What Are the Key Strengths and Weaknesses of Partnership Supply?

B3. What are the key strengths and weaknesses of partnership supply? Discuss and justify examples of suppliers with whom your firm should use partnership supply.

Outsourcing involves handing over a process or function performed by an organization to an external party. Partnership supply, a common form of outsourcing, is used by both profit and non-profit organizations for several reasons primarily related to cost, strategy and politics.  

Key strengths include significant cost savings as suppliers can provide better quality products and services at lower costs due to specialization and economies of scale. Outsourcing also results in organizational efficiency by reducing fixed and indirect costs as a result of fewer employees and less infrastructure to support them.

Strategically, partnership supply improves core competencies and flexibility as organizations can re-focus their limited resources to fundamental tasks. This improves performance and quality of service resulting in strong client satisfaction. Such relationships also reduce investment risks for businesses and let organizations compete better by enabling them to meet demands quickly. Using partnership supply, businesses can share knowledge and gain access to their suppliers’ strengths, technology, skills and talent. Furthermore, outsourcing allows partners to support and understand each other, build trust, and share success and risks. Since partnership supply involves a few key long-term relationships, organizations typically save on transaction costs ensuing from frequent changes.

On the other hand, outsourcing provides no guarantee of cost savings and may lead to an overdependence on suppliers. Increase in supplier power, loss of skills and core competencies to suppliers are further weaknesses of outsourcing efforts. Partnership supply can also weaken internal collaborations and efficiency of existing operations. To make a good first impression, suppliers may only perform well at the beginning and not fulfil commitments later.

Non-profit organizations like the PDSA may not have the ability or skills to oversee outsourced operations. Poor requirement communications with weak suppliers can result in performance problems and bad reputation which may dissatisfy customers. Self-serving suppliers may also be unwilling to share resources and technology with the organization.

The PDSA should use partnership supply with wholesalers who provide the organization with animal care products, drugs and medicine as they would have better capacity and technical knowledge to produce and supply these products to its hospitals. This would reduce costs and allow the PDSA to focus on its core function of providing free or low cost pet treatments, improve its services and compete with industry rivals. By buying in large quantities, the PDSA can also utilize economies of scale, and pass on savings to its beneficiaries and paid clients. The PDSA can also collaborate with manufacturers and suppliers to develop new and innovative products and services.