Exploring quality generating factors in customer-supplier relationships. Nuria Rodríguez-Ló[email protected], M. Eva Diz-Comesañ[email protected] and. Commitment is the desire to develop a stable relationship, a willingness to make . We trust our major suppliers to give us the best quality. Lack of top management commitment is often cited as the reason for supplier partnership failure. engineering, process engineering, marketing, accounting, and quality control. provide stability in personal relationships with suppliers.
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Relationship stability and supplier commitment to quality | PolyU Institutional Research Archive
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Exploring quality generating factors in customer-supplier relationships
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Journal of marketing 67 1pp. Suppliers are often a procurement organization's secret competitive weapon, their hidden resource, their competitive edge. These competitive gains can manifest themselves in a wide range of areas, from better prices and delivery times to increased opportunities to consider and implement innovative practices.
Such improvements will not be realized without meaningful leadership from business owners and executives. Leading companies develop tailored supply strategies that are directly linked to their corporate strategies. These leaders emphasize shareholder-value creation, revenue growth, and cost competitiveness, and establish specific programs with their key suppliers in order to ensure that these priorities are addressed.
Whenever possible, business leaders use suppliers to maximize their own product competitiveness, going beyond the narrow focus of cost reduction. Under such a plan, which is also sometimes referred to as "supply chain management," distribution channels are set up across organizations so that all the members of the channel, from suppliers to end users, coordinate their business activities and processes to minimize their total costs and maximize their effectiveness in the marketplace.
But while this trend has become more prevalent in today's business environment, it is still practiced in only spotty fashion in many industries. Common impediments to establishing true business partnerships with suppliers include: Companies that feature many of these characteristics typically cling to old competitive bidding practices that center on perfectly legitimate concerns about price, but at the exclusion of all else.
As a result, these businesses miss out on the many benefits that can accrue when effective partnering initiatives are established with suppliers. Suppliers can be an important source of information on ways in which both small and large businesses can improve performance and productivity. Five general categories exist in which supplier involvement can help buyers compete in the marketplace: Improvement of products through contributions to product design, technology, or ideas for producing new products.
In most such instances, suppliers help buyers by pointing out ways in which designs can be improved or more desirable materials can be used. Improvements in product quality. In addition to providing design recommendations that result in improved products, suppliers are often sources of suggestions that allow buyers to hold consistent tolerances in production.
Improvements in "speed to market. Reductions in total product cost, either through streamlining of work processes inventory management, new product design, scheduling, etc.
Improvements in customer satisfaction. Analysts indicate that suppliers receive some benefits in the emerging purchasing dynamic as well. Reduced paperwork, lower overhead, faster payment, long-term agreements that lead to more accurate business forecasts, access to new designs, and input into future materials and product needs have all been cited as gains.
Other observers, meanwhile, point out that some buyer-supplier relationships have become so close that suppliers have opened offices on the site of the buyer, an arrangement that can conceivably result in even greater improvements in productivity and savings. Of course, companies are not going to form such "partnerships" with all of their suppliers. Some form of the traditional purchasing process involving bidding and standard purchase orders and invoices will continue to exist at almost every company, and especially at smaller companies that do not have the financial clout to pressure suppliers for price or delivery concessions.
But many management consultants and business experts contend that even those businesses that are not ideally positioned to create partnerships with suppliers can benefit from the establishment of effective supply chain management practices.
Buyer-seller alliances unleash a capacity for innovation that far outweighs the short-term cost savings offered by arm's-length competitive bidding. Businesses should explain their overarching needs to several dedicated suppliers and open lines of communication with them rather than simply defining their requirements and waiting for a flurry of bids that are primarily—or exclusively—concerned with submitting the lowest bid.
Potential Drawbacks of Supplier Partnerships Establishing close relationships with suppliers, though, means that buyers have to conduct the necessary research to make sure that they select the right companies.
Today's emphasis on partnerships is contingent on suppliers who can become part of a whole supply system. In fact, major suppliers need to be critically screened and evaluated before they are brought into any supply chain system. Thriving small-and mid-sized businesses that are already well-established will be better able to take on such tasks than will fledgling businesses, but even start-ups should take the time to learn more about their suppliers than their prices.
Of course, desired supplier traits vary somewhat depending on who is being surveyed. For example, design engineers tend to place the most weight on product quality when analyzing suppliers, while purchasing professionals place greater importance on cost considerations in conjunction with product quality.
Criteria to be evaluated will also vary depending on product category.
Relationship stability and supplier commitment to quality
The objective of all evaluations is the same: To compare all potential suppliers in a market segment to determine the one best qualified partner with whom to work. The evaluation of potential suppliers should include an assessment about whether the supplier is suited to assist the purchaser to meet its prime business objectives. Typical the objectives to which the supplier should provide assistance include inventory reduction, quality improvement, elimination of paperwork, and improved handling of incoming goods.