Paper info

Buyers' expectations from their suppliers

Olli-Pekka Juhantila and Veli-Matti Virolainen

The paper was published at the 19th IMP-conference in Lugano, Switzerland in 2003.

External relationship management assumes more strategic significance as companies become reliant on third parties. The key purposes of these engagements are to gain competitive advantage and to add value to a company's internal operations. Thus the process of managing business relationships during all respective stages is a critical success factor. This paper explores the fundamental expectations buyers have from their potential suppliers. This is done in order to create an understanding on how to improve the results of intercompany engagement processes - the intitial stages of the relationship management continuum - applied by industrial companies. The fundamental questions to be answered are ?What do industrial buyers expect from their suppliers?? and ?What are the key attributes of a good supplier?? It is generally understood that to become a supplier to a company requires passing their supplier qualification programand thus meeting the respective supplier qualification criteria. Therefore it is important to understand what such programs and criteria might be and are they generic ones or specific to a particular industry or even a company. Furthermore a question of interest is: ?Are the ways proposed by literature and described in industry processes aligned with: a) the true evaluation criteria of purchasing decision-makers; and b) the ingredients of a successful relationship??When observing the attributes to a good and to a poor supplier there is a common understanding on the role of the traditional three critical success factors time, cost and quality. However, when observing the attributes revealed in the empirical research on a more detailed level, it is clear that there is a difference between the main geographical regions. Even though there is a reasonably good alignment concerning good supplier attributes across the industry and literature, they are reflected in companies? supplier qualification criteria only occasionally. Furthermore there is less alignment in what different companies measure during their process of supplier evaluation. When further comparing these criteria with what is actually preferred by purchasing managers i.e. those making or at least significantly influencing the supplier selection and qualification decisions, it can be observed that there is a great mismatch between the official supplier selection criteria published by companies and the actual criteria based on which decisions are made. Thus it can be assumed that there is a significant amount of subjectivism involved in the decision-making. When comparing the good supplier attributes with the preferred criteria the purchasing managers have identified there is a rather good alignment between the two both world-wide and regionally. Also this suggests that purchasing managers rather pay attention to what they have experienced to be important to a successful supplier relationship than to what is the official decision-making criteria.