Strategic Alliances and Alliance Development

CSCP defines a strategic alliance as a relationship formed by organizations that share proprietary information, participate in joint investments and develop common processes to improve performance.

Why it matters

Alliances can create value that ordinary buyer-supplier transactions cannot, including joint innovation, faster problem solving, better quality, flexibility and improved delivery performance.

Core concepts

• Strategic alliances require a stronger commitment than normal transactional supplier relationships.

• Partners may share proprietary information and coordinate joint investments.

• Alliance activities can involve engineering, marketing, production planning, inventory and quality management.

• Goals can include cost reduction, quality improvement, delivery improvement, flexibility and new-product introduction.

• Alliance development means strengthening the capabilities of an important partner.

• Trust, flexibility and mutual benefit are important because the parties depend more heavily on one another.

• The level of collaboration should fit the strategic importance of the relationship.

Remember for the exam

• Strategic alliances involve joint value creation, not just preferred-supplier status.

• Alliance development can include capability improvement.

• Trust and information sharing are central to deep collaboration.

• Not every supplier relationship should become an alliance.

Apply it

• Use this concept in a practical decision by asking: Strategic Alliances and Alliance Development

• Then check the decision against this principle: CSCP defines a strategic alliance as a relationship formed by organizations that share proprietary information, participate in joint investments and develop common processes to improve performance.

Exam trap

Watch for questions that test this distinction or principle: The level of collaboration should fit the strategic importance of the relationship.

Key takeaway

Strategic alliances are high-collaboration relationships in which organizations share information, jointly plan and may jointly invest to improve mutual supply-chain performance.