financial investments were to be made by either party, then
the net present value of the cash flows over the life of the
investment would be calculated in order to verify that the
initiatives met the companies’ hurdle rates on new investments—in other words, the minimum acceptable rate of
return on those investments.
The financial benefit of revenue enhancements achieved
through the implementation of the joint projects was calculated as the segment controllable margin resulting from
the increased sales of new products. This represents the
net sales directly resulting from the project less incremental variable costs, such as manufacturing, marketing, and
Following the success achieved with The Partnership
Model, which has been used by companies such as Cargill,
Coca-Cola, and Amcor Asia-Pacific, among many others,
to structure more than 100 relationships, the researchers and executives associated
with The Global Supply Chain
Forum, a research center at
The Ohio State University,
developed The Collaboration
Framework, a tool for strengthening collaborative relationships in a one-day session.
The Collaboration
Framework comprises six
activities: assess drivers (the
business goals for the relationship) for each company; align
expectations; develop action
plan; develop product and service agreement; review performance; and periodically re-examine drivers (see Figure 1).
The “assess drivers” step
requires that each company’s
representatives meet in separate rooms with a facilitator to identify their business
goals for the relationship in
terms of four driver categories:
asset/cost efficiencies, service improvements, marketing
advantage, and profit growth/
stability. Then, the two management teams come together, and each presents its drivers to the other organization’s management team.
In the “align expectations” session, the teams mutually establish goals based on both companies’ drivers.
“Develop action plan” requires that the teams prioritize
initiatives, assign responsibilities, establish timelines, and
agree on the appropriate metrics. These activities take
place in a one-day “collaboration meeting,” and the output
provides the customization of
the product and service agreement that is necessary for key
customers and suppliers. The
product and service agreement is a written summary of
the rules of engagement and
action plans. It is necessary to
review performance on a regular basis (monthly, quarterly) to
ensure that each company has
achieved its drivers. Finally,
the teams should meet again
in 18 to 24 months to re-examine the drivers.
While in the case described
in this article, management decided that The
Collaboration Framework was
the most appropriate tool,
the Partnership Model could
have been used to structure
the relationship. Both address
expectations and the development of a joint plan, but the
Partnership Model also deals
with relationship style issues
and requires an additional half-day to complete.
Editor’s Note: For more information on The Partnership
Model, see Douglas M. Lambert and A. Michael Knemeyer
(2004), “We’re in This Together,” Harvard Business Review,
Vol. 82, No. 12, pp. 114–122.
ABOUT THE COLLABORATION FRAMEWORK
Company A
Assess Drivers
Team articulates business
goals for the relationship
Company B
Assess Drivers
Team articulates business
goals for the relationship
Align Expectations
Teams jointly establish goals
for the relationship
Develop Action Plan
Teams develop action items, prioritize,
establish timelines, and assign responsibility
Develop Product and Service Agreement
Teams determine rules of engagement
and summarize action plans
Review Performance
Teams measure performance
against expectations
Periodically Re-examine Drivers
Teams reassess drivers as appropriate
SOURCE: DOUGLAS M. LAMBERT, A. MICHAEL KNEMEYER,
AND JOHN T. GARDNER, BUILDING HIGH PERFORMANCE
BUSINESS RELATIONSHIPS (SUPPLY CHAIN MANAGEMENT
INSTITUTE: SARASOTA, FLORIDA, 2010), P.79
