Leading Organizational Learning

This scenario may sound utopian, but IBM has spoken with a
loud voice regarding its determination to be in the forefront of this
movement. In addition, it has the resources and staying power to
make it happen in part, if not in total. The bottom line in this sce-
nario, however, will be treating these suppliers as treasured alliances.
After all, outsourcing IT and systems services are not new ideas. The
wholesale turnkey operation of the nature that IBM’s on-demand
concept envisages contemplates an entirely different supplier rela-
tionship. Now the alliance issues should be dealing with mutuality,
not just price-related and commoditized bargaining methods man-
aged by the purchasing department. These mutuality issues should
be negotiated and managed at corporate headquarters. The chief
alliance officer (CAO) level should work hand in hand with the
chief supply officer (CSO) to distinguish between relationships that
require alliance management and those that require supplier man-
agement. The question then becomes, what is the difference
between supplier and alliance management? (See Exhibit 8.2.)

86 LEADINGORGANIZATIONALLEARNING

Exhibit 8.2 Supplier Versus Alliance Management

Suppliers That Are Not Tiered Suppliers That Are Tiered into

Alliances

Little information shared and High level of information shared;

low communication commitment excellent communication

processes and attention

Low level of integration whether High level of integration whether

manufacturing, distribution, joint manufacturing, distribution, joint

marketing, joint purchasing, or marketing, joint purchasing, or

mutual design mutual design

Low level of relationship investing High level of relationship investing

Negotiations take place at the Negotiations take place at the

purchasing department level, and senior executive level, and

relationship manager is not relationship managers are not in

allocated or if allocated is seen the purchasing department but

primarily as a supply chain manager rather in the alliances group or at

and price negotiator the division level