L13, Buyer-supplier relationships Flashcards
communicate the importance of buyer supplier relationships for business
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What different elements are impacting buyer-supplier relationships and their impact?
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where do business relationships come in?
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Why is it important to have relationships with others?
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Who do companies have relationship with?
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Describe collaboration?
Collaboration is a mutually beneficial and well-defined relationship that involves people from different organizations, agencies, sectors or the community joining together to achieve a common goal.
That goal could not be achieved as efficiently by any one person, organization or sector. The result is a highly shared endeavor in which members eventually commit themselves as much to the common goal as to the interests of their respective organizations
What different levels of relationship are there?
- connection
- coordination
- cooperation
- collaboration
why do organizations enter relations?
- lack of all necessary resources
- focus on core competences
—> outcource
—> exchange relations
what are the consequences of inter-organisational relationships?
- loss of control over flows
- exposed to uncertainty
- dependence
- loss of power
- different levels of power in the network
- need to regain control or mitigate
what are the different uncertainties and risks that the buyer and supplier firm experience from entering a relationship?
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does the risk differ if the relationship is at a different level?
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what are the trends for industries with regards to relations?
In many industries, buyers increasingly need to
—> rely on their suppliers
—> search for sources of supply outsidentheir traditional supplier base
Industries are exposed to new levels of supply risks
Need for:
— leap of faith (trust)
— intensive qualification
Describe the cross-functional approach and a complex web of interactions
Its important to have a both formal and informal relations
- internal function hierarchy
- cross-function
- each function to supplier
- higher management level
what is meant by parallel channels with suppliers?
sometimes communications can go from several different channels e.g. both from R&D and purchasing, which can complicate things.
Its therefor important to align information and governance
—> internal (within function and across)
—> exteral, between supplier’s, buyer’s and the inter-organization structure
what might happen if uneven distribution of power in the network?
— creation of underdogs
— Important to map who has the power to influence the network
— All organization strive to maximize their power through reformulating these dependencies
— Goal to create balanced distribution of power in the network
who drives the negotiations in the relationship?
- Supplier dominance?
- Independence?
- High independence?
- buyer dominance?
where does power come from?
- substitutability
- Interconnections
- Demand share
- Information symmetry
- Reputation
- Regulations
Describe the different power positions!
- Independence
—> low or equal power from both for both seller and buyer - Firm Dominance
—> high power in the buyer company and low power for the supplier - supplier Dominance
—> high supplier power and low power from the buying company - Interdependence
—> equally high power from both the buying company and the supplier
How can you deal with a lower power position?
- accept the situation and be weak
—> few suppliers with high prices for product X. Gather funds and buy - Accept the situation and safeguard
—> few suppliers with high prices for product X. Have a detailed and strict contract so terms are set for a longer time - Try to change the situation
—> Few suppliers with high prices for product x. insource, or invest in developing small suppliers e.g. a local one.
Increasing volumes + growing number of suppliers = reducing prices
What different types of buyer-supplier trust are there?
- Contractual trust
—> the assumption that the other party will follow the agreement - Competence trust
—> the assumption that the parent’s abilities will help carry out the agreement - goodwill trust
—> the assumption that the partner har the intention to perform according to the agreements
Describe the different levels of inter-organizational trust
- inter-personal
—> between individuals - Organizational
—> between individuals and an organization - inter-organizational
—> between organization - Inre-organizational network-level
—> between one and many companies
