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CHAPTER 5
SUPPLIER RELATIONSHIP MANAGEMENT
is unconcerned about the salesperson as long as he or she is quick, correct
and polite.
Transactional relationships have inherent advantages. First, they can be
implemented by personnel who have lower levels of qualification, since the
transactions require minimal judgment and managerial skill. Second, transactions
conducted through this arrangement commonly require less time and effort,
since the parties are mainly concerned with establishing the price [8].
There are several disadvantages associated with transactional arrangements.
Since no trust exists, the relationship can have communication difficulties,
delivery problems and supply disruptions, a possible compromise in the quality of
the goods exchanged and poor service levels from suppliers. These challenges
can force the buyer to change suppliers frequently, consequently resulting in
switching costs (the costs incurred in switching to a new supplier) [9].
Transactional relationships are neither bad nor inferior. There are areas in which
they are appropriate, such as in purchasing non-critical items or items that will
not detrimentally affect the company if not immediately available. These typically
include stationery, toiletries and refreshments (teas and coffees) for the company.
The arrangement is also appropriate where the buyer has more power than the
supplier and dictates the conditions of the purchase.
5.4.2 COLLABORATIVE RELATIONSHIPS
Collaboration is the art of working together to achieve a common goal.
In collaborative buyer-supplier relationships, as opposed to transactional
relationships, there is an awareness of interdependence and the need for co-
operation. Therefore, a collaborative relationship is one that provides mutual
benefit to the buyer and the supplier. The buying and supplying organisations
work together for increased savings and future innovations. Most companies
engage in some form of collaborative relationship, even though they may not
be aware of it in some cases.
Collaborative arrangements offer a number of benefits. The buying organisation
enjoys the benefit of Early Supplier Involvement (ESI), which ensures benefits
from improvements in quality, cost, time to market and leveraging of supplier
technology. The likelihood of disruption is greatly reduced, since collaborative
suppliers take care of the needs of their buyers. This further provides protection
for buyers during hard times, e.g., when there is a shortage of the supplied goods.
Collaborative relationships also provide ample room for supplier development,
which consequently allows investments in research and development efforts
and enhanced inter-organisational training.
Despite their obvious appeal, collaborations have their drawbacks. For instance,
in order to develop and maintain collaborative relationships, high levels of human
expertise, time and energy are required, whichmakes these types of arrangements
demanding. Furthermore, it may be costly to separate the organisation from its