Is win-win in supplier relationships impossible? Andrew Cox thinks so, we’re not so sure

David Atkinson, ex CPO and now one of the most thoughtful advisers and thinkers in our business,  tweeted a link to a fascinating  white paper the other day. I don’t know how ‘new’ it is, but its message is timeless, so it seemed worth highlighting here and starting a discussion perhaps.

"The Problem with Win-Win" was written by Professor Andrew Cox, ex Birmingham University, procurement guru, founder of IIAPS (International Institute of Purchasing and Supply) and Chair of its Advisory Board. As so often in the case of material from him, it is aimed to stir the procurement pot, provoke and challenge conventional and lazy thinking. Which is great, even if we think he is incorrect in some of his assertions.

The paper looks at supplier relationship management in the context of long-term collaborative relationships and the value that each party can extract from them.  Cox challenges the idea that we should  always seek ‘win-win’ outcomes from these relationships – this just isn’t possible, he says.

This is because a true win-win, in which both parties simultaneously achieve their ideal outcomes, is not feasible under any circumstances. By its very nature, buyer and supplier exchange is always contested.

But does that statement go a bit too far? A win-win is "not feasible under any circumstances"?  Surely not. It may be very unusual but it is possible.  Suppose I want a small piece of consulting work carried out. My ‘ideal outcome’ would be successful delivery at zero cost.  (I may not think I will achieve that, but it would be the ideal.)  Now it just so happens that a small consulting firm wants to try out a new technique, and is keen to have my firm as a reference on its CV. So it's happy to do the project without financial reward.

Hence ideal outcomes all round.  And the chart on page 2 of the Paper shows “Buyer Wins : Supplier Wins” as one of nine possible outcomes from buyer and supplier exchange, which seems to cut across that previous assertion of impossibility.

But it has always been Cox’s style to make sweeping assertions to drive debate and get his audience thinking, which is a technique we admire and – let’s be honest – we have been known to follow here.  So bear that in mind as you read this, which you should if you are at all interested in SRM, because its core message is an important one.

Cox is pointing out that win-win isn’t always possible or even desirable, and that delivering value from long-term collaborative relationships is not a simple matter. He is not against the development of such  relationships however – as he says, they "are still an extremely useful tool in the armoury of a buyer seeking improved value for money.”  But, buyers have to understand the risks. If they allow suppliers to dominate and “create high switching costs operationally” (that is, make it difficult for the buyer to change supplier), then

“... the buyer may not receive the currently best available value for money deal in the market, but a sub-optimal offering from which it is difficult to exit.”

Now there’s a situation which will be recognised by many in the public and private sectors.  Are you locked into a dominant IT supplier, or an outsourced services deal where you just can’t face the hassle of changing suppliers? That’s the risk of not understanding the dynamics of these long-term relationships, Cox would argue.

We’ll come back and look further at the paper, but it is available here and well worth a look.

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