The concept of supplier partnering is one of mutual dependence, trust and choice. The businesses are viewed as independent but dependent on each other. They share the same values and visions, and communicate as an extended business entity.

Supplier partnering is not something that happens overnight. It is a process developed over time a long-term commitment. The Japanese have been leaders in recognizing the importance and benefits that a long-term, trusting relationship can offer. Trust is a key ingredient, after all a true partnership is between people and not pieces of paper. Sako (1992) distinguishes trust as:

1. Contractual trust: a belief that one party can sue the other for not delivering. Aprincipal over time resulting in more prescriptive and detailed contracts, but used in conjunction with 100 per cent quality inspection.

2. Competence trust: a prescriptive contract is still in place, but it is accepted that the other party will behave in a predictable manner that they are competent at their job. Quality checks will still be carried out.

3. Goodwill trust: according to Sako this is the basis of Japanese trading. It is the justified acknowledgement that both parties are on the same side. The supplier will do something because it shares the other party s objectives, and not because it is contracted to do so.

Within the supply chain there will be an operation or key business link which sets the standard for the rest of the supply chain. In an automotive supply chain, for example,...