Buyer-Supplier Relationship

Buyer-Supplier Relationship

To remain viable in a competitive market, it is essential that companies and businesses source for the right products and the right services. To achieve this, the parties have to out-source the right supplier to ensure that the supply-chain process is of high quality and desirable to the market demands. Inherently, the objective is to ensure that there is a relationship developed through the development of specific strategies to manage the relationship. A buyer-supplier relationship is described as a transactional relationship between a buyer, such as a company or an organization, for the purchase of goods and or services (Powers and Reagan 1237). The impact of the relationship is comprehensively reliant on several factors that determine whether the relationship will be successful or not.  Among the factors are reputation, performance satisfaction, trust, comparison level of the alternative, mutual goals, and technology, among others. The paper aims to discuss in detail the factors that affect the buyer-supplier relationship, which is pivotal to determining the most appropriate strategy to manage the relationship.

1. Reputation

The perception, acceptability, and public relations image and branding a buyer or a seller has played a critical role in the development of a buyer-supplier relationship. In most cases, it aligns with the performance of the business, working culture, the value in product definition and services rendered as well as standing in the market. Powers and Reagan determine that the concept that a business thrives on the status it develops with its clients is noteworthy (1239). For instance, a company that is reputable for offering high-value services or products takes pride in providing after-care services to its clients and has quality-assurances policies is considered a good company to work with regardless of its market status (Powers and Reagan 1239).

On the other hand, a company whose mission or goal is to offer quality services but does not offer this in the act, then it is considered ridicule and inappropriate to work within the sector or industry. The emphasis that is placed when working with a reputable company lies in the service or product delivery. In my case, I love coffee, and I mostly prefer Starbucks coffee. Notably, the care and precision the company takes in providing the best products and services ensure that its suppliers also do the same. Inherently, reputation is a fundamental factor regarding how either the buyer or the supplier performs within the market and not from a numbers point of view, but, how they value their brand. Therefore, to develop a relationship, the first factor to consider is the reputation of the business, which ought to gather praises and not negativity.

1. Performance Satisfaction

In line with its reputation, a company needs to take into consideration how it values its downstream process. In the supply chain management process, companies often consider the quality of products and or services they opt to give their clients (Chae et al. 50). If a buyer does not take precautions, including quality-assurance, then it becomes difficult for the customer at the end of the chain to produce good reviews. For example, a service company should always guarantee good customer care services. How its customer care representatives handle clients, regardless of the attitude or behavior, determines a lot how they are rated by the clients. Often, clients are the most honest parties in a business transaction. If a company has negative reviews, suppliers may not be quick to work with such businesses.

Similarly, if a supplier does not take into consideration the pertinence in caring for their buyers, then performance satisfaction is tied with reputation. Buyers may opt-out of the supply chain, and this may bring about inquiries on why the company does not attract the right business. In summary, performance satisfaction is tied to the value placed in handling the clients, specifically in how products or services are produced and provided (Chae et al. 50). A company that does not offer good value for money sets the pace for bad business whereas, a company that invests in the valuation of its performance sets good precedence and rapport with buyers as well as sellers.

1. Comparison Level of the Alternative

The increased competition margins in the current economy have made companies wary of how well they perform alongside how well they are doing the market or industry. To outbid one another, companies invest massively on tools, techniques, employees, and strategies to improve on the product in addition to minimizing the cost of production (Chae et al. 50). In most cases, buyers rely on cost-benefit analysis to determine which inputs are worth investing it due to the customer dynamics. For example, the brewing industry is set on customer preferences. But, the loophole or limitation in this industry is that customer preference and consequential, loyalty is often dependent on the type of product. Buyers, therefore, are subjected to identifying the best supplier who will not compromise on quality but has efficiency in the reduction of costs of production (Scutto et al. 1380). The development of the relationship, therefore, is dependent on how well the two can correlate in case of any market performance given that the current climate is volatile. In this, the development of a relationship and how to manage it is reliant on this concept of comparison level of the alternative.

1. Mutual Goals

The company’s target based on mission, objectives, and values plays a critical role in how well it interacts with either the buyer or the supplier. In an age where consumer preference is geared towards specific movements, gaining the right partners (buyer or supplier) is crucial towards improved performance and overall profitability. For example, a company aiming for the conservation of the environment may not want to work with another company that does not have the same vision (Scutto et al. 1380). Buyers-supplier relationship in the current climate is formed on such a basis which is necessary to gain the right clients and sustain the demand. Therefore, the relationship factor on mutual goals is key to determining how well to handle the relationship in the future in case of any issues arising.

1. Technology

Technology is associated with efficiency in production and improved work-rate. For a buyer-supplier relationship to be effective, companies that have invested well in technology often work well together. This is because, for instance, high demand for products requires quality assurance with a guarantee constant supply (Scutto et al. 1380). It not only works for businesses that require technology for production, but it also engaged companies that require quality assessment both for their machines and products (Scutto et al. 1380). Therefore, a company, whether a buyer or supplier that immensely invested in technology, may work well with each other. As a result, technology determines how well the relationship will be managed in the future.

Conclusion

The paper has provided a critical discussion on the factors that affect the buyer-supplier relationship. These are technology, mutual goals, comparison levels of the alternative, performance satisfaction, and reputation. In conclusion, it is necessary for businesses to determine these factors based on either strengths or opportunities to determine their viability in forming a relationship.