Question

Pa Creating and Managing Supplier Relationships Relational Supplier Payoffs Some distributors continuously search out new suppliers to find better pricing and nargins for their firm; whereas others believe they will add value to their firm by eveloping a more integrative relationship with certain key suppliers. The graph below hows the results of a comprehensive study where the integrative relational approach treating suppliers significantly increases key performance metrics as compared to hen the relationship is more transactional (i.e., less integrative) in nature. elect any two of the outcomes (e.g, supplier quality and customer satisfaction) and plain why you believe the integrative approac h has produced such significant ferences in performance relative to the transactional approach. In doing so, use the FIGURE 2. Differences in Performance Outcomes between Purchasing Configurations 4.2 3.8 3.6 .4 3.2 Styles Styles Pane 3.4 3.2 Interpersonal network Interpersonal dyadicIntegrative relational Notes The labels a, b, and c at the tops of the bars indicate a lower performance for the marked configuration, compared with the inte ative relational config ation: a the difference s s n ficant at p-。I; b; the diference is sgr ficant at pi-05, and c the difference is significant at pial 10. See note 78 for the speofic statistical tests used

Answer 1

The two outcomes that I have selected are – (i) supplier quality (ii) Customer attraction

Supplier quality – When a distributor develops a more integrative relationship with certain key suppliers then those key suppliers will develop trust while doing business with the distributor. The key suppliers will be more involved with the distributor’s business and the guaranteed business from the distributor will enable them to focus on improving their quality. This will create a mutually beneficial relationship and both the distributor as well as the supplier will become more aligned to each other needs. The need of the supplier will be regular orders and timely payments while need of the distributors will be high quality of goods, timely delivery etc.

Customer attraction – The integrative approach will not only lead to transactional efficiency but will also lead to improved quality (as discussed above). The distributor will be able to reduce costs in the long run due to transactional efficiencies accruing to the business. This will enable the distributor to provide goods to customers that are of high quality but are still reasonably priced. This will enable the distributor to attract new customers and thus increase the overall business potential.