While purchasing economies are only one benefit of Membership, we recognize that they are highly visible and important. For this reason, Management’s approach goes beyond “bulk purchasing” (which focuses narrowly on using volume to achieve the lowest possible unit price) to “Strategic Sourcing,” a model that takes into account the total value of Audigy Group International’s (AGI) relationship with each supply partner.
Strategic Relationship Principles
There are six Partnership Principles that govern AGI’s strategic relationships. The first three set clear, basic standards for how partnerships are structured and managed. The remaining three principles define the shared objectives that drive these relationships..
Principle #1: Mutual Recognition
Each partner acknowledges that the other has a core set of business expectations that must be met for the relationship to be worthy of ongoing investment. Each partner also recognizes that the other exerts market influence and can significantly impact—either positively or negatively—the results of the partnership.
Principle #2: Shared Risk & Reward
Strategic partnerships are structured in a manner that create common upside and downside potential for all participants. Each partner benefits from the relationship only to the extent that the other’s business goals for the partnership are also met or exceeded. This is the best way we know (short of shared ownership) to align participants’ business interests.
Principle #3: Performance Transparency
Clearly defined terms, common objectives and a shared approach to measurement are the primary bases for evaluating the performance of strategic relationships. Executives charged with partnership oversight and managers with day-to-day operating responsibility have access to relationship-level information appropriate to their decision-making requirements.
Principle #4: Disciplined Revenue Growth
Profitable, capital-efficient sales growth is the cornerstone objective of strategic partnerships. Rather than using the relationship as a vehicle to simply shift or buy market share, partners will focus their efforts on strategies that meaningfully increase the overall long-term volume and quality of revenue.
Principle #5: End-to-End Value Chain Efficiency
Partners identify and fund joint initiatives to reduce the Group’s cost of doing business. Projects focus on development of management infrastructure that reduces operating complexity and improves information flows across the value chain.
Principle #6: Regional Consolidation
Audigy Group and its supply partners protect and expand collective market share in an environment of accelerating consolidation by providing strategic, operational and financial support to the Group’s strongest regional and local practices. This approach is the most effective way for both AGI and its suppliers to pre-empt aggressive acquisition companies while growing the collective market share.