Course Name: - Total Quality Management.

Book Title: - Total Quality Management and Operational Excellence.

Part II, Chapter 5, Partnerships and resources.

PARTNERING AND COLLABORATION

‫المشاركة والتعاون‬

What Is a Partnership?
A partnership is a formal arrangement by two or more parties to
manage and operate a business and share its profits.
There are several types of partnership arrangements. In
particular, in a partnership business, all partners share liabilities
and profits equally, while in others, partners have limited liability.
There also is the so-called "silent partner," in which one party is
not involved in the day-to-day operations of the business.

Liabilities: ‫متطلبات‬

 A partnership is an arrangement between two or more people to

oversee business operations and share its profits and liabilities.
 In a general partnership company, all members share both profits
and liabilities.
 Professionals like doctors and lawyers often form a limited liability
partnership.
 There may be tax benefits to a partnership compared to a
corporation.

Business, technologies and economies have developed in such a way that

most organizations now recognize the increasing needs to establish
mutually beneficial relationships with other organizations, often called
‘partners’. The philosophies behind the various TQM and Excellence
models support the establishment of partnerships and lay down principles
and guidelines for them.
Even in the twenty-first century, however, some organizations do not
fully appreciate the important role supply chains play in delivering on-
quality, on-time, on-cost products and services in their organization. Yet
the ‘supply chain’ is often responsible for most of the labor, materials and
equipment involved. Because joint design and manufacturing (JDM)
partnering has become commonplace in some industries, the supply chain
now includes the designers and developers. Partner organization
employees can constitute upwards of 80 per cent of workers in the
product or service chain, so a very important part of each organization’s
strategy must be the consideration of the values, skills, knowledge and
attitudes of partner management and employees.

(constitute upwards of ‫) تشكيل ما يزيد‬

How companies in the private sector plan and manage their partnerships
can mean the difference between success and failure for it is now
extremely rare to find companies which can sustain a credible ( ‫الحفاظ على‬
‫ )المصداقيه‬business operation without a network of cooperation between
individuals and organizations or parts of them. This extends the internal
customer–supplier relationship ideas into the supply chain of an
organization, making sure that all the necessary materials, services,
equipment, information skills and experience are available in totality to
deliver the right products or services to the end customer.

An efficient supply chain process, built on strong confident partnerships,

will create high levels of people satisfaction, customer satisfaction and
support and, in turn, good business results.

Similarly in public sector organizations, where the involvement of the

private sector has been a key development feature in recent times, there is
the need to recognize and build strong external partnerships.

How an organization plans and manages the external partnerships must be

in line with its overall policies and strategies, being designed and
developed to support the effective operation of its processes. A key part
of this, of course, is identifying with whom those key strategic
partnerships will be formed. Whether it is working with key suppliers to
deliver materials or components to the required quality, plan (lead times)
and costs, or the supply of information technology, transport,
broadcasting or consultancy services, the quality of partnerships has been
recognized throughout the world as a key success criterion.
Understanding and applying a sound approach to improving strategic
partnerships and supplier relationships will have a significant return on
investment by:
• Significantly reducing the management overhead ‫تقليل النفقات االدارية‬
through increasing the level of collaboration on a number of key
dimensions to be critical in effective partnerships.
• Establishing the right partnerships from the outset through ‫من البداية‬
understanding what makes partnerships work and building that into the
selection, review and re-contracting’ process.

Once the goals for the partnership are established, partners may carry out
a ‘health check’ on the current operations to assess strengths and areas for
improvement.

The approach recommended looks at five key dimensions of good

collaborative working:

• Strategic alignment: ^‫ التوافق^ االستراتيجي‬how well aligned are the partners

and how do they achieve this alignment at all key levels of management?
• Customer focus: to what extent do both parties develop and deliver the
desired standards of service and experience across the whole service
chain?
• Decision-making and governance: how the partnership is managed to
best effect and efficiency.
• Communications and transparency ‫ الشفافية‬: how well data and
knowledge is captured, shared and disseminated ‫ نشرها‬in a way that builds
value and not cost.
• Investment and improvement: the extent ‫ مدى‬to which the partnership
jointly invests in ^‫ االستثمار^ بشكل مشترك‬and improves the partnership
operations and outcome measures.

There are various ways of ensuring the partnership processes work well
for an organization. These range from the use of quality management
system audits and reviews, through certificates of competence ‫شهادات‬
‫ االختصاص‬, to performance reviews and joint action plans. A key aspect of
successful partnerships is good communications and exchange of
information which supports learning between two organizations and often
leads to innovative solutions to problems that have remained unsolved in
the separate organizations, prior to their close collaboration.
When establishing partnerships attention should be given to:

• maximizing the understanding of what is to be delivered by the

partnership – the needs of the customer and the capability of the supplier
must match perfectly if satisfaction and loyalty are to be the result
• understanding what represents ‫ يمثل‬value for money – getting the
commercial relationship right
• understanding the respective roles ‫ دور كل منهما‬and ensuring an
appropriate allocation ^‫ توزيع‬of responsibilities – to the party best able to
manage them
• working in a supportive, constructive ‫ بناء‬and a team-based relationship
• having solid programs of work, comprising agreed plans ‫تشمل الخطة المتفق‬
‫ عليها‬, timetables, targets, key milestones ‫ معالم‬and decision points
• structuring the resolution of complaints ‫ هيكلة حل المشكالت‬, concerns or
disputes ‫ المخاوف^ او النزاعات‬rapidly and at the lowest practical level
• enabling the incorporation of knowledge transfer and making sure this
adds value
• developing a stronger and stronger working relationship geared to
delivering better and better products or services to the end customer –
based on continuous improvement principles

GLOBAL OUTSOURCING

What Is Outsourcing?

Outsourcing is the business practice of hiring a party outside a

company to perform services and create goods that traditionally
were performed in-house by the company's own employees and
staff. Outsourcing is a practice usually undertaken by companies
as a cost-cutting measure. As such, it can affect a wide range of
jobs, ranging from customer support to manufacturing to the back
office.
Research by The Economist has shown that the top two reasons for the
selection of ‘global suppliers’ were the pursuit of new markets and
reducing costs. Product/service quality and customer service
improvements did feature but they were down the list of priorities.

Three key areas of opportunity and risk are common across both global
in-sourcing and outsourcing.

Managing performance and exposure ‫ مواجهة‬to risk

- The quality can't be inspected and it should be built in

- Inspection dose not prevent the poor quality to escape to the
customer
- There is no clear view of risk across a global manufacturing or
operations footprint; we can only manage what we can measure.

Getting organized for success

Building a global quality management capability needs leadership and a

clear policy for managing quality on a global scale. The approach must
integrate quality assurance, quality control, and quality improvement
techniques, such as Lean Six Sigma, into an integrated approach to
quality management.

The ongoing management of quality on a global scale requires an

appropriate balance of stewarding ‫االشراف‬global quality performance,
facilitating global improvement, and managing risk. It is also vital to
ensure that quality is not solely seen as the responsibility of the ‘Quality
Department’. As quality is everyone’s responsibility it must rank with
equal importance with other critical areas.

SUUPPLY CHIN EFFECTIVENESS IN THE GLOBAL

ECONOMIES

A high-level overview of a process to strengthen sourcing security in

terms of quality, timeliness and cost, by sourcing a second supplier.
1 Decide the selection criteria that are right for the business

Firms should conceder a set of sourcing criteria, such as, sourcing and
supply chain capability, technical capability, product cost profile, and so
on.

2 Make an initial selection

Using the selection criteria make an initial selection of candidates

3 Toughen up the selection criteria and make a shortlist

Using a more rigorous set of selection criteria reduce the list to – say –
five candidates

4 Conduct site visits

At this stage, really put the candidates under the microscope by
scrupulously ‫ بدقة‬examining all the factors around the potential deal,
including:
• Approach to managing a large production and assembly account
• Level of interest in the commercial opportunity
• Professionalism and ability to quickly accommodate ‫ التوفيق‬site visits
and assessments.

5 Make a final evaluation . . . and choice

Re-evaluate the key business criteria scores, moving them up and down
as appropriate. Also, determine the candidates’ key strengths and
weaknesses, together with associated risks, and draw the conclusions.

THE ROLE OF PROCUREMENT/PURCHASING IN

PARTNERSHIPS

The primary objective of a ‘Purchasing’ or ‘Procurement’ function is to

obtain the correct equipment, materials and services in the right quantity,
of the right quality, from the right origin, at the right time and cost.
Procurement or Purchasing can also play a vital role as the organization’s
‘window-on-the-world’, providing information on any new products,
processes, materials and services that become available. It can also advise
on probable prices, deliveries and performance of products under
consideration by the research, design and development functions. In other
words it should support any partnership in the supply chain.

The purchasing or procurement system should be documented and

include:
1. Assigning responsibilities for and within the purchasing/procurement
function.
2. Defining the manner in which suppliers are selected, to ensure that they
are continually capable of supplying the requirements.
3. Specifying the purchasing documentation – written orders,
specifications, etc. – required in any modern procurement activity.

The supply chain or procurement, their role is to work across the business
functions exploring ways to optimize the supply process through
strategies such as outsourcing, early supplier involvement and off-
shoring.

Clearly, the link between procurement strategy and business performance

and the resulting shareholder value need to be considered.

Procurement needs to expand its remit into managing risk and

vulnerability ^‫ التحول الى ادارة المخاطر والضعف‬within the supply chain,
particularly in the context of geographically dispersed and distant
supplier's ‫ال سيما في سياق الموزعين المتناثرين البعيدين‬. Additional complexity
also arises as a direct consequence of the volatility of commodities ‫تقلب‬
‫السلع‬, currencies and interest rates.

Risk-related issues include managing exposure ‫ التعرض‬to commercial and

reputational risks, as well as providing improved supply market
intelligence, such as forecasting future shortages.

Collaborative relationships are a prerequisite for tapping into innovations

available from suppliers globally and suppliers are becoming increasingly
integrated into new product development efforts. In some organizations
this requires the development of new remuneration ‫مكافات‬and risk sharing
models ‫ نماذج‬to share the benefits of technological development with
suppliers. Most large organizations and governments worldwide are
increasingly focusing on the issue of sustainability, both from the societal
and the environmental perspectives. This has the potential to be the single
most significant influence on organizational strategy, with procurement
playing an important role in this effort.
Commitment and involvement

The process of improving supplier performance is complex and clearly

relies ‫ يعتمد‬very heavily on securing real commitment from the senior
management of both organizations to a partnership. This may be aided by
presentations made to groups to directors of the suppliers brought
together to share the realization of the importance of their organizations’
performance in the quality chains. The synergy derived from members
‫التازر المستمد^ من االعضاء‬of the partnership meeting together, being educated
and discussing mutual problems will be tremendous ‫كبير هائل‬. If this can
be achieved, within the constraints of business ‫ ضمن قيود العمل‬and technical
confidentiality, it is always a better approach than the arms-length
approach to purchasing still used by many companies.
A supplier of goods or services that has received such attention,
education and training, and understands the role its inputs play, is less
likely knowingly to offer nonconforming materials and services, and
more likely to alert customers to potential problems.

Policy

One of the first things to communicate to any external supplier is the

purchasing organization’s policy on quality of incoming goods and
services. This can include such statements as:

• It is the policy of this company to ensure that the quality of all

purchased materials and services meets its requirements.

• Suppliers who incorporate a quality management system into their

operations will be selected. This system should be designed, implemented
and operated accordingly to the International Standards Organization
(ISO) 9000 series.

• Suppliers who incorporate statistical process control (SPC) and

continuous improvement methods into their operations will be selected.
• Routine inspection, checking, measurement and testing of incoming
goods and services will not be carried out by this company on receipt.

• Suppliers will be audited and their operating procedures, systems and

SPC methods will be reviewed periodically ^‫ بشكل دوري‬to ensure a never-
ending improvement approach.

• It is the policy of this company to pursue uniformity of supply, and to

encourage suppliers to strive for continual reduction in variability ‫السعي‬
‫ لتقليل التقلبات‬. (This may well lead to the narrowing of specification
ranges.)

Quality management system assessment certification

Many customers examine their suppliers’ quality management systems

themselves, operating a second party assessment scheme ‫تشغيل نظام تقييم‬
‫الطرف^ الثاني‬. Inevitably ‫ بال شك‬this leads to high costs and duplication of
activity, for both the customer and supplier. If a qualified, independent
third party is used instead to carry out the assessment; attention may be
focused by the customer on any special needs and in developing closer
partnerships with suppliers. Visits and dialogue across the
customer/supplier interface are a necessity for the true requirements to be
met and for future growth of the whole business chain. Visits should be
concentrated, however, on improving understanding and capability, rather
than on close scrutiny of operating procedures, which is best left to
experts, including those within the supplier organizations charged with
carrying out internal system audits and reviews.