BUSINESS TO BUSINESS RELATIONSHIP MANAGEMENT
Strategic Sourcing and Supply Chain Management
I. Stages of Buyer-Supplier relationships 4
II. Types of buyer-supplier collaboration 5
III Supplier evaluation and selection 6
IV. Steps to establishing a Buyer-Supplier Collaboration 8
V. Barriers to establishing a succesful Buyer-Supplier relationships 9
VI. Benefits of a successful Buyer-Supplier Collaboration………………………………………………………..9
In today’s competitive business world, having the right kind of buyer-supplier ...view middle of the document...
Orders are usually ready to be shipped 36 hours after the customer placed the order. As a result, Dell is still one of the most profitable computer manufacturers in the world today.
The focus of this paper is on the development and management of business relationships and understanding the dynamics of collaboration in buyer-supplier relationships. In this paper, I will indentify different collaboration methods, potential obstacles and benefits. Most of the conclusions drawn in this paper are written from the point of view of the buyer.
I. Types of buyer-supplier collaboration
Most buyer-supplier relationships begin from an arm’s length relationship. In this stage, the level of interaction between the buyer and supplier is very low. Both parties only contact each other to exchange essential commercial details to fulfill order placement and payments. The main goal for both parties at this level of the relationship is to minimize the cost and time it takes to complete the transaction.
The Product and Process information exchange buyer-supplier relationship level involves the exchange of proprietary internal information such as sales/forecasting or cost information. Firms that have this level of relationship, try to make sure they have the right amount of product available to meet end customer’s demand. This is common with retail stores and their suppliers. Cost information in used to determine sale price and historical sale information is used to forecast potential demand.
Operational linkages: This level of relationship requires the linkage of buyer and supplier’s operating systems and procedures to facilitate fast flow of information, goods, services and payment. e.g Walmart’s suppliers have access to Walmart’s systems and can tell when inventory is running low and they need to replenish a particular store.
Co-operative norms level of collaboration usually involves a legal contract that specifies what is expected from each party and when. Such agreements usually have an expiration date and a termination clause. For example apple and ATT’s collaboration on the I phone. While the Relationship specific adaptation is the highest level of collaboration effort between a buyer and a supplier. Buyers and suppliers engaged in this level of collaboration make non-transferable investments in each other’s business to enhance the performance of each other’s products or services. Such relationships usually last for a very long time. Examples of such investments could be adaptation of products or services to improve a partner’s product performance or even building a plant close to the buyer’s manufacturing plant or distribution center.
II. Supplier general evaluation and selection criteria
a) Price, quality, and delivery: Supplier’s ability to provide quality products at a reasonable price is an important part of making the buyer more competitive against their industry rivals.