Working relationship between suppliers and buyers

working relationship between suppliers and buyers

The study of buyer-supplier relationships and purchasing process has been the link in the supply chain is becoming the prerequisite of business success. In the supply chain literature as well as in business environments Supplier Relationship Management and Buyer Supplier Relationship have. Here are four tips for improving relationships with your suppliers: Suppliers aren't just working with your company, so give them the benefit of the doubt if your Trust is critical for a constructive buyer-supplier relationship, and the best way to.

But does it work all the time?

Building a Better Buyer-Seller Relationship - HBS Working Knowledge - Harvard Business School

The answer is no," he said. Sometimes the all-at-once approach is the only way to jump-start from zero, he observed. From Transaction To Commitment To explain how he has come to answer question three—how to convert a customer from a transactional to a relationship orientation—Narayandas answered with a case and a research project.

The Wesco case is about a company whose business was very transaction-oriented—dealing in bulbs, wires, and connectors for contractors and industrial customers. Yet it managed to shepherd about a third of its customers into a relationship. As he learned in the Wesco experience, the road is bumpy at first. The distributor tells the customer, "I want to give you lower prices, which will come at the expense of my markets.

What I want you to do is give me higher volumes. The suppliers' costs, meanwhile, just go up.


While the customer is getting more value, only one party—the distributor—is actually working at the relationship. Even the slightest effort they put in will lead to much more value for themselves. At some point, the customers begin to give more volumes. For the customers, value increased, thanks to price reduction and the fact that the customers began to see the value of collaboration.

Trust forms between people, between individuals. But commitment forms between firms. So make sure you get through the investment phase at the beginning—investing in skills and systems—and figure out how long to invest and pull out [if necessary]. In Wesco's case, about a third of relationships migrated through; two-thirds fell in the trap. You also need to have an understanding of the pattern of investments, and more important, an understanding of the process of how relationships evolve over time," he said.

working relationship between suppliers and buyers

Kasturi Rangan took an in-depth look over time at three buyer-seller relationships, all in commodity markets. The three pairs represented different parts of the value chain: What we found is that there are many commonalities," he said.

Together they developed a process model of relationship development, described in their working paper, "Building and Sustaining Buyer-Seller Relationships in Mature Industrial Markets".

working relationship between suppliers and buyers

Previous work by other scholars had focused on two paths: None of this work could explain how relationships that began as unbalanced, with one player holding most of the cards—as is typical in industrial markets—could evolve from adversarial to collaborative. In their paper, they developed nine propositions and identified five processes. They found that the contract stage in industrial markets leads to a performance evaluation stage. Performance evaluation affects two elements: Some researchers like Gadde, et al.

Hence, Supplier Relationship Management gains enormously on relevance. Corporations offer seminars and trainings to demonstrate how to improve Supplier Relationship Management for maximizing supply chain efficiency, cost-effectiveness, operational-progress, breakthroughs and joint-innovation creations to mutual benefits.

Furthermore, Rizza, indicates that Supplier Relationship Management augments a faster time-to-market, transactional-efficiency, competitiveness, financial benefits, etc. This is why, also Enterprise-Resource-System providers added tools and applications to their programs for the concerns to have an overview over their supplier-bases.


Given that, Supplier Relationship Management -technology provides unparalleled visibility and assists in reducing and sharing risks, which subsequently yields the strategic point of view of sourcing in supply chain firms. The businesses invest, depending on the level of required services and productsa massive amount of money in their suppliers, including, among others, time, money, the actual loss of a material resources and opportunities, etc.

The goods and services they source do not solely affect the procurement-realms, but the entire cooperation according to Easton, et al.

working relationship between suppliers and buyers

Therefore, they must be selective, when deciding with whom to collude. Consequently, both sides need to endeavour to attract the best strategic partners. This hierarchical model is a six step instruction to reach the maximum potential in Buyer Supplier Relationship. Accordingly, depending on categorisations, each supplier base has its own challenges, problems and risks, with regard technical, demand considerable, administrational terms, etc.

As reported by Harland, et al. Regardless the degree of power-resources, the parties are independent, nevertheless by having high power-resources, a strategic alliance and competitiveness can be built.