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Partnering and Supply Chain Management

Published 13th February 2006 by Constructing Excellence

‘Partnering’ is a label used for a variety of innovative approaches to managing relationships between organisations in construction.

These arrangements have one thing in common – an intention to move beyond the limitations of traditional project relationships. In these, there is little or no integration of the processes used by the different members of the project ‘team’; all too often one party seeks to improve business performance by manipulating cash flows and enhancing profit margins at the expense of someone else.

Partnering is not another new form of contract nor a new way of relating between people. It is a different way of structuring business relationships, which has profound implications for both contracts and the ways people work together.

Most ideas of Partnering draw their inspiration from manufacturing – vehicles, food, aerospace and electronics – where long-term supply relationships have developed between product assemblers and key first-tier component suppliers. Rather than constantly put out tenders and choose different suppliers on the basis of lowest price, assemblers enter into long-term, but relatively informal, agreements with a few suppliers. You can read more about this in the Supply Chain Management Factsheet. Commercial pressure is maintained by benchmarking supplier performance on a number of fronts, with agreed targets for improvement. Suppliers work together with the assembler to deliver continuous improvement in products and processes over time. As a result, all parties deliver lower costs and improved quality without squeezing each other’s profit margins. Steady profits then provide the basis for investment in improved products and processes, and a virtuous circle of continuous improvement is established.

In the construction sector, this model has been adapted into three forms of Partnering.

Partnering has close connections with:

  • Briefing the Team
  • Value Management
  • Risk Management
  • Supply Chain Management
  • Integrating Design and Construction

Filed in: External Relations, Logistics, Partnering, Supply Chain Management