The effect of model change from direct to distribution on buyer-supplier behavior and relationship

Abstract

This paper explores the effect of model change from direct to distribution on the behavior of buyer and supplier and their relationship. First, a theoretical framework is established to investigate the effect of model change based on literature review. Then, a case study is presented to illustrate the developing relationship between a world-class American company and its Chinese suppliers. Finally, comparisons between actual report and theoretical outcomes show that the results are consistent. The results indicate that (1) suppliers' performance declines while the business model is shifting from direct model to distribution model, (2) the buyer-suppliers relationship is not as close as before, and (3) the power of buyer over suppliers declines. However, these effects may be mitigated through applying some integration and collaboration methods from the viewpoint of the overall supply chain.