Buyer Supplier Dyads Research Articles

Buyer–supplier interaction in business-to-business services: A typology test using case research

We empirically test a theory specifying distinct ideal interaction patterns for four business-to-business service types, which differ with regard to how they are used by the buying company. The ideal interaction patterns are conceptualised as configurations of five different interaction dimensions: the key objectives in the interaction, the critical capabilities on either side of the relationship, the type of functional involvement from the buying firm and the key issues in the buyer–seller dialogue. Using a combination of quantitative and qualitative data from 23 cases of service exchange at six buying organisations we test whether similarity between the ideal interaction pattern and an actual, observed interaction pattern is a continuous necessary condition for successful ongoing service exchange. The findings suggest for each of the four service types that, in order for a service exchange to be successful, buying companies should design their interactions with their service providers to closely resemble the specified ideal pattern for that specific service type. Besides contributing to the knowledge on how to effectively structure buyer–supplier interactions across the heterogeneous spectrum of services bought, a methodological contribution is made by showing how case research can be used for theory-testing purposes. As this study is the first real test of the typology, further replications with new data, preferably obtained from both sides of the buyer–supplier dyad, are necessary.

Designing and implementing open book accounting in buyer–supplier dyads: A framework for supplier selection and motivation

Though Open Book Accounting (OBA) is a well-known practice in supply chain management, the lack of guidelines to support managers to implement it effectively has been highlighted in the literature. This paper discusses a methodology to support the selection of suppliers with whom to successfully cooperate in OBA projects and the identification, for each buyer–supplier dyad, of appropriate incentives to enable cost data disclosure. The methodology has been developed using empirical findings from an action research the authors have conducted in close collaboration with an Italian manufacturer of modular kitchens and 19 of its suppliers. It emerges that the sourcing strategy and the nature of cost data disclosed should drive the buyer's decisions on how to use disclosed account data and how to select the most appropriate set of incentives to encourage suppliers' participation. In particular, the sourcing strategy mainly affects the supplier's reaction to incentives and the uses of cost data shared, while the nature of open books agreements primarily influences the buyer's attitude to commit resources to specific suppliers and, therefore, to activate the more costly incentives. These findings have interesting implications for the identification of the suppliers with whom to collaborate in open books programs, for the selection of incentives to mitigate suppliers' natural reluctance to disclose cost data, and for restrictions in the use of disclosed data to ensure that they are not abused within and outside the relation.

Coopetitive Buyer–Supplier Relationship: An Investigation of Bargaining Power, Relational Context, and Investment Strategies

ABSTRACTThis study proposes an analytical approach combined with a behavioral experiment for a joint examination of the competitive and cooperative (i.e., coopetitive) relationship between a buyer and a supplier. Specifically, the article considers the scenario in which the buyer and the supplier invest in strategic capabilities to increase their relative bargaining power. The article examines how dynamic investments in strategic assets are influenced by the locus of bargaining power and by the underlying context (synergistic vs. adversarial) of the interfirm relationship. The dynamic evolution of bargaining power is also examined. A dynamic game model is considered to examine the evolution of investment strategies in critical resources and to investigate the issues of bargaining power in a buyer–supplier dyad. Equilibrium expressions for the investment strategies of the buyer and the supplier are presented and their implications for buyer–supplier relationships are examined. The behavioral experiment complements the analytical model and examines the correspondence between optimal behavior suggested by the analytical model and the boundedly rational behavior of decision makers in an experimental context. The results from the model and behavioral experiments suggest that the strategies are a function of the risk‐adjusted returns obtained from investments. The experiment shows that, in a synergistic relational context when the buyer maintains bargaining power, the investment shifts of the buyer and the supplier accord well with theoretical predictions. In an adversarial relational context, the results of the experimental study do not correspond well with that predicted by the theoretical model. The implications of the results are discussed and directions for future research are presented.

Performance measurement in buyer-supplier collaboration programmes: implementing the common scorecard

Collaboration programmes for coordinated replenishment in buyer-supplier dyads have become popular among companies willing to increase market responsiveness, decrease safety stocks and increase control over the supply chain. In parallel, logistic performance measures have been identified as a crucial element for defining objectives, supervise improvements and managing effectively the supply chain. We explore the use of the common scorecard to share performance measurements between buyer and supplier in collaboration projects. The common scorecard works as a tool to facilitate the communication between partners and to share transparently partners’ individual objectives in a structured and objective way. Its implementation and beneficial impact is shown in a case study of a vendor managed inventory operating in an environment of high demand volatility, long lead-time and customised products.

Special Topic Forum on Service Supply Chains

Services play a dominant role in most developed economies, but are underrepresented in academic research agendas. As emphasized by Ellram, Tate and Billington (2007, p. 64), “Universities should also give attention to the service sector and services supply management in educating future practitioners and in conducting research. The area of services supply management affords great research opportunities.” For example, the examination of service supply chains has the potential to shed new light on the underlying principles of supply chain management: when stocks and flows of product inventory are no longer the central concern, what are the new phenomena and questions that should engage SCM scholars? And how should we go about answering these questions? This Special Topic Forum will seek to address these challenges. We invite the submission of papers that provide new theoretical and empirical insights into service supply chains and the supply of services between organizations. We are particularly interested in work exploring these phenomena beyond the simple buyer-supplier dyad, into networks and chains involving more than two organizations. We are not interested in studies centered on the provision of goods in service sectors, e.g., the supply of pharmaceuticals in the healthcare sector, but in settings focused on the provision of services between organizations—which might, indeed, be in what would routinely be classified as manufacturing sectors. Submissions must set out their theoretical assumptions, particularly regarding the definition of services. Contributions may draw on theory from outside of operations and supply, but must make a clear contribution to supply chain management theory development. Submissions may be conceptual or empirical. Empirical studies may be based on case study, survey, secondary data or sources of empirical data. Examples of suitable topics include: Supply chain implications of customers' role in service Supply-chain effects of novel services arrangements such as “servitization” and offshoring Innovation in contracting approaches such as performance-based contracting Inter-firm networks in knowledge-intensive services Risk and flexibility in service supply chains Capacity, quality and process coordination in extended service supply chains THE DEADLINE FOR SUBMISSIONS IS AUGUST 31, 2011 Manuscripts must conform to JSCM style guidelines and submission requirements. Early submissions are welcome and the review process will be initiated when papers are received. Manuscripts should be submitted electronically via the Journal's online submission platform (http://mc.manuscriptcentral.com/jscm). Please note in the cover letter that the submission is for the Special Topic Forum on Service Supply Chains. Questions can be addressed to either of the guest editors: Martin Spring (m.spring@lancaster.ac.uk) Scott Sampson (ses3-jscm@sm.byu.edu)

Applying confirmatory factor analysis multi-trait multi-method approach in supply chain management research

Supply chain integration (SCI) is considered as one of the important critical success factors for firms. Both academic researchers and business managers have attempted to understand the impact of supply chain integration for buyer and supplier firms. To date, the answer still remains unclear and is fuelled by debates that there could be an asymmetric distribution of benefits to buyer and supplier firms. One way to assess the impact of SCI is to assess the joint capabilities of buyer-supplier dyad. It calls for data collection of joint capabilities from the stand point of both the buyer and the supplier firms. When we deal with empirical research involving multiple traits (capability factors) and multiple methods (in this case, buyer and supplier firms), confirmatory factor analysis multi-trait multi-method approach can be applied to assess the construct validity. We provide a methodological review of this approach and provide a detailed empirical illustration by examining the ‘capabilities of buyer-supplier dyad’ construct.

PROCUREMENT PROCEDURES FOR SUPPLIER INTEGRATION AND OPEN INNOVATION IN MATURE INDUSTRIES

The development and installation of new process equipment in production plants typically require strong collaborative efforts by a process firm and its equipment suppliers. However, existing knowledge about how such supplier integration and open innovation practices should be organized and managed is scarce. The purpose of this investigation is therefore to explore how process firms can organize and manage supplier integration and open innovation practices when developing and installing new process technology. By means of a literature review and a case study of two process firms, a lifecycle perspective on procurement is adopted. Our results show that the process firms utilize different interconnected cooperative procurement procedures in different stages of the equipment's lifecycle, in order to enhance integration both in buyer-supplier dyads and among the suppliers in the project network. The contributions of the paper are summarized and illustrated in a developed lifecycle-based procurement model that guides practitioners in organizing and managing supplier integration and open innovation practices.

Managing interdependencies in supplier networks

Building and managing a supplier base has been referred to in the literature as a key aspect of supplier management. Scholars have proposed a number of models aimed at enhancing the effectiveness of supplier network management, mainly based on a portfolio approach. In the IMP tradition of research, those models are often criticized as they ignore the interdependencies between the different existing dyadic relationships of a focal buyer company and its suppliers. Such interdependencies are the main focus of this paper, which has four objectives: (1) To analyze the types of relationships linking suppliers, (2) to understand the factors and dynamics underlying the creation and management of these relationships (3) to uncover existing links between buyer–supplier and supplier–supplier relationships, and (4) to clarify how different configurations of supplier relationship interactions impact on the performance of the actors involved. The paper discusses two empirical case studies, using the supplier networks of two focal buyer companies. We find that supplier interdependencies are mainly a by-product of the buyer–supplier dyads. Furthermore, the nature and dynamics of these dyads are a strong determinant of the scope and frequency of supplier connections and the corresponding effects on performance.

Using Buyer–Supplier Performance Frontiers to Manage Relationship Performance*

ABSTRACTThis article presents a consensus‐building methodology to implement dyadic performance measurement. It focuses on transmuting supplier performance and buyer performance metrics on several important attributes into actionable relationship management plans using Clark's (1996) theory of performance frontiers. Access to the supplier performance management program of a Fortune 100 corporation was granted to the research team. Direct observation of practice and in‐depth discussions with several managers provided a roadmap for investigating both the literature on quantitative evaluation methods and the empirically derived theory on buyer–supplier relationships from several perspectives. This study describes a multiphase, iterative framework that uses current methods and theory on dyadic buyer–supplier evaluation to consider: (i) evaluation criteria and their importance; (ii) whether the improvement focus should be on strengths, weaknesses, or both; and (iii) whether the referent role supplier should be the ideal supplier, best supplier, or best‐in‐strategic‐group supplier in the focal supply base. We illustrate a unifying approach by reporting results from a large buyer and 35 of its key suppliers. This research makes the case for managing supplier relationships through the dyadic performance lens. The outputs from this framework provide individual supplier improvement paths which are actionable prescriptions for each buyer–supplier dyad, as well as recommendations for strategic group formation.

Towards an understanding of attraction in buyer–supplier relationships

This paper explores how firms are attracted to one another within buyer–supplier dyads. It draws attention to ways of managing in a relational mode as an alternative to managing in a controlling mode. This study argues that in order to improve value creation and value transfer in buyer–supplier relationships it is not enough to optimize and coordinate management and control systems. Following Dwyer et al. [Dwyer, R., Schurr, P.H. and Oh, S. (1987). Developing buyer–seller relationships. Journal of Marketing, 51: 11–27.], it argues that mutual attraction is important in developing relationships. It is also argued that this can be achieved through a range of perceptual approaches and actions, which enhance performance between the parties involved. A conceptual model of attraction is developed with theoretical underpinnings in social exchange theory. It proposes three behavioral constraints: expected value, trust, and dependence. These components of attraction interact to draw dyadic parties closer together or push them apart. Finally, implications for research and practice are discussed.

Examining the Impact of Interorganizational Systems on Process Efficiency and Sourcing Leverage in Buyer–Supplier Dyads

ABSTRACTManufacturing firms are increasingly seeking cost and other competitive advantages by tightly coupling and managing their relationship with suppliers. Among other mechanisms, interorganizational systems (IOS) that facilitate boundary‐spanning activities of a firm enable them to effectively manage different types of buyer–supplier relationships. This study integrates literature from the operations and information systems fields to create a joint perspective in understanding the linkages between the nature of the IOS, buyer–supplier relationships, and manufacturing performance at the dyadic level. External integration, breadth, and initiation are used to capture IOS functionality, and their effect on process efficiency and sourcing leverage is examined. The study also explores the differences in how manufacturing firms use IOS when operating under varying levels of competitive intensity and product standardization. In order to test the research models and related hypothesis, empirical data on buyer–supplier dyads is collected from manufacturing firms. The results show that only higher levels of external integration that go beyond simple procurement systems, as well as who initiates the IOS, allow manufacturing firms to enhance process efficiency. In contrast, IOS breadth and IOS initiation enable manufacturing firms to enhance sourcing leverage over their suppliers. In addition, firms making standardized products in highly competitive environments tend to achieve higher process efficiencies and have higher levels of external integration. The study shows how specific IOS decisions allow manufacturing firms to better manage their dependence on the supplier for resources and thereby select system functionalities that are consistent with their own operating environments and the desired supply chain design.

Performance benefits through integration hubs

Some recent integration hubs provide configurations that facilitate optimization beyond the buyer-supplier dyad provided by traditional point-to-point integration. We argue that coordination so far has been preliminary dyadic but that a new era of network-level optimization is possible, providing future benefits beyond dyadic coordination and optimization mechanisms through the use of integration hubs and B2B marketplaces.

Responding to schedule changes in build-to-order supply chains

This multiple case study explores the reaction strategies suppliers use to respond to short-term dynamics of schedule changes in build-to-order supply chains. We examine the relationship and supply chain processes between a notebook computer manufacturer and five component suppliers. Two distinct reaction strategies emerge from these five buyer–supplier dyads. The “reduce uncertainty” strategy emphasizes supply contracts with a high degree of restrictiveness, relatively infrequent schedule revisions, and a high level of form postponement. The “cope with uncertainty” strategy emphasizes flexible supply contracts, relatively frequent schedule revisions, and low levels of form postponement. Eight propositions are formulated to understand the linkage between a supplier's power, its short-term process flexibility, and the elements of its reaction strategy. The paper concludes by proposing future research directions.

Cost of Risk Transfer: Pricing Agreements in Residential Supply Chains

Theoretical and computational studies of supply chains are confined mainly to buyer-supplier dyads. Evaluation of more tiers in the construction sector specifically is also rare, perhaps in part because short-term partnerships are typical. However, supplier selection in residential construction is often conducted in support of multiple subdivision tracts over a comparatively long time-horizon. This paper describes the lumber supply chain for residential construction, extending from the homebuyer to the lumber company. A particular case for a real builder is examined in which a builder adopted a pricing strategy to control their lumber cost risk. The strategy included minimum time periods of fixed pricing, insulating the builder from price fluctuations during those periods. Consideration of supply-chain lead times allows financial risk modeling for the builder-framer/lumber yard.lumber company portion of the supply chain in order to evaluate the cost-effectiveness of this strategy. Historical records of lumber prices were used to conduct Monte Carlo simulations of three tiers of the supply chain. The pricing strategy is shown to result in a risk premium generally in excess of the true commodity price risk.

Specific Investments in Marketing Relationships: Expropriation and Bonding Effects

Specific investments, which are tailored to a particular company or value-chain partner, are important components of firms' marketing strategies. At the same time, extant theory suggests that such investments pose considerable risk, because they put the receiver in a position to opportunistically exploit the investor. In this article, the authors examine this “expropriation” scenario but also consider whether specific investments, because of their specialized nature, may actually “bond” the receiver and reduce opportunism under certain conditions. These conditions involve a focal relationship's time horizon (i.e., its extendedness) and particular norms. The key theoretical argument is that the effect of specific investments on opportunism will shift in a nonmonotonic fashion over the range of these relationship conditions. The authors test their research hypotheses empirically through parallel analyses on each side of 198 matched buyer–supplier dyads. The empirical tests provide general support for the predictions but also reveal differences between buyers and suppliers regarding the focal effects. The authors discuss the implications of the findings for marketing theory and practice.

Investigating the Role of Information Technology in Building Buyer-Supplier Relationships

A widely held position observed through the lens of transaction cost theory (TCT) has been the role of information technology in decreasing transaction costs between buyers and suppliers and in creating more market based governance structures. However, observations have not supported this contention. In particular, buyer-supplier dyads often engage in cooperative behavior that could offset opportunistic tendencies espoused by TCT. The role of IT in this structure is unclear. This paper examines the relationship between perceived transaction costs and the concept of relationalism within buyer-supplier dyads. The role of IT in mediating this relationship is also examined. Survey data from 203 buyers in the OEM electronics industry is used to test proposed hypotheses. All major constructs, transaction costs, relationalism, and IT use are operationalized using validated multidimensional scales. The results suggest a positive role of IT in partially offsetting the negative relationship between transaction costs and relationalism. The results suggest that the decision to use IT within the dyad can encourage a commitment to establishing relational behavior.

Retail Sourcing and Procurement Strategies in the UK Fashion Industry — An Exploratory Study of Contemporary Supply Relationships

The fashion industry defines an industry sector that is unique and global in character. It defines a context that can be characterised as increasingly entrepreneurial, reflecting high levels of complexity and dynamism. The dramatic shift in the scale and power of major retail buyers in the market, the advent of own brands, and the nature of sourcing and supply-chain decisions which are increasingly global in nature, are some of the issues that define this entrepreneurial context. The interactions between those managing the buyer–supplier relationships have, particularly within the past five years, changed substantially as a consequence. At the core of this is the challenge to actors in the buyer–supplier dyad to identify innovative responses to managing these interactions. The aim of this research is to explore the nature of these relationships, focusing upon UK high-street multiple-fashion retailers and their contracted suppliers, many of whom are entrepreneurial, located in different parts of the globe. The research examines implications for supply-chain strategies applied to fashion products. There are a number of important implications for ‘fashion-marketing’ that emerge from this research project. These are discussed under four core themes that emerged from the study, namely: power, process, partnership, and people. The research approach was qualitative, and conducted over a period of twelve months. It involved in-depth discussions with key managers in organizations on both sides of the buyer–supplier relationship. The paper ends with an agenda for future research.

Buyer-supplier relationships today

This article examines how industrial buyers and suppliers perceive recent changes in business markets. It assesses the perceptions and opinions of practitioners on both sides of the industrial buyer-supplier dyad about their relationships. Some major factors moving companies toward using fewer suppliers are investigated along with the advantages and characteristics of a good buyer-supplier relationship and the problems with long-term relationships.