Buyer-supplier relationship: impact on supplier's participation in the local industry

Abstract

The significance of suppliers’ roles in contributing towards the performance of buying firms had been widely documented (Birou & Fawcett, 1994; Carr, Kaynak, Hartley, & Ross, 2008; Corsten & Felde, 2005; Cousins, Lawson, & Squire, 2008; Gonzalez, Quesada, & Mora Monge, 2004; Handfield, Krause, Scannel, & Monczka, 2000; Larson, 1994; Kannan & Tan, 2004; Laugen, Acur, Boer, & Frick, 2005; Leenders, Nollet, & Ellram, 1994; Sanchez-Rodriguez, Hemsworth, & Martinez-Lorente, 2005; Wagner, 2006; Wong, 2002). This is hardly surprising, looking at the increasing reliance of buying firms on their external supply base for product development, quality, productivity, and technology. Because of global competition, inventory reduction and staff downsizing, many buying firms have moved to retain only core competencies where a large part of the buying firms’ activities are outsourced. As a result, suppliers are being asked to assume additional responsibilities of many kinds such as earlier participation in product development, managing inventory for customers, delivering smaller lot sizes to narrowing delivery windows, producing near-perfect quality, providing steady price reductions, and many more. To a large extent, the external suppliers are now considered an extension of the buying firm’s organisation (Monczka, Trent, & Handfield, 1998). The changing role of supplier is probably the reason why Laugen, Acur, Boer and Frick (2005) identify supplier strategy as one of the emerging best practices of buying firms.