Supplier Reliationships

SUPPLIER RELATIONSHIPS

The key strategic decisions in supply management center on which supplier to pursue and what kinds of relations to maintain with suppliers. Strategic supply management is founded on the conviction that a significant competitive edge can be gained from the suppliers an organization has developed and its supply systems and supplier relationships. Any organization’s desire to satisfy its customers and to provide continuing improvement in its customer service is dependent on its suppliers to help it accomplish this goal.

Supplier performance has a greater impact on the productivity, quality, and competitiveness of the organization than most managers realize. Recent trends to buy instead of make, to outsource instead of continuing to make, to improve quality, to lower inventories, to integrate supplier and purchaser systems, and to create cooperative relations such as partnerships have underlined the need for outstanding supplier performance.

1. Adversarial relationship

Adversarial relationship is characterized as being of an ‘arm’s length nature;, which relies on formal paperwork communications rather than personal contact. It is seen essentially as a short-term, competitive sourcing approach, which can lead to frequent changes of suppliers. Outcomes of adversarial or competitive behavior are perceived in terms of ‘win-lose’ results, whereas the partnering relationship is held up as possessing the possibility of a ‘win-win’ outcome - both sides winning simultaneously, through the adoption of problem- solving approaches, for example, to solve any difficulties. The characteristics associated with adversarial relationship might be summarized as indicated in Figs-1.

|1. Arm’s length, formal communication approach |

|2. Adversarial attitudes |

|3. Lack of trust...