Slide 7.
Supplier Relationships
Definition of a Relationship
A Connection or Association
Relationship Marketing
Relationship Purchasing
1
2
Long-term
Strategy
Long-term
Strategy
Secures
Mutual
Benefits
3
Not one
Sale at
a Time!
Requires
Focus
Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005
Supplier Relationships
Slide 7.2
Table 7.1 Main differences between transactional and relationship purchasing
Transactional
Focus on short, discrete purchasing
Relationship
Focus on supplier retention
Short-term orientation
Long-term orientation
Arms length
Closeness
Simple buyer/seller relationship
Complex, including internal relationships
Emphasis on price, quality and delivery in the
offered product
Emphasis on improving price, quality, delivery and
other factors such as innovative design as a
collaborative exercise between purchaser and
supplier
No innovation
Moderate supplier contact
Little sharing of information; opaqueness
Reverse auctions may be applicable
High supplier contact, with each contact being
used to gain information and strengthen the
relationship
Significant sharing of information including cost
information, transparency
Reverse auctions generally inapplicable
Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005
Supplier Relationships
Slide 7.3
Relationship Formation
Five Aggregation Levels
1
Actions
Episodes
Sequences
- Individual initiatives
- Groups of interrelated actions
- More extensive entitles of interactions
4 Relationships
- All sequences that comprise in one relationship
5 Partner base
- Relationship portfolio
Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005
Slide 7.4
Supplier Relationships
The Cox Model
Internal
contracts
mergers,
acquisitions
Strategic
alliances
Network
sourcing
Single
sourcing
Preferred
supplier
Adversarial
Arms
length
Partnership
relationship
Core
competencies
A step-ladder of external and internal contractual relationships
Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005
Slide 7.5
Supplier Relationships
Centralised Purchasing
An Illustration of the Interaction Model
Environment
Market structure
Dynamism
Atmosphere
Power/dependence
Cooperation/conflict
Short
term
Organisation
Technology
Structure
Strategy A
Individual aims
Experience
Internationalisation
Position in the manufacturing
channel
Social system
Closeness/distance
Expectations
Trust/opportunism
Product/service
Information
Financial
Social
Exchange
episodes
Interaction process
Long
term
Institutionalisation
Adaptations
Relationships
Organisation
Technology
Structure
Strategy B
Individual aims
Experience
IMP Group, An Interaction Approach in International Marketing and Purchasing of Industrial Goods, Winter 1982, p 10-27
Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005
Slide 7.6
Supplier Relationships
Tangs Classification of Operational Characteristics
Type of contract
Delivery schedule
Length of contract
Senior management involvement
Product service type
Information exchange
Supplier development
programs
Pricing scheme
Number of suppliers
Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005
Supplier Relationships
Slide 7.7
Termination Legal Considerations
Financial consequences
Confidentiality agreements
Intellectual property rights
Capital assets
Security issues
Employee rights (TUPE)
Signed record of settlement
Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005
