Supplier relationships

Supplier relationships - Supply Management Supplier...

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Supply Management Supplier relationships Kraljic Matrix Two dimensions – supplier risk/ profit impact High Profit impact Low Low High Supply risk For each type of item purchased, three different strategies are recommended: Leverage items – exploit purchasing power Strategic items –form partnerships Non-critical items – ensure efficient processing Bottleneck items – assure supply Power and interdependence Buchanan 1992 – “dependence is mutual” (studies incorporating both the perspective of the buyer as well as the supplier. Power The buyer’s dependence on the supplier is a source of power for the supplier and vice versa. (if A depends on B more than B depends on A, than B has power over A (Pfeffer, 1981)) Asymmetric- the most independent partner dominates the exchange. Balanced relationships refer to the domination of neither parties (Buchanan 1992) Buyer- supplier relationships that are characterised by asymmetric interdependence are more dysfunctional because the independent partner experiences high power and will be attempted to exploit it (Anderson 1989) In respect of power imbalances within buyer-supplier relationship can lead to unproductive partnerships. In the long term the position of the weaker party will be eroded too much and the partnership will be destroyed. Total interdependence Refers to the intensity of a relationship. A high level of total interdependence refers to the intensity of the relationship. A high level of total interdependence is an indicator for a strong, co-operative long-term relationship in which both parties have invested. Mutual trust and mutual commitment will characterise those relationship. When total interdependence is high, both partners are faced with high exit barriers.
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Supplier relationships - Supply Management Supplier...

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