From arms‐length to collaborative relationships in the supply chain

Abstract

Buyer-supplier relationships play an important role in an organization's ability to respond to dynamic and unpredictable change. If the relationship is too restrictive, flexibility will be difficult to achieve and, if it is too lenient the risk of opportunism will be present. This paper provides a framework for understanding how buyer-supplier relationships have evolved over the past two decades from transaction processes based on arms-length agreements to collaborative processes based on trust and information sharing. To achieve this objective, buyer-supplier relationships are reviewed from the perspectives of transaction cost theory, strategy-structure theory and resource-based theory of the firm. Findings from early supply chain research are contrasted with the findings of more current research to provide a better understanding of how these relationships have changed. Current theory is extended by offering two proposals that test the influence of trust and information sharing and a third proposal that rejects the notion that supply chain alliances lead to monopolistic practices.

Tyre Purchasing by Civil Engineering Construction Companies – A Case Study of a Major Company in Africa

“…However, according to Dyer et al (1998) and Hoyt and Huq (2000), two strategic, namely, those contributing to between 36% and 37% of XZY-Eng-Africa's tyre expenses, and several non-strategic suppliers, namely, those sharing between 3% to 13% of XZY-Eng-Africa's tyre expenses, could be distinguished. Therefore, relationships with the (strategic) supplier can be built, because of the market conditions and/or specific company conditions, for example, the need for a specific product that only a particular supplier is providing, whereas dependency on the non-strategic suppliers is minimized (Dyer et al, 1998;Hoyt and Huq, 2000). Although it is not always feasible to reduce the supplier base in tyre purchasing, supplier selection can be rationalized, so as to select a few key suppliers (Berger and Zeng, 2006).…”

Collaborative Supply Chain Management: The Hybrid Knowledge-Based Development Approach of Suppliers-Customers Perspective

“…The partnering success factor merely emphasises on how supplier, OEM and customer promote trusting and sharing behaviour in their relationships (Udin, 2004). Factors (such as trust and dependability) in these variables are important and critical in developing CSCM as discussed by many researchers such as Lambert et al (1999), Hoyt and Huq (2000) and Mentzer et al (2000). Finally, in this sub-component, the satisfaction of supplier-customer is evaluated through identification of elements in the supplier and customer satisfaction programme implemented in their organisation.…”

An Empirical Investigation of the Channels that Facilitate a Total Quality Culture

“…Secondly, it is becoming increasingly important to pay serious attention to customers perceptions of the organisation's product/service package, as to the tangible transactions. Thirdly, customers now tend to seek continual improvement in their transactions with their suppliers (Hoyt and Huq, 2000;Moller et al, 2003). Creating the opportunity to visibly demonstrate competence and/or performance improvement to customers can have a significantly greater impact than through indirect communication.…”