Research and Discussion

The phrase “supplier relationship management” refers to the process of communicating with and managing third-party suppliers who supply goods, resources, and services to your firm in the most straightforward terms possible. Making a company connection more valuable by selecting suppliers that are both cost-effective and easy to deal with seems simple enough. This, however, is not always the case in practice. Inevitably, as is the case with the majority of modern business practices, it has evolved into something far more sophisticated over time as well. Supplier management has seen a significant transformation over the last several years as a result of technological advancements and the increased globalization of the business.

Qualitative study was undertaken to allow the gathering of enough data in order to acquire a better knowledge of the challenges surrounding identifying the characteristics that aid in creating strong collaborative relationships with distributors and suppliers to guarantee successful supply management. The qualitative research approach was primarily utilized to generate all conceivable difficulties and leads that might be employed in the construction of a realistic and tested hypothesis. Furthermore, the quantitative research methodology was utilized in part to guarantee that the study was completed completely. The quantitative research design was included since it is one of the most powerful methods for approving or disapproving a hypothesis. Secondary research was used to learn about the characteristics that aid in the development of strong collaborative relationships with distributors and suppliers, as well as their consequences, how the attacks were handled, and the conclusion. In addition, document or content analysis, as well as surveys, were carried out within the businesses. This was done to collect previously documented data on the characteristics that aid in the development of strong collaborative connections with distributors and suppliers in the various companies and individuals where the research was undertaken.

The purchasing function, as a component of strategic management, has gained in importance during the previous few decades. When it was realized that suppliers have a larger influence in a company’s performance than previously thought, the idea of Supplier Relationship Management (SRM) was developed. The concept behind great relationship management is that external parties to firms, such as customers and suppliers, may be convinced to contribute to the rise in the value of the company by providing outstanding service (Forkmann, et al., 2016). This knowledge progresses to include the notion that a corporation may acquire a competitive advantage by working closely with its suppliers to develop new products and services. According to Poluha (2016), a large number of firms have established plans that are focused on the key processes in order to meet the requirements for a value-oriented supply chain strategy. As a result, one of the most significant characteristics of a successful supply chain strategy is its alignment with the business plan and, as a result, with the strategic core vision of the organization. When this essential is altered to include the achievement of a company’s human rights objectives, suppliers can become major participants, as firms are frequently related to human rights breaches through their relationships with their suppliers.

Literature Review

Purchasers sought to maximize financial value in each transaction they entered into, while suppliers sought to concentrate on procurement operations carried out by purchasing organizations’ procurement departments, according to the conventional model of communication between purchasing firms and suppliers. In many cases, the perspective for these deals is short-term, and this is paired with the belief that the providers are easily replaceable. The adoption of a buyer-focused approach is still achievable when the reasonable stakeholder expectations faced by enterprises are not yet complicated and do not need greater integration of suppliers into core company processes. Ross (2015) explained how, as the relationship evolves, the widely recognised relationships with suppliers continue to extend into more cooperative and collaborative ways of doing business together. It is well recognized that a firm’s goodwill with its suppliers is a valuable asset to the company. In their study, Schuh and colleagues (2014) identified a number of business challenges caused by a lack of an overview approach in purchasing policy, including large investments in processes and procedures that are not supported by adequate attention on the essential results and a silobased strategy that is unable to bring together different departments.

Supply chain coordination can become more challenging when there are conflicts about the scope of alternatives and activities, opposing goals and objectives within an organization, or variances in reality perceptions that are employed in cooperative decision-making among supply chain participants. According to the literature, another problem is the measuring of individual performance, which, when done in a coordinated manner, may be irrelevant to the goal of optimizing supply chain improvement. When organizations operate in an environment where the economic climate is always evolving, they must constantly create new strategies in order to remain competitive. A connection exists between the first original concept and the continued operation of the firm.

As notions such as the notion that suppliers may be more valuable when they are not just evaluated on the basis of monetary considerations have emerged, the importance of suppliers in a company’s survival has expanded in unison with this development. Decision-makers should assess the risks associated with various alternatives and compare the results of other options in terms of expected performance and risk in order to make informed decisions. When a purchasing firm is ready to be honest, unbiased, and scrupulously fair in all of its contacts with suppliers, supplier goodwill may be built up. In addition to the realization of competitive advantage through supply chain interactions, fairness (or the treating of individuals with dignity) has been found to be connected with the realization of competitive advantage (Hornibrook, Fearne & Lazzarin, 2009). The feedback from suppliers may, as a result, cover a wide variety of issues that are beneficial to the firm in terms of both financial and non-financial terms. Cost-cutting efforts and improvements in the quality of obtained materials are two examples of initiatives that have a monetary impact. Monitoring non-monetary gains covers activities that result in the fulfillment of duties that are not primarily driven by money considerations, such as complying with regulatory requirements or responding to legitimate stakeholder demands.

Implementation issues

You have a plethora of supplier options, making it difficult to select the most appropriate one. Using innovative ideas to streamline your supplier management system may be quite beneficial. “Purchasing Must Become Supply Management,” a Harvard Business Review article written by McKinsey consultant Peter Kraljic in 1983, was the first time the notion of supplier relationship management was proposed (Johnson, Leenders and Flynn, 2021).

Managers must learn to influence events in order to get an advantage over their competitors, rather than merely watching what is happening. A complete shift of viewpoint is required here: from purchasing to supply management, and nothing less will suffice. This is critical to grasping the concept of strategic resource management (SRM). In order to be effective, relationships must be strategically planned and growth-oriented in nature. Spend managers and senior staff members should keep this in mind at all times when making purchases, whether they are for actual things or software. Supplier relationship management has always been a strategic endeavor for successful firms that rely on third-party suppliers, regardless of the industry in which the business operates. When it comes to supply chain management, Apple has earned a well-deserved reputation as a worldwide leader because to its commitment to long-term partnerships and mutual trust with its suppliers. This has allowed Apple to introduce new products with confidence and in large quantities. Because of the impact on travel and worldwide supply chains caused by the COVID epidemic, the necessity of supplier management and supply chain management became an even more essential concern than it had previously been. Companies who put a strong emphasis on strategic sourcing and strategic supplier relationship management were able to weather the storm far better than their competitors.

Conclusion

There are several methods in which suppliers to large-scale food manufacturing firms provide help to their customers. When it comes to identifying and negotiating new contracts with new suppliers, there are a number of expenses that must be considered up front in order to be successful. Supplier relationship management programs have the potential to significantly lower the costs of establishing new business ties with suppliers. A supplier relationship management program may help companies save a significant amount of money on these costs. It is possible for an organization to achieve long-term cost savings by establishing a mutually beneficial relationship with essential suppliers. These savings can be realized in the form of fewer challenges with availability, quality and delivery delays, as well as lower inventory expenses. As the relationship between an organization and its supplier becomes stronger, the quality of communication between the two parties increases. As with any connection, the provider develops a greater understanding of the organization as the partnership grows, which helps them to increase the efficiency of their service. When ordering, there will be fewer problems, and if there are problems, the positive connection that existing between the organization and the supplier will make it simpler to handle the issues. They will have more success working and aiding one another if they improve their mutual grasp of each other’s enterprises. Even though both parties may have to adjust their approaches, there is the possibility for increased efficiency and operational value as a consequence of this arrangement.

References

Easton, S., Hales, M.D., Schuh, C., Strohmer, M.F., Triplat, A. and Kearney, A.T., 2014. Supplier relationship management: How to maximize vendor value and opportunity. Apress.

Forkmann, S., Henneberg, S.C., Naudé, P. and Mitrega, M., 2016. Supplier relationship management capability: a qualification and extension. Industrial Marketing Management, 57, pp.185-200.

Hornibrook, S., Fearne, A. and Lazzarin, M., 2009. Exploring the association between fairness and organisational outcomes in supply chain relationships. International Journal of Retail & Distribution Management.

Johnson, F., Leenders, M.R. and Flynn, A.E., 2021. Purchasing and supply management. McGraw-Hill Companies, Inc.

Manzini, R. (Ed.). (2012). Warehousing in the global supply chain: Advanced models, tools and applications for storage systems. Springer Science & Business Media.

Poluha, R.G., 2016. The Quintessence of Supply Chain Management. Springer.

Ross, D.F., 2015. Distribution Planning and control: managing in the era of supply chain management (Vol. 820). New York: Kluwer Academic Publishers.

Scott, C., Lundgren, H. and Thompson, P., 2011. Guide to supply chain management. Berlin: Springer.