Industrial Buyers Research Articles

Global suppliers' selection in foreign-aid funded procurement using the quality function deployment matrix

The supplier selection criteria used by the industrial buyers are considered critical elements for suppliers' choice process. However, little attention has so far been given to identify the specific selection criteria, and to analyse level of importance the buyers assign to the criteria in the context of developing economies. Using a sample of Executing Agencies (EAs), this study identified the supplier assessment criteria and their relative importance in foreign-aid funded procurement in Bangladesh. Data were collected against 32 seven-point semantic differential scaled items belonging to four categories of supplier assessment criteria, such as economic, reliability, familiarity with supplier, and other capability. The Quality Function Deployment (QFD) matrix was then applied to benchmark the performance of three major suppliers against buyers' (i.e. EAs) requirements. The results indicated that the suppliers involved in foreign-aid funded procurement are required to carefully design their offerings to meet buying organisations' requirements such as delivery on time with high level of quality products and services, maintain high level of technical support, provide better warranties, and maintain high calibre management system.

The Seeds of Dissolution: Discrepancy and Incoherence in Buyer–Supplier Exchange

In this research, we examine a novel mechanism of interorganizational relationship dissolution: incoherence in a partner's behavior. We propose that the discrepancy between an exchange partner's opportunistic behavior and the focal firm's expectations may create a state of incoherence and uncertainty and that this effect can be damaging to the exchange even when the partner's behavior is better than expected. Using nearly 500 longitudinal, confidential reports of industrial buyers and sellers, we find supportive evidence that (1) the net effect of the discrepancy is initially positive when behavior is better than expected but becomes rapidly negative thereafter, and (2) the net effect of the discrepancy is always negative when behavior is worse than expected. Thus, these effects will generally damage the exchange even as the partner tries to improve the relationship. This gives insight into why exchange relationships that hit a downward spiral can be difficult, if not impossible, to salvage. We also show that the dysfunctional consequences of discrepancy are mitigated through exchange structures such as the magnitude of dependence on an organizational partner, the development phase of the relationship, and the presence of bilateral idiosyncratic investments. Implications for theory and the management of interorganizational relationships are developed.

The Successful Conference Venue: Perceptions of Conference Organizers and Hotel Managers

Withinthe conference industry there are differences in the needs and requirements of those who organize conferences and those who provide venues for them. Focusing on the situation in Korea, this article investigates the prior attributes required of a venue by Conference Organizers, the demand side of the industry, and by Hotel Managers, the supply side. This research is also aimed at identifying the common operational problems in hotels used as conference venues, and investigating if there is any correlation between these problems and the hotel attributes highly valued by the buyers in the conference industry. According to the results of this study, there are significant disparities between the attributes and common problems in the hotel conference industry from the perspectives of Conference Organizers and Hotel Managers.

Toward A Trustful B To B Relationship

Being trusted by the buyer has to be considered as an intangible asset that constitutes a considerable competitive advantage. To enjoy this advantage it becomes ineluctable to determine the trust’s antecedents. This survey tents to bring elements of answer for this problematic in an industrial context.The emphasis has been placed, in one side, on the importance of trust as a condition of successful relationship marketing, in the other side, on its conceptualization. Finally, and while distinguishing two targets of trust, the seller and his salesperson, an empiric verification close to electronic industrial buyers, indicate that several variables influence trust’s development towards the seller firm and its salespersons and that it (trust) can be transferred from the latter to the former.

International integration: a hope for a greener China?

PurposeIn recent years, “trade up” argument has gained momentum. It argues that international integration can benefit developing countries' environments by fostering the adoption of voluntary environmental standards, such as International Organization for Standardization (ISO) 14001 certification. Based on this argument, a social marketing program that encourages greenness among buyers, especially downstream industrial buyers (for example, auto industry) in developed countries could motivate firms in developing countries go green. The purpose of this paper is to provide an investigation on whether “trade up” is a real hope, and what is required to make it real.Design/methodology/approachTheoretical modeling and case studies.FindingsThis paper finds that international trade does gear up the adoption of ISO 14001 standards in China through increasing pressures from international green customers. However, our analyses suggest that the adoption of ISO 14001 certification does not necessarily improve firms' compliance with existing environmental regulations in China. The actual impact depends on how stringently environmental agency carries out inspections. We also find that in China, ISO 14001 certification motivates little, if any, environmental performance improvement beyond bottom‐line environmental regulations.Research limitations/implicationsThis finding suggests that the “trade up” argument as well as a social marketing strategy targeting international buyers (including downstream industries) need to be scrutinized carefully before being used to guide practice.Originality/valueFew efforts have been made to explore the actual impacts of ISO 14001 certification in developing countries. This paper fills this gap. It provides empirical support for Andreasen's argument that social marketing should be applied more broadly to achieve the desired impacts.

Multiple Sourcing and Procurement Process Selection with Bidding Events

We examine the procurement process selection problem of a large industrial buyer who employs reverse auctions for awarding procurement contracts. We contrast two classes of commonly used strategies under multiple sourcing; namely, single-stage reverse auctions, and two-stage processes where price-quantity adjustments between the buyer and the suppliers follow a first-stage reverse auction. Deriving bounds of efficiency for these two classes of procurement processes under convex supplier production costs, we present insights on the conditions under which each class is preferable for the buyer. Considering the effect of contracting and processing costs, a single-stage process is likely to be preferable to a two-stage process when the number of bidding suppliers is high, especially when capacity is rigid. A two-stage process with one information transfer in the second stage may be the preferred procurement mode when production is highly scalable, i.e., when the marginal production cost increase with increased production is small. When the number of suppliers is low, the effect of a decrease in production scalability depends on the current scalability level. For high scalability levels, a decrease in production scalability may decrease the efficiency of both single-stage and simple two-stage processes, whereas for low scalability levels, it tends to increase efficiency for both of these process classes. A decrease in production costs makes employing simple processes more attractive when production is highly scalable or when supplier capacity is rigid. For intermediate production scalability, however, a cost decrease may make employing two-stage processes with multiple information transfers in the second round preferable for the buyer.

Purchasing strategies in supply relationships

PurposePurchasing has emerged as a key source of competitive advantage. This paper aims to explore how different purchasing strategies are connected to complex supply relationships and to the goal of purchasing.Design/methodology/approachThe study draws on the literature on industrial network theory and industrial buying behaviour.FindingsThe contribution describes six types of purchasing strategies that firms exert. These strategies depend on the complexity of supply relationships and the buyer's purchasing goal. Conventional products and services are bought through transactional exchange relationships, whereas strategically important items are purchased through intentional supply networks.Practical implicationsPurchasing strategies of a firm emphasise either efficiency or effectiveness of operation. The type of exchange varies according to the nature of supply relationships: it is either transactional or relational. A key implication for managers is that they should recognise the goal of buying, the strategic importance of the object of purchasing, and choose accordingly between the different types of supplier structures.Originality/valueThe paper shows that firms' purchasing strategies depend on the nature of their supply relationships and the motive for purchasing. Different strategies emphasise different aspects and events that ultimately manifest themselves in the firms' business models.

High‐tech, innovative products: identifying and meeting business customers' value needs

PurposeDuring the industrial purchasing process of high‐tech, innovative products, various decision‐influencers within buying companies evaluate the attractiveness of the manufacturer's market offering; namely the “value” of the offering. This paper aims to identify the various tangible and intangible value elements requested by the business customer, and the stage(s) of the purchasing process in which these value considerations take place.Design/methodology/approachThis paper develops a framework that will effectively guide manufacturers of high‐tech, innovative products to market, and customize, their offer throughout the different stages of prospective business customers' purchasing process.FindingsThe findings, derived from in‐depth interviews, demonstrate that manufacturers should focus on distinctive product‐, service‐, and supplier‐related value elements, and that the particular elements depend on the different decision‐influencers, as well as the different stages of the purchasing process.Originality/valueThe paper discusses some avenues for future research in the marketing of high‐tech products.

Supplier satisfaction: Conceptual basics and explorative findings

In the past, supplier satisfaction has not been a major topic of interest within purchasing and industrial management from either a practitioner or an academic point of view. Yet, successfully managing buyer–supplier relationships is difficult without taking the supplier's satisfaction into account. Consequently, analysing supplier satisfaction should take into account interaction processes within buyer–supplier relationships (e.g., exchange of information) as well as the atmosphere within these relationships (e.g., power dependence). This paper aims to explore the construct of supplier satisfaction as a factor of buyer–supplier relationship quality. Supplier satisfaction is defined as a supplier's feeling of fairness with regard to buyer's incentives and supplier's contributions within an industrial buyer–seller relationship. Supplier satisfaction as a complex construct is operationalised through an index, and its determinants are measured using a survey.

Industrial buyer supplier relationship: perspectives from an emerging Middle East market

This paper examines buyer-seller relationships in the industrial environment of Saudi Arabia. A model is developed, which focuses on the relationship between long-term relationship, dependence and trust; the antecedents of trust and dependence. Empirical research is used to test the hypotheses developed. Results based on a survey of purchasing managers from small to medium-sized firms in Saudi Arabia reveal that trust and dependence of Saudi buyers is positively related to sellers' long-term relationship. The findings of this study have implications on the manner in which critical function as procurement can be better performed in the Saudi market.

Rethinking language in IMP research: Networking processes in other words

Summary This paper explores the challenges of applying concepts from the “linguistic turn” in the social sciences to Industrial Marketing and Purchasing (IMP) theory. We discuss some key consequences for IMP researchers of rethinking their approach to language. This involves an acknowledgement that language has a reality constituting and distorting character. It also affords the realization that when phenomena are couched “in other words”, they appear differently to us. We shall argue that this realization allows the inspirational potential of creating, through the use of new language, a new and possibly better understanding of the complexities of business networks. The potentials and practicalities in industrial network scholars accommodating language and communication are discussed in the context of selected approaches from the linguistic turn, such as certain variants of discourse analysis, which offer promising developments for research. We conclude that these potentials may enable IMP researchers to benefit from adopting the metaphysics of change, a process epistemology, the ontology of “becoming” and a more reflexive and intimate engagement with practice.

The effect of logistics service quality on customer satisfaction and repurchase intention: focusing on company size as a moderator

There are many studies supporting that logistics service quality affects on customers satisfaction and these satisfied customers have a strong repurchase intention in consumer products. However, a few studies involving Industrial products examined these relationships. Therefore, the main purposes of this study are (1) to empirically examine logistics service factors influencing on the customers’ satisfaction and repurchase in industrial purchasing, (2) to clarify the differences of service factors between customers satisfaction and repurchase in industrial purchasing process, and (3) to analyze the influence of these factors on the customers’ satisfaction depending on the size of company. As a result of an analysis of survey data, this study found the followings. (1) the factors affect customer satisfaction and the factors affect repurchase intention are different from each other; 5 factors (timeliness, order quality, personnel intimacy, personnel quality, order release quantities) for customer satisfaction and 6 factors (timeliness, order period, personnel quality, order quality, information factor, order release quantities) for repurchase intention. (2) the relationship between order release quality factor and customer satisfaction was differ depending on the company size. The large companies showed a stronger relationship than the smaller company did. (3) the positive linear relationship between customer satisfaction and repurchase intention was identified also in industrial purchasing.

The effect of logistics service quality on customer satisfaction and repurchase intention: focusing on company size as a moderator

There are many studies supporting that logistics service quality affects on customers satisfaction and these satisfied customers have a strong repurchase intention in consumer products. However, a few studies involving Industrial products examined these relationships. Therefore, the main purposes of this study are (1) to empirically examine logistics service factors influencing on the customers’ satisfaction and repurchase in industrial purchasing, (2) to clarify the differences of service factors between customers satisfaction and repurchase in industrial purchasing process, and (3) to analyze the influence of these factors on the customers’ satisfaction depending on the size of company. As a result of an analysis of survey data, this study found the followings. (1) the factors affect customer satisfaction and the factors affect repurchase intention are different from each other; 5 factors (timeliness, order quality, personnel intimacy, personnel quality, order release quantities) for customer satisfaction and 6 factors (timeliness, order period, personnel quality, order quality, information factor, order release quantities) for repurchase intention. (2) the relationship between order release quality factor and customer satisfaction was differ depending on the company size. The large companies showed a stronger relationship than the smaller company did. (3) the positive linear relationship between customer satisfaction and repurchase intention was identified also in industrial purchasing.

Structuring a choice model for mass customisation

A mass custom design approach is readily available for the delivery of quality affordable homes today. However, in reality, homebuilders tend to follow routines in their way of doing business and to be reluctant to apply (or buy) such innovative design (and construction) approaches to their housing developments. Their buying behaviour towards the adoption of a new product or service was surveyed by reviewing organisational (or industrial) buying behaviour. The author found that industrial buyers tend to cut down the information search for nonprogrammed decisions to determine whether or not to buy an unfamiliar product or service; thus, the organisational buying decision-making process may need to be well programmed. Accordingly, in conjunction with the concept of mass customisation, this paper proposes a new choice model that helps homebuilders understand the true value of innovative design and construction systems that can be applied for upgrading their mass housing developments.

As time goes by: Examining the paradox of stability and change in business networks

Stability and change may seem contradictory features but in business networks, they coexist [Hakansson H, Snehota, I. Developing Relationships in Business Networks. London, Routledge; 1995]. This article explores the paradox of the coexistence of stability and change in an Australian context. Previous research illustrated that stability over time can exist in specific business relationships [Sutton-Brady C, Donnan, M. Nexus nonsense or is it? Conference Proceedings, 19th Annual IMP Conference, Lugano, Switzerland September 2003; 2003]. This research study further investigates time as a proxy variable of stability [Halinen A, Tornroos, J-A. The meaning of time in the study of industrial buyer–seller relationships. In: Moller K, Wilson DT, editors. Business Marketing: An Interaction Approach. Norwell, Mass: Kluwer Academic Publishers; 1995.] and attempts to uncover other variables, which may influence the stability of the relationship. Given the exploratory nature of the research a case study approach was utilized to gain an in-depth understanding of the variables, which may contribute to the stability. This article further advances the concept of time as a proxy variable for stability while investigating what other variables may be crucial in understanding this concept. From analysis of the case studies, the findings show that other variables do play a role in determining the stability and change in the relationships and networks, these included location, product/service quality, technology, cooperativeness, adaptations and cost. The major contribution of this article is the reopening of discussions on time as a proxy variable for stability and attempts to broaden this to include other variables.

Exercised power as a driver of trust and commitment in cross-border industrial buyer–seller relationships

The article reports the findings of a study conducted among 151 U.S. export manufacturers of industrial goods regarding their working relationships with foreign customers. Specifically, the emphasis is on the sources of power exercised and how these affect trust and commitment in the relationship through the mediating role of conflict and satisfaction. Using structural equation modelling, it was confirmed that the exercise of power derived from coercive sources increases conflict and reduces satisfaction, while the exercise of non-coercive power sources leads to lower conflict (but not significantly increasing satisfaction). Conflict was found to be negatively associated with trust, as opposed to satisfaction which enhances trust. Trust was subsequently revealed to foster commitment in the relationship. Conclusions and implications are derived from the study findings and directions for further research are provided.

The importance of brand in the industrial purchase decision: a case study of the UK tractor market

PurposeWith brands being an important source of competitive advantage, knowledge of branding is needed to inform their management. After reviewing the literature, the article aims to report the findings of a case study that investigated the role of branding in the industrial purchase of agricultural tractors in the UK. The study's overall conclusion is that branding can play an important role in industrial purchase decisions.Design/methodology/approachVarious attributes, together with levels of these attributes, were identified from the literature and a series of semi‐structured interviews with three farmers and farm contractors. Subsequently, conjoint analysis was employed to reveal how purchasers made their purchase decision. A total of 428 farmers and farm contractors (a 28.7 per cent response rate) ranked 25 cards that had been constructed to profile various hypothetical tractor designs.FindingsFive attributes appeared from the literature review and interviews – brand name, price, dealer proximity, quality of dealer's service, and buyer's experience of the dealer. The conjoint analysis revealed that brand accounts for 38.95 per cent of the purchase decision, ahead of price (25.98 per cent) and service (14.90 per cent). The importance of brand varies according to the tractor brand. Also, the overall utility varies, with John Deere and New Holland brand names appearing as marketing assets and Valtra, Massey Ferguson, and Case IH as marketing liabilities. Among the study's other findings are that UK tractor buyers are brand loyal.Research limitations/implicationsThe study focuses on tractors in the UK, so while it provides an insight into the role of branding in an industrial purchase situation, further research is required in other product categories before the findings can be generalised.Practical implicationsManufacturers and distributors need to maintain a strong image. Also, they may charge higher prices for tractors, using the extra revenue to reinforce their brand image. On‐farm demonstration of new tractors is suggested as an experiential marketing strategy. Special attention should be given to the location of dealers and the service they provide.Originality/valueResearch concerning branding in an industrial purchase context is limited, dated, or contradictory. This article contributes with empirical findings on industrial brand management in an important and relevant context.

The differential value of information in industrial purchasing decisions

PurposeThis research integrates recent work on customer information acquisition in services marketing and economics of information research with literature on industrial buying behavior for the purpose of proposing and empirically testing a model that explores information acquisition in industrial purchasing.Design/methodology/approachTo test the proposed model, an online survey was prepared using WebSurveyor and an introductory e‐mail with a link to the survey was sent to a sample of members of a professional organization of industrial purchasing managers.FindingsResults indicated a differential use of information sources across differing purchase situations. When purchasing situations were perceived to be easy to evaluate, there was a significantly greater use of impersonal information sources. In addition, we offer evidence that the use of both personal and impersonal information sources does, in fact, increase the perception of goal clarity with respect to the purchasing task among industrial purchasers.Originality/valueIf marketers can help provide key information – both personal and impersonal – to their customers, they are helping to clarify the purchasing task. These communication efforts can then contribute to that satisfying outcome which might ultimately enhance the relationship between the two parties.

Private Label Development: The Large Food Retailer Faced with the Supplier's Opportunism

For the last 20 years, large food retailers have had an important place in fast-moving consumer good sales. This article describes their buying strategies, focusing on supplier selection in the case of private label contracts. It introduces the concept of opportunism to explain recent and probably irreversible developments in retail buying organisations, integrating a growing number of technologists and scientists. New businesses, with close relationships to industrial purchasing, have appeared in the retailing industry. In the end, they will require a new ‘species’ of managers, able to simultaneously monitor logistical, technical and commercial interfaces between large food retailers and their private label producers.

Leveraging emerging markets for commercial success

PurposeEmerging markets are becoming the catalysts for new product and service innovation. Long‐term success, however, will take far more than simply making minor adjustments to existing products, lowering prices, and developing new sales channels, according to a new report, “Laboratories of innovation: leveraging emerging markets for commercial success” by the Member Firms of Deloitte Touche Tohmatsu (Deloitte).Design/methodology/approachStudy by Deloitte Touche Tohmatsu.FindingsThe Deloitte study shows that companies will need to acquire a new set of competencies and organizational structures to generate a continuing stream of innovative products tailored to the needs of consumers and industrial buyers in emerging markets.Practical implicationsCompanies will need to acquire a new set of competencies and organizational structures to generate a continuing stream of innovative products tailored to the needs of consumers and industrial buyers in emerging markets. They will need to allow for local autonomy, for example local R&D and local commercial operations, while taking advantage of their parent company's governance, business processes, and management expertise to offer these products at dramatically lower prices that match the lower purchasing power of most buyers in emerging markets.Originality/valueSuccessful companies are looking beyond traditional strategies to meet the needs of markets with significantly lower per capita GDP.