Supplier relationship management for the supply chain competitiveness
2.1 Introduction
With the increasing competition in global market and a variety of choices available for consumers, supplier relationship management is now receiving much attention in business strategy. “Competitive forces are putting firms under pressure to improve quality, delivery performance, and responsiveness while simultaneously reducing costs. In response, firms are increasingly exploring ways to leverage their supply chains, and in particular, to systematically evaluating the role of suppliers in their activities” (Vijay and Keah, 2006, p.755). The way to create the competitive supply chain is to begin supplier relationship that will benefit both parties by utilizing supplier’s latest technology and core competency.
In process category, close relationships with key suppliers help a firm in the way of cost savings, value-adding to the quality, shorter lead time, and improved transportation facility or delivery service. In strategic category, increased market share and competitiveness, responsiveness, improved product quality, innovative design, flexibility in developing effective solutions, guarantees, invest on fixed assets and technology, sharing market risk, improving business ties, collaboration, and continuity should be achieved as sustainable long-term objective. To achieve this, a good business relationship function must be established.
2.2 Business Relationship Functions
“The business relationship functions are derived from two basic roles they play in economic systems. First, business relationship functions are the means by which the benefits are realized in a society, and they provide the structure within which knowledge and ideas are transported in business relationships. Second, through the buyer-supplier relationship in question, firms are able to make use of the activities, resources, and outputs of other firms, and to combine and coordinate them in order to produce and deliver products/services valued by buyers” Young et al. (2009)
With the increasing competition in global market and a variety of choices available for consumers, supplier relationship management is now receiving much attention in business strategy. “Competitive forces are putting firms under pressure to improve quality, delivery performance, and responsiveness while simultaneously reducing costs. In response, firms are increasingly exploring ways to leverage their supply chains, and in particular, to systematically evaluating the role of suppliers in their activities” (Vijay and Keah, 2006, p.755). The way to create the competitive supply chain is to begin supplier relationship that will benefit both parties by utilizing supplier’s latest technology and core competency.
In process category, close relationships with key suppliers help a firm in the way of cost savings, value-adding to the quality, shorter lead time, and improved transportation facility or delivery service. In strategic category, increased market share and competitiveness, responsiveness, improved product quality, innovative design, flexibility in developing effective solutions, guarantees, invest on fixed assets and technology, sharing market risk, improving business ties, collaboration, and continuity should be achieved as sustainable long-term objective. To achieve this, a good business relationship function must be established.
2.2 Business Relationship Functions
“The business relationship functions are derived from two basic roles they play in economic systems. First, business relationship functions are the means by which the benefits are realized in a society, and they provide the structure within which knowledge and ideas are transported in business relationships. Second, through the buyer-supplier relationship in question, firms are able to make use of the activities, resources, and outputs of other firms, and to combine and coordinate them in order to produce and deliver products/services valued by buyers” Young et al. (2009)