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CHAPTER 5
SUPPLIER RELATIONSHIP MANAGEMENT
Means addresses the extent to which the company is realising those means
that enable it to meet its goals. For example, to attain the delivery schedule
target, it can evaluate its transportation system, which is the means that it uses
to achieve the delivery schedule target.
By assessing the extent to which both means and targets have been achieved,
an accurate state of the relationship with a particular supplier will be reflected.
These results can then be used to take action to improve on the relationship.
5.3.6.2 SRM Factor Method
Another approach involves four high-ranking factors that are generally
considered to be fundamental elements of any business relationship in terms
of their contribution to the development of trust between the partners; the level
of power they possess in decision making; their involvement in SRM; and their
contribution to the development of commitment to buyer-supplier relationships
[3]. The measurement factors and their characteristics are illustrated in Table 5.2.
Table 5.2:
SRM measurement factors [3].
Factor
Characteristics of factor
Trust
Calculative: Actors would act in a trustworthy fashion only
because it is in their interest to do so.
Cognitive: Arises on the grounds of common cognitions
amongst the involved parties.
Normative: Characterised by a mutual understanding
of expectations and responsibilities of the involved
parties based on industry or societal norms (comply with
organisational culture, honesty and openness).
Trustworthiness: Characterised by keeping promises and
having confidence in partner.
Power
Authority: Responsibility for taking decisions and issuing
orders.
Control: Arises from access to critical resources that give
contextual pertinence to those that hold them.
Influence: Indirect dimension of power arising from
centrality in a network of actors.
Involvement
Complexity: Refers to the level of intricacy of a buyer-
supplier relationship (number and level of individuals
involved).
Scope: Refers to the amount of resources devoted and the
capabilities that are transferred between the partners.
Intensity of interaction: Refers to the quantity of information
exchanged between the parties. Personal contact and
spatial proximity between the actors, and the early input of
suppliers in a customer’s projects.