Purchase offering quality: The effects of buyer behaviour on organizational supplying behaviour

The role of risk management in buyer-supplier relationships with a preferred customer status for total quality management

Purpose

This paper provides a comprehensive risk management framework for buyer-supplier relationships where the buyer has the status of a preferred customer with the supplier.

Design/methodology/approach

Empirical evidence is offered with a case study on a large multinational organization in the Fast Moving Consumer Goods (FMCG) industry, with some real-life perspectives on the main risks, mitigation strategies, and issues faced when applying the risk management framework.

Findings

The results show that several risks may affect buyer-supplier relationships: not only traditional supply risks but also risks linked to specific initiatives and/or relationships, as well as risks specific to buyer-supplier relationships with a preferred customer status. Customer attractiveness and supplier satisfaction are found as core drivers for the mitigation strategies, which are built to protect the relationship with the supplier, rather than the buying firm alone, knowing that being a preferred customer with preferential resources allocation may increase a firm’s competitive advantage.

Originality/value

The research brings important contributions to the academic literature and interesting insights to strategic purchasing practitioners, by enhancing the existing knowledge on supply risk management in buyer-supplier relationships with a preferred customer status, as well as providing strategic purchasing practitioners a comprehensive view of the risks, which may affect the relationships with a preferred customer status, as well as possible ways to mitigate them.

The role of social media in managing supplier attractiveness

Purpose

Managing attractiveness is a constant challenge to mobilize relationship-specific investments, especially in a business environment increasingly enhanced by social media (SM) activities. There is limited knowledge on how SM activities contribute to supplier attractiveness, so decisions about strategizing with SM and consequent resource allocations become highly uncertain. The purpose of this paper is to examine how suppliers’ SM activities influence supplier attractiveness.

Design/methodology/approach

Altogether, 57 senior managers were interviewed: 32 semi-structured in-depth interviews were conducted with senior managers in strategic decision-making roles regarding SM on the supplier side, along with 20 senior managers responsible for purchasing or looking after supplier development; one-to-one interviews were complemented by a focus group with 5 senior managers on the buyer side.

Findings

The study reveals an inverse U-shaped relationship between the intensity of the supplier’s SM activity and its attractiveness and offers a set of propositions about the influence of SM on supplier attractiveness, with special regard to the perceived risks of increased transparency and becoming “too social” on SM.

Practical implications

The study highlights SM management results for supplier attractiveness and their impact areas on business growth and supply chain development.

Originality/value

This paper provides in-depth insights into the role of SM in managing supplier attractiveness. Various effects of SM activities are identified that aim to contribute to the body of literature on supplier attractiveness as well as SM management in buyer–supplier relationships.

Inter-Organizational Supply Chain Interaction for Sustainability: A Systematic Literature Review

Research on inter-organizational supply chain interaction (IOSCI) for sustainability can be described as fast-growing and fragmented. It is uncertain to what extent logistics and supply chain management (SCM) literature has been able to close research gaps regarding e.g., empirical scope and sustainability dimensions addressed. A systematic literature review (SLR) is carried out to synthesize the existing knowledge and ongoing trends, and to propose a research agenda. The trend analysis shows that the gap between the environmental and social dimension is increasing, that Asian studies grow nearly exponentially, and that the focal firm perspective gains more ground. The research agenda calls for participatory studies of multiple actors and for studies addressing, e.g., the invisible logistics service providers. This study provides an important complement to existing literature reviews on sustainable supply chain interaction, primarily by its focus on the development over time, the empirical scope, the focus on publications in logistics/SCM journals, and its narrow focus on the interaction among firms in supply chains.

The influences of contract structure, contracting process, and service complexity on supplier performance

Purpose

To build a more comprehensive understanding of factors affecting the success of service contracting, the purpose of this paper is to investigate the influences of service complexity, contract structure and contracting process on the buyer-perceived supplier performance in business-to-business (B2B) services.

Design/methodology/approach

A research model is developed based on transaction cost economics and the research on service contracting. The model is tested by the survey data collected. Professional focus groups on LinkedIn are used to generate the list of potential respondents. The sample consists of 177 purchasing professionals from 25 countries.

Findings

The results indicate that three major contract dimensions and follow-up management practices positively influence buyer-perceived supplier performance. Furthermore, service complexity amplifies the effects of incentives designed in the contract and the buyer’s follow-up contract management on perceived supplier performance.

Research limitations/implications

The sample consists of respondents from 25 countries and provides good geographic coverage. However, the results should be generalized with caution because not all countries were represented equally.

Practical implications

The study suggests a framework and guidelines for purchasing managers to improve the design and management of service contracts to secure good performance from their supplier.

Originality/value

This paper contributes to understanding the performance-enhancing aspects of designing and monitoring service contracts in B2B contexts. It also adds to the knowledge of the role of service complexity in successful B2B service purchasing.

INNOVATING WITH DOMINANT SUPPLIERS: LESSONS FROM THE RACE FOR LASER LIGHT

Traditionally, manufacturers could usually choose from several suppliers who would be more than willing to engage in innovation processes with them. However, more often the situation arises that a supplier has a dominant position because of a clear leadership or even exclusivity in a certain technology. How should the buying companies handle such situations when a supplier can choose the customer to collaborate with, rather than cueing in front of the customer’s door? This paper focuses on how a buying company may best handle this situation of innovating with dominant suppliers. The methodology used is a case study that compares, from an original equipment manufacturer’s perspective, two implemented supplier innovations with different expirations — a success case and a failure.

Findings lead to three main propositions: First, firms may benefit from carefully analysing and designing the buyer–supplier constellation in innovation processes and not only the quality of the innovation. Drawing back on attractiveness theory grounded in social exchange theory may provide clues on how to do so. Second, in case of a dominant supplier situation, traditional innovation management processes may fail and need to be amended by a dedicated innovation process with a different order of steps. In the case of supplier dominance, it is essential to first analyse the supplier constellation, and then make the decision for the innovation path to follow — and not the other way around. Third, in the fight for getting access to a supplier’s innovation, a speed-up process with the buying company may be a tool for outperforming other buyers competing for the same supplier.

Networking capability in supplier relationships and its impact on product innovation and firm performance

Purpose

The purpose of this paper is to propose and empirically investigate the concept of networking capability (NC) for the management of supplier relationships and their dynamics in order to leverage product innovations. NC in the context of supplier relationships is conceptualized based on dynamic capabilities aimed at relationship initiation, relationship development, and relationship ending. Furthermore, the study tests the interaction of NC with relationship proclivity as an organizational feature, and analyzes latent classes of NC affecting product innovation.

Design/methodology/approach

This study brings together prior research on company routines related to inter-firm networking, the dynamic capability approach to strategy, and literature on inter-firm innovation. The study utilizes multiple informant survey data gathered from 156 firms operating in the automotive parts industry in Iran. Data are analyzed with partial least square structural equation modeling, as well as latent class analysis using finite mixture modeling (FIMIX-PLS).

Findings

This research provides evidence for the positive influence of NC with respect to supplier relationships on firm product innovation, as well as overall firm performance. Relationship proclivity is shown to amplify this effect. At the same time, the research illustrates that NC may be applied in different combinations in the context of supplier relationship portfolio management. Two mechanisms are tentatively identified: firms using “static optimization” focus mainly on supplier relationship development capabilities, while those using “dynamic optimization” utilize supplier relationship initiation and ending capabilities.

Research limitations/implications

This research focuses on one setting (i.e. the automotive parts industry in Iran). Further studies need to broaden these findings to other industries and countries, specifically those which show a different cultural make-up from Iran. Furthermore, this research indicates the existence of two distinct mechanisms as to how different aspects of NC impact product innovation. While it is reasonable to identify these mechanisms as networking “strategies,” this study does not clarify whether this represents intended strategies by firms or relates to emerging capability patterns.

Practical implications

The study contributes to managerial knowledge by illustrating the need for a dynamic approach with regard to networking-related routines in supplier relationships in the context of product innovation. This study suggests that managers should devote equal attention to strengthening existing supplier relationships as well as to initiating new supplier relationships (e.g. screening for promising partners and signaling firm’s relationship value to attract new counterparts) and managing non-performing supplier relationships (e.g. by developing routines to exit from those supplier relationships).

Originality/value

The paper contributes to a better understanding of dynamic approaches to networking with suppliers and their impact on product innovation from the perspective of the focal firm. It furthermore provides a fine-grained understanding of different latent classes of firms in terms of how they utilize networking capabilities.

Winning the competition for supplier resources

Purpose

This paper examines the competition between buying firms for the supplier’s competitive resources. The purpose of this paper is to examine how indirect capabilities – the ability to access external resources – can help in obtaining preferential resource allocation from suppliers.

Design/methodology/approach

Partial least squares structural equation modeling is used to analyze data of 163 buying firms that assess preferential resource allocation from suppliers.

Findings

Two indirect capabilities (a buying firm’s selection capability and relational capability) positively influence the firm’s competitive advantage. These relations are significantly mediated by preferential resource allocation of suppliers. The impact of preferential resource allocation appeared stronger for manufacturing firms than for service firms.

Research limitations/implications

This study’s data set represents the buyer’s assessment of suppliers’ resource allocation. Future research should aim for dyadic data for further validation. In addition, due to sample size limitations, this study’s data does not allow sector segmentation. A larger study that provides insights into segmentation is suggested for future research.

Practical implications

The results inform managers about the relevance of the competition for supplier resources with rival firms that share suppliers, and the influence of this competition on firm competitiveness. Managers should not only focus on the supplier itself, but also on the capabilities of the supply chain management (SCM) function to recognize and integrate the supplier resources.

Originality/value

This study adds to the extended resource-based view literature by integrating the notion of supplier resource competition. In addition, the study shows the importance of indirect capabilities for obtaining preferential resource allocation from suppliers. Finally, the authors show the importance of separating between service and manufacturing when examining SCM practices.