Notesale: Turn your study into money

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The supplier-buyer
relationship
/ contract continuum

Spot
purchase

ITC

Regular
trading

Call-off
contracts

Fixed
contracts

Partnership

Joint
ventures

Internal
provision

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1-2

Repeated spot purchases
You need to ensure that the supplier remains competitive
Frequent interaction will lead to mutual understanding
Suppliers used frequently tend to give you higher priority - you
may also have one “preferred supplier”
Good when you don’t know requirements in advance and/or
when each requirement is different

ITC

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4-1

4
You commit to purchase a certain volume or value
This type of contract is more attractive to the supplier
and you may therefore get better conditions
Good for frequent requirements when volumes can be
predicted in advance

ITC

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5-1

Call-off and fixed contracts
Items purchased

ITC

Fixed or calloff contract?

Why or why not?

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6-1

GOAL

Partnerships are appropriate for critical and
bottleneck items and where the focus is on longterm product development
They can allow you to achieve a better result than
you could have achieved alone
Partnerships require time and effort so selecting
the right partner is fundamental
ITC

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6-3

How to develop a partnership:
Becoming aware of the need for a partnership
Conceptualising the partnership
Pursuing the partnership
Confirming the partnership
Implementing and administering the partnership
Assessing the partnership
Terminating the partnership
ITC

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6-4a

Partnerships sometimes fail because:
The buyer is unable to adjust to the partnership culture
One party is more dependent on the relationship than the other
Key people are replaced
The level of time and investment needed was underestimated
The relationship loses commercial focus

ITC

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6-1

Partnership and your organisation
Three of your purchase products where you are you using a
partnership approach:
How do you benefit?
For which three other of your purchase items could you envisage
developing a partnership?
What would make you ready/prevent you from doing this?

ITC

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7-1

Internal provision means making rather than buying
Gives you maximum control over
supply and reduces supply risk
But:
Developing or acquiring the capabilities to provide can be
very costly
Your fixed costs will increase
You may not reach an efficient scale of production
ITC

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6-1

Which approaches to supplier relationships does your company
use?
Type of relationship/contract

Approximate number of suppliers involved

Spot purchase
Regular trading
Call-off contracts
Fixed contracts
Partnerships
Joint ventures

ITC

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9-1

Supplier Perceptions
Develop

Core

Marginal
Exploit

ITC

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9-3

Supplier Perceptions
Exploit

Your level of purchases may be important but the supplier
sees no reason to develop a long-term relationship
The supplier will not make any particular effort or give you
priority
If the supplier is sure of your business it may exploit you by
raising prices
ITC

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9-5

Supplier Perceptions
Core
The supplier consider your company to be part of its
core business (in terms of current business as well as
development potential)
Suppliers will make a significant effort to sell to you
and to retain your business
This quadrant is suitable for partnerships
ITC

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9-7

The effect of Supplier Relationships
Being a good customer means:
Paying on time
Being efficient & effective
To avoid being “bothersome”
Having an “account manager” for the supplier
Responding swiftly to queries
Handling administrative formalities yourself
Being professional & ethical
ITC

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Develop

Marginal

Core

Bottleneck

Critical

Routine

Leverage

Exploit


...

ITC

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9-8b

Action Point

3
...
9-9

your options
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10-1



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