“Thegoodnewsisthatoureffortstoimproveourrela-tionshipwithBascoinBelgiumfinallyseemtobepayingoff,eventhoughitwasaslowandtortuousprocesstogetthere”,PeterJackmansaid.“Thebadnewsisthatinthenextsupplychainproject,abouttostartwithPerdirelliinMilan,thepressurereallyison,asthey’regoingthroughamajorbusinessredesignexercise.Wecan’taffordtotakeasmuchtimeandmakeasmanymis-takesaswedidinthisfirstproject.”PeterJackmanisPellton’slogisticsmanagerforEurope.HehasbeeninvolvedinaprojectwithBasco,amajorcustomer,tojointlyimprovethesupplychainlinkingthemandbuildastrongpartnershipwiththeirBelgianandGermanoperations.Becauseofthesuccessofthatproject,PelltonhadinitiatedasimilarprojectwithPerdirelliinMilan,anothermajorcustomer.Jackmanandsomecolleaguesweretryingtodecidehowtoorga-nizethisnewproject,basedonwhatthey'dlearnedfromthepreviousexperience.Jackmanwaskeenlyawareofthechallengehewasfacing:“Thistimethereareoppor-tunitiesforevengreaterbenefits,butifwefail,wecouldloseallofourbusinesswithPerdirelli.”PelltonInternationalandBascoPLCPelltonInternationalisamultinationalchemicalfirmwithEuropeanheadquartersinMaastricht,Netherlands.Pellton’smainproductisPell-Q,aPVBplasticwhichitproducesandsellstocustomersworld-wide;themajori-tyoftheirproductissoldtowindscreenmanufacturersintheautomotivesupply-chain(seeExhibit1).Allwind-screensaremadewithlaminatedglass:alayerofPVB(atransparentplasticwhichaddsresistance,preventsshattering,andsometimesabandofcolorforshading)sandwichedbetweentwolayersofglass.Pelltonsharesapproximately85%oftheworldmarketwiththreeothermajorsuppliersofPVB.Pelltonsuppliesalmost70%ofBasco’stotalPVBrequirements,whichconstitutes30%ofitstotalsalesinEurope(Perdirelliconsumes20%).BascoPLC.BasedinLondon,Bascomanufacturesawiderangeofglassproductsfortheautomotiveandconstructionindustry,includingwindscreens,forwhichtheyhavefourplantsthroughoutEurope.TheyareoneofthelargestwindscreensuppliersinEurope.Torespondtoincreasingcustomercostpressures,Bascorecentlycentralizedpurchasingforallcriticalrawmate-rials,whichincludesPell-Q(approximately4.40Eurosperm2,whichaccountsfor25%ofwindscreenproduc-tioncost),atBascoPurchasing(BasP)inLondon.BasPwouldconductnegotiationswithkeysuppliers,actingasaservicecentertotheBascoproductionsites.TheProductandtheProductionProcessPell-Qissoldinrolledsheets(250minlength)tomanu-facturersofautomotivewindscreens.Pelltonproducesabout50differentwidthsin1cmincrementswithmostfallinginthe70to110cmrange.Theadditionofcoloredbandsanddifferentproductformulationscombinedwiththerangeofwidthsyieldavarietyofover2000dif-ferentstock-keepingunits(SKUs)forPellton.Somecustomershavespecialqualityrequirements;forexample,PerdirellirequiresaspecialformulationofPell-Q(calledS2/P),andPelltonmustproducealargenum-berofSKUsthatareuniquetoPerdirelli.DemandforPelltonInternational,amultinationalchemicalfirm,producesandsellsPVBplastictowindscreenmanufacturersintheautomotivesupplychain.ThecasedescribesPellton’seffortstobuildastrongersupply-chainpart-nershipwithBasco,akeyEuropeancustomerandtoextendtheirsuccesstoanotherlargeEuropeancustomer,Perdirelli.Thepotentialpartnersstrugglewithissuesofbuildingtrustandovercomingconflictbetweentheorganizations,measuringandsharingbenefitsofprocessimprovement,consignmentstockasanincentivetocustomers,andSKUrationalization.PelltonInternational:DevelopingaSupply-ChainPartnership60SupplyChainForumAnInternationalJournalVol.2-N°1-2001www.supplychain-forum.comCharlesJ.Corbett,AssistantprofessorofOperationsandTechnologyManagement,JohnE.AndersonGraduateSchoolofManagement,UCLAJosephD.Blackburn,JamesA.SpeyerProfessorofProductionManagement,OwenSchoolofManagement,VanderbiltUniversityLukN.VanWassenhoveHenryFordProfessorofManufacturinganddirectoroftheCenterforIntegratedManufacturingandServiceOperations,INSEADInterestedreaderscanrefertothecompletecase-PelltonInternational,PartnershipsorTugofWar(A),(B)and(C)INSEAD,1997CASESTUDYPelltonInternationalBascoAntwerpAutoAssembler1CompetitorsPerdirelliMilanAutoAssembler2Exhibit1-PelltonInternational’sAutomotiveSupply-ChainPell-Q,especiallyattheindividualSKUlevel,ishighlyvariable.SummarystatisticsofdemandpatternsforBascoBelgiumandPerdirelliMilanaregiveninExhibit2.ProductionplanningtomatchsupplywithdemandisdifficultforPelltonbecauseoftheneedtoproduceinlargebatchsizeswithlongtimeintervalsbetweenpro-ductionruns.Pell-Qisproducedinbatchproductionrunsrangingfromseveralhourstoseveraldays;changeovertimesvaryfromseveralminutestoafulldayforsomeofthediechanges.Becauseofthelongchangeovers,produc-tionbatchsizesarelarge,andcycletimesbetweenbatchesofthesameproductrangefromtendaystosixmonthsforlowerdemanditems.ProductionlinesinMaastrichtrunthreeshifts,sevendaysaweek.Combinedannualoutputisjustunder55millionm2andtotalvariablecosts(mostlyrawmaterials)averageabout1.3Euros/m2.Storageanddistributionofthepro-ductisverycostlybecausefromproductionthroughpackaging,storageanddeliverytothecustomer,rollsofPell-Qmustberefrigeratedtokeeptheplasticsheetontherollfrombondingandlosingdefinition,renderingtheproductunusablebythecustomer.L