not necessarily mean pursuing customers who are currently the most profitable. It could mean pursuing customers who cause the company to improve in ways necessary for continued survival. For example, consulting firms often have to turn away customers desiring services in areas outside the expertise of the company. Customer rationalization ensures that a high-quality product is provided, and the service provider stays within its field of expertise. Also, this allows firms to focus on a smaller number of key customers and to develop an annuity relationship, in which the customer provides a long-term, steady income stream to the provider. As suppliers focus on satisfying their customers, these customers are recognized as primary sources of information. To better understand the customer, data about the customer must be gathered, analyzed, and used for improvement. The rest of this chapter is concerned with gathering and analyzing customer data so that the data can be used for improvement. There are a variety of means for gathering data from customers. These include active data gathering, such as through focus groups and surveys, and passive data gathering, such as through customer comment cards.
- Actively solicited customer feedback Includes all supplier-initiated contact with customers Examples: telephone contact, focus groups, surveys Types of data Soft data, hard data, and ordinal data Phone contacts, focus groups, and survey results are referred to as soft data. As opposed to soft data, hard data are measurement data such as height, weight, or volume, measured on a continuous scale. Soft data are not continuous and are, at best, ordinal. Ordinal data are ranked so one measure is higher than the next.
- Telephone surveys are often used to gather information related to customers. Most often, they are used for surveys or structured interviews. This is a type of convenience survey method. The major problem with telephone surveys is bias. Major segments of the population of interest are often not available via telephone at certain times. This makes random sampling difficult. Also, customers resent being called at inconvenient times. With recent changes in laws, service providers can be asked to remove customers from contact lists if this method is used. In addition, phone surveyors must respect state and federal do-not-call lists. However, it is often helpful to call respondents prior to sending a survey to see whether they are willing to respond to a survey.
- Focus groups narrowly address a single topic or group of topics, and they draw individuals with similar characteristics or demographics, which limits the discussion to subjects and market segments that are of particular interest to the firm. Figure shows the steps included in performing a focus group session. After identifying the purpose of the focus group, a set of questions is developed that sequences from broad to specific. After the focus group sessions are completed with multiple groups, the notes from the sessions are reviewed to find common themes that become the basis for planning and improvement. Focus groups are often used by business and government agencies to gauge topics or issues that elicit the strongest emotional responses from the subject. Focus groups need to be carefully facilitated so that the objectives of the research are met.
- The customer service survey is an important tool for determining customer perceptions of customer service and quality, and is used by marketers and quality professionals to define areas of strength and areas for improvement in quality systems. It is disappointing that surveys are sometimes misused, as is shown in A Closer Look at Quality, Figure 5-2. A survey (or instrument) consists of a series of items (or questions) designed to capture perceptions. The number of items is determined by the purpose of the instrument and the willingness of respondents to spend time filling out the survey. 1. Identifying customer requirements. Customer requirements include the dimensions of quality, service, and performance that are necessary to satisfy the customer. Identifying customer requirements initially involves reviewing the purchase orders and contracts established when the relationship with the customer begins. Second, customer needs are reviewed with marketing and production. Third, interviews are conducted with a sampling of customers to determine what to add to the list of customer requirements. 2. Developing and validating the instrument. After dimensions of customer requirements are identified, specific examples are developed to measure the particular dimensions. An alternative means of developing survey items is the critical-incident approach, which involves obtaining information from customers about the process they use to receive goods and services. The critical incidents are aspects of organizational performance with which the customers come in direct contact. These are important for monitoring and measuring process performance as it relates to customer service. 3. Implementing the survey. Reliability and validity are two different but interrelated issues of survey development. We use the traditional target approach to explain this relationship. If the target in Figure 5-11 (shown on the next slide) is the dimension of customer service that you are trying to measure, each arrow mark represents a single response using the survey instrument. If the measure of the dimension ascertains the dimension perfectly, the shot will be right in the center of the target. If you don’t hit the center, you are not perfectly measuring the quality dimension. The more imperfect the measurement, the farther the shot will be from the center of the target 4. Analyzing the results. For business purposes, data analysis generally should be kept simple. Means, histograms or numerical responses, and simple correlations are best for analyzing survey responses. Open-ended questions are analyzed with Pareto analysis using bar charts of the various categories of responses. More extensive data analysis using advanced statistical techniques—such as multiple regression, analysis of variance, or other procedures—should be performed if necessary. Explanations of these statistics can be found in introductory statistics textbooks. However, business experience has shown that simpler analysis is better because simple statistical results are easy to communicate to managers and coworkers.
- Validity is related to reliability, but a reliable instrument is not guaranteed to be valid. There are different types of validity; for example, construct validity refers to the use of certain terms and whether terms really measure what it is we want to measure. Criterion validity indicates that your measuring instrument has the capability to predict or agree with constructs external to that which you are measuring. Content validity refers to whether the item really measures what we want to measure.
- According to research in the area of passive data collection, it was found that passive collections resulted in lower ratings of quality than active collections. It is not clear which approach is more biased. However, it is expected that people who fill out customer response cards based on their own initiative probably have issues they would like resolved. Customer research card: We are all familiar with customer cards. We see them at many services companies and receive them with products. They are often an inexpensive way to involve the customer in the process. Research shows that respondents to these cards tend to be expressing extreme responses—either very highly pleased or extremely displeased. Response cards provide an opportunity for the service provider to develop a relationship with a customer through properly recovering from an extremely poor service encounter. Companies should have a method for logging, resolving, and tracking complaints. Resolved complaints also should be used for future feedback for systems improvement. Many companies provide websites and toll-free phone lines for customer complaints, questions, and inquiries. These services are offered by many third parties or can be offered in-house.
- Customer retention is an important indicator that every company should track. For services in which the customers are an input to the process, variability can be reduced by maintaining a stable pool of customers who are familiar with the transaction processes. Customer loyalty can take many forms, including high customer contact or technology advancements. If a customer and supplier are linked through electronic data interchange (EDI), it is more difficult to switch to an alternative supplier because information systems have to be upgraded to work with new suppliers. This also speeds up data transmission between supplier and customer, reducing cycle times and lead times for delivery of products and services.
- With business information systems—especially over the Internet and social media—companies are receiving volumes of customer-related data. These data include personal, Internet, process, and customer-preference information. As a result, systems have been created to mine these data to improve customer service and retention. CRMS technologies are used in customer data acquisition and data-mining efforts. All firms desire profitable customers. Customer self-service and product customization are ways to acquire new customer data. Another means is to provide customer access to information technology (IT) systems for configuring orders or researching information online. Customer retention is enhanced through a variety of activities. Because it costs six times as much to acquire customers, it is cost effective to retain customers. Frequent-flier programs and grocery discount cards are examples of information-based methods for retaining customers. Enhancement involves improving service to the customer through the use of information systems.
- The key to success in partnering with customers is to get them involved early in the product development cycle. Let them preview the design. Allow them to observe and even try prototype models. Get their feedback at every stage in the product development cycle, and make any needed changes as soon as they are identified. When this approach is used, customer satisfaction surveys can solicit feedback from a broader audience to verify the input given earlier in the product development cycle.
- This is a strategy that applies more frequently to small and medium-sized firms, but it can also be used by even the largest organizations. For example, the leading computer companies in the United States may form a partnership to develop the next technological breakthrough before a similar team in Japan, Germany, or some other country beats them to it. The most widely practiced type of partnership among SMEs is the manufacturing network.
- Manufacturing Networks of SMEs A manufacturing network is a group of individual SMEs that cooperate in ways that increase their quality, productivity, and resultant competitiveness to levels beyond what the individual member companies could achieve by themselves. Manufacturing networks were originally conceived as a way to rebuild. Manufacturing networks began to appear in the United States in the 1980s. The earliest known network in the United States is the Garment Industry Development Center, established in New York City in 1984.
- To improve performance, organizations must first improve their people and the interaction of their people with process technologies. Individuals who lack fundamental work skills cannot perform at globally competitive levels, and people who lack process skills cannot get the most out of technologies available to them. The need to continually improve employees’ work skills is the primary force driving business and education partnerships. In such partnerships, educational institutions provide on-site customized training, technical assistance, and consulting services to help organizations continually improve their people and their processes. They also provide workshops and seminars and facilitate focus groups.
- 1. Define the term partnering. 2. What are the benefits of partnering? 3. Describe each step in the partnering model. 4. Define the term internal partnering. 5. What is partnering with suppliers? 6. Explain the mandatory requirements of supplier partnerships. 7. List and explain the stages of development in supplier partnerships. 8. Explain the rationale for partnering with customers. 9. What is a manufacturing network? 10. What role does mutual need play in manufacturing networks? 11. List and explain the most widely practiced network activities. 12. What types of services do educational institutions typically provide to business and industry partners?