Controls in Strategic Supplier Relationships by M Briers

By M Briers

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You need data and statistics regardless of what you do. There is no point in having a meeting with a supplier and having all these nice warm and fuzzies [without the data and statistics]. These accounting controls were introduced in response to dissatisfaction with suppliers. Explaining this, the material supply manager commented: So, what we had to do from 1987 onwards is make our suppliers more accountable so that when they had a contract with us they valued that contract and they performed according to the contract.

The suppliers continued to point out problems in the use of competition controls in the SSR relationship. They again identified technical flaws in the proposal and promoted trust mechanisms as an alternative control: Supplier X field service manager: We want to revisit the benchmark on parts and labour, otherwise we'll step into a penalty rate through no fault of our own. Firm A contracts negotiation manager: Parts bills in excess of $20 000 a month will be at cost. Supplier X general manager 1: Where did you get the $20 000 figure from?

Like their counterparts at Firm A, Firm B purchasing officers considered trust pivotal in the establishment of open communications and long-term relationships with suppliers, and often relied upon mutually shared expectations about the role of the supplier. One purchasing officer in materials supply explained the key role that trust played: Trust has got to be both ways. We've got suppliers that tell us how much they buy it for and how much their mark-up is and they put all those figures on the table.

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