Chapter 1.4

Question 1

What does the CIPS Relationship spectrum do?

Answer 1

It describes the range of commercial relationships between a buyer and supplier based on richness of communication, longevity and mutual dependence

Question 2

Name the 11 stages of the CIPS relationship spectrum

Answer 2

1. Adversarial
2. Arms length
3. Transactional
4. Moderate
5. Bespoke
6. Single-source
7. Outsourced
8. Strategic
9. Collaborative
10. Partnership
11. Co-destiny

Question 3

What is the CIPS supplier relationship spectrum based on?

Answer 3

The important idea of supplier segmentation, whereby the buying organisation segments its supply base based on how important the supplier is perceived to be to the success of the buyer’s organisation and the potential value that could be lost from a lack of proactive supplier relationship management

Question 4

Name a 3 step way of segmenting suppliers

Answer 4

1. Transactional
2. Tactical
3. Strategic

Question 5

Name 4 methods of negotiation with transactional suppliers

Answer 5

1. Limited negotiation -may not be worth effort
2. Focused on price and delivery
3. Over phone/e-mail/no meetings
4. Win-lose or win-win

Question 6

Name 4 methods of negotiation with operational suppliers

Answer 6

1. Selective targeted negotiations
2. Focused on wider cost and risk elements
3. Over phone/e-mail/in-person buyers
4. Win-lose or win-win

Question 7

Name 4 methods of negotiation with strategic suppliers

Answer 7

1. Regular structured negotiations
2. Focused on total cost - both parties
3. In person with stakeholders
4. Win-win

Question 8

Define reputation

Answer 8

The beliefs or opinions that are generally held about someone or something / a widespread belief that someone or something has a particular characteristic

Question 9

Name 10 ways you may base whether a supplier has reputational strength

Answer 9

1. Quality of products or services
2. Enhanced levels of communication
3. Brand alignment
4. Low cost/high value for money
5. High ethical standards
6. Reliability
7. Cutting-edge technology
8. Strong customer focus
9. Engineering excellence
10. Cultural alignment

Question 10

Name 3 examples of how one incident has caused huge damage to a country’s reputation

Answer 10

1. BP - Deepwater horizon oil spill in the Gulf of Mexico
2. Volkswagen - cheating on diesel emissions reporting
3. Samsung - Galaxy Note 7 battery catching fire

Question 11

Name 4 examples of how you can help to buy your company a good reputation

Answer 11

1. Sponsorship of prestigious events to drive brand association
2. Recruitment of sales people with technical qualifications
3. Employment of high-profile sports people, celebrities or leaders, to bolster reputation
4. Buying brands or smaller companies to acquire their reputational goodwill

Question 12

Define trust

Answer 12

The expectation that the other party will behave in a predictable and mutually acceptable way

Question 13

Who identified a taxonomy of three types of trust in commercial relationships

Answer 13

Dr Mari Sako

Question 14

What are the taxonomy of three types of trust in commercial relationships

Answer 14

1. Contractual trust
2. Competence trust
3. Goodwill trust

Question 15

Name 9 trust/partnership building behaviours

Answer 15

1. Joint issue resolution
2. Quick sharing of information
3. Joint agreement in re-evaluating KPIs
4. Open discussions on root cause of failures
5. Joint planning, focus on value for money
6. Strong sense of ownership for high-quality service
7. Commercial transparency and co-proposition of cost reduction and service improvement programmes
8. Joint recognition and celebration of successes
9. General mood: Appreciation, trust, opportunity, excitement, self-examination

Question 16

Name 7 trust/partnership-destroying behaviours

Answer 16

1. Hallway rumours/gossip of partnership breaking down
2. Emotion-based assessments of performance, usually due to recent service breakdowns
3. Quick blaming of other party for service or performance problems
4. Constant shadowing and oversight, focus on controls
5. Avoiding traditional decision makers in new contract agreement
6. Avoidance of accountability
7. General mood: resentment, distrust, resignation, overwhelm, frustration and blame

Question 17

What is litigation

Answer 17

Where parties go to court to resolve their dispute

Question 18

What is a vicious circle of blame

Answer 18

Where the supplier blames the organisation (or less likely procurement), and the organisation blames the suppliers

Question 19

How can you break the vicious circle of blame?

Answer 19

Procurement will need to use their negotiation and conflict management skills, adopting a collaborative and integrative approach

Question 20

What should you do to repair a relationship (4)

Answer 20

1. To establish the facts that led to the situation where the relationship broke down
2. Consult with your business partners internally to establish their points of view of where the issues and sources of conflict are
3. Contact the supplier and get their side of the story
4. Apply principled negotiation separating the people from the issues, focusing on interests and not positions and then looking for options of mutual benefit

Question 21

What else can you do to repair a relationship

Answer 21

Involve a third party to facilitate elements of repair

Question 22

What may you have to consider when restarting a relationship

Answer 22

A relationship relaunch event, joint triage teams and new governance structures for problem solving and escalation