Developing mutually beneficial relationships with suppliers is an important aspect of quality management and one of the eight principles of Total Quality Management. Such relationships enhance the ability of both the organization and its suppliers to create value by providing increased flexibility, faster responses to changing needs, and optimized costs and resources. To ensure improved supplier performance and quality management, organizations should select key suppliers, develop long and short-term relationships built on clear communication and cooperation, and recognize supplier achievements.
Developing mutually beneficial relationships with suppliers is an important aspect of quality management and one of the eight principles of Total Quality Management. Such relationships enhance the ability of both the organization and its suppliers to create value by providing increased flexibility, faster responses to changing needs, and optimized costs and resources. To ensure improved supplier performance and quality management, organizations should select key suppliers, develop long and short-term relationships built on clear communication and cooperation, and recognize supplier achievements.
Developing mutually beneficial relationships with suppliers is an important aspect of quality management and one of the eight principles of Total Quality Management. Such relationships enhance the ability of both the organization and its suppliers to create value by providing increased flexibility, faster responses to changing needs, and optimized costs and resources. To ensure improved supplier performance and quality management, organizations should select key suppliers, develop long and short-term relationships built on clear communication and cooperation, and recognize supplier achievements.
Developing mutually beneficial relationships with suppliers is an important aspect of quality management and one of the eight principles of Total Quality Management. Such relationships enhance the ability of both the organization and its suppliers to create value by providing increased flexibility, faster responses to changing needs, and optimized costs and resources. To ensure improved supplier performance and quality management, organizations should select key suppliers, develop long and short-term relationships built on clear communication and cooperation, and recognize supplier achievements.
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An important aspect of quality management is developing and maintaining a
mutually beneficial relationship with suppliers. This is one of the 8 principles in Total Quality Management. As ISO defined the mutually beneficial supplier relationships is: “An organization and its suppliers are interdependent, and a mutually beneficial relationship enhances the ability of both to create value.” An organization and its suppliers are interdependent and a mutually beneficial relationship enhances the ability of both to create value.
Use of this supplier relationship principle provides an increased ability to create
value for both parties. It allows flexibility and speed of joint responses to changing market or customer needs and expectations. And, it can optimize costs and resources. Applying the principle of mutually beneficial supplier relationships typically leads to establishing relationships that balance short-term gains with long-term considerations, pooling of expertise and resources with partners, identifying and selecting key suppliers, clear and open communication, sharing information and future plans, establishing joint development and improvement activities, inspiring, encouraging, and recognizing improvements and achievements by suppliers. The benefits of Mutually Beneficial Supplier Relationships & Quality are as follows. Increased capacity to create value for both suppliers and the organization. Flexibility and faster joint responses to changing market conditions or customer requirements and expectations. Optimized costs and resources across the board.
To ensure the improvement of supplier performance and quality management in
order to apply the principle these steps must be followed. Identify and select key suppliers, who should be selected for the value that they add to the organization as well as their approach to the supply chain. Develop supplier relationships that address both short-term advantages with long-term concerns for the organization and ensure a greater level of commitment to quality across the supplier and organization’s operations. Develop clear and open communications to ensure that there is a greater level of transparency and accountability among suppliers and the management. Initiate cooperative development and enhancement of products and processes, to ensure the best level of quality for the organization as well as the supplier. Mutually create a clear understanding of customer needs in regards to the organization, to ensure that suppliers are able to comprehend these needs to deliver the best level of service. Share information and forthcoming goals and targets, so that both the supplier and the organization can work together to achieve these goals. Identify and recognize supplier improvements and achievements, to maintain positive relationships and motivate suppliers to continue to strive for improved quality.
Supplier relationship management (SRM) is a systematic, enterprise-wide
assessment of suppliers' assets and capabilities with respect to overall business strategy, determination of what activities to engage in with different suppliers, and planning and execution of all interactions with suppliers, in a coordinated fashion across the relationship life cycle, to maximize the value realized through those interactions. The focus of SRM is to develop two-way, mutually beneficial relationships with strategic supply partners to deliver greater levels of innovation and competitive advantage than could be achieved by operating independently or through a traditional, transactional purchasing arrangement.
An Exploratory Study of Important Dimensions in Strengthening Buyer-Supplier
Relationship: Case Study
Focus of study is on business relationship of buyer and seller. Present industrial
scenario is very volatile due to various socio-economic reasons; ever-changing business dynamics and uncertainties compels buyers to keep harmony in relationship with their suppliers. Traditionally vendors are supplying items as per buyer’s schedule or requirements maintaining other variables such as price, delivery, quality etc. In fact, authors bring attention to point that this traditional philosophy now having paradigm shift. Suppliers are no more suppliers, but they are now business partners irrespective of value and criticality of items they are supplying to buying organization. Organizations are focusing on building long lasting relationships which yield them tangible and intangible results. Another aspect of business relationship is now a day’s industry moving to outsourcing model in “make or buy” decisions they preferring to buy over make as they intend to focus on their core strengths or products. In this process they became vendor dependent for items which they intend to outsource here this dependency directly proportional to importance of business relationship. To prove the growing importance of business relationship empirically author framed this study and results are analyzed. Different types of business relationships and pillars of business relationship also discussed.
The present study attempts to analyze the following objectives. First, to study importance of the business relationship between supplier and buyer. Second, to study and to analyze impact of business relationships on purchasing decisions. Third, to identify different types of business relationships in different business scenarios. Fourth, to identify factors with which business relationship can be developed in faster way. For this research study following hypothesis were formulated and studied. Appropriate statistical techniques are employed to test and validate the hypothesis. Business relationship is not important sourcing driver for any purchasing decision. Company turnover targets can be achieved without having healthy business relationship with business partners.
For this study data is collected from respondents involve in buying and selling activity in the company so it is based on primary data in nature. The data collected through online survey followed by personal discussions with buyers working in different industries in Bhosari Industrial Area in Pune. Choice of area is obvious as MIDC Bhosari is major industrial area and automobile and manufacturing hub. Starting with small scale there are many multinational companies situated in this area. Researcher framed a structured questionnaire and sent to multiple respondents across different companies covering not only manufacturing but IT & ITes, trading firms and service organizations. Responses received are analyzed for further study.
Study reveals that irrespective of nature of business (Proprietary/Private etc.),
type of organization be it small scale or multinational organization having turnover in rupees crores, or type of business (service or manufacturing or trading) buyers of all type of organizations are having consensus that business relationship predominantly serving as important factor over traditional school of thinking for sourcing drivers viz price, delivery quality etc. Quite a few reasons as one of the findings of study revealed for buyer’s business relationship gaining importance as their business partners are supporting the organization in crucial time like downturn and also reverse of it that company flooded with orders or situation of overbooking and chances of failure on account of maintaining schedules or agreed deliveries, in every situation business relationship work in favor of buyers. Also, key suppliers take actively participate in discussions and provide vital inputs for lowering prices, improvement in quality, reducing lead times and hence increasing productivity, throughout and making buying organization to pave strong foothold in respective markets creating mutual business opportunities. With business partners support buying organization can make their production and related processes lean and hence organization can focus on core activities and outsource non-value-added activities to business partners which is of mutual interest of business growth.
Sources:
Pahurkar, R., Sangvikar, B., Khadke, K., & Kolte, A. (2020). An Exploratory Study of Important Dimensions in Strengthening Buyer-Supplier Relationship. International Journal on Emerging Technologies, 11(2), 803-810.
