Page 231 - Performance Leadership

220 • Part IV Implementing the Performance Leadership Framework

F igur e 12.2
Three Types of Relationships within the Performance Network

Transactional relationship
• Supplier/customer relationship
Supplier Customer • Separate objectives

Added-value relationship
• Embedded supplier process within customer
Or
Supplier Customer • Customized supplier process for customer
• Aligned objectives
Joint-value relationship
• Cosupplied value proposition for joint customers
Cosupplier
Either
Combined
Customer • Transactional or
offer
• Added-value
Cosupplier
• Shared objectives
to secure repeat business. Each party in a relationship focuses on its
own performance, managing its own processes.
Although transactional relationships are scalable (because they can be
repeated for every single customer) and can be very profitable, they are
becoming decreasingly competitive. Within transactional relationships,
competing on price is not likely to be a good option. Most likely you have
invested in becoming operationally excellent already, or there will always
be someone else who can do it even cheaper. Or perhaps price competi-
tion doesn’t fit your brand. Also, competing on product quality is becom-
ing less differentiating: There are hardly any really “bad” products left in
the market. Many organizations therefore look to provide additional value.
In added-value relationships, profit and growth are still important for
the supplier. But there is a clear need and wish to create a long-term
relationship. In some cases, products or services are tailored to meet
the needs of a specific customer. Think of printing a customer’s logo
on a standard product, or building a product from scratch according to
a customer’s specifications. Another form of adaptation can be found
in logistics and administration, connecting systems to monitor stock
levels or to perform joint planning. A certain level of trust is required
by the customer to allow another party into the operation. Once this is
a fact, switching costs will be higher. Both parties are committed to the
relationship and seek alignment, benefiting from mutual success.