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The Supplier Perception Model
- How suppliers see your company as a potential client
H

M

Level of
attractiveness

L

N

N

ITC

L

M

Value of
business

H

M5:U4:4
...
2-2

The value of your business to a supplier
Classifying your expenditure as a proportion
of the supplier’s turnover
Classification

Percentage

High (H)

More than 15%

Moderately high (M)

5% - 15%

Low (L)

0
...
8%

5
X

2

ITC

M5:U4:4
...
2-1

The value of your business to a supplier
Give an example of a potential supplier that you are considering purchasing
from, and a product or service to be purchased:
Product/service:
Supplier:
Your expected annual expenditure with the supplier:
The supplier’s annual turnover:
Your company’s share of the supplier’s turnover:
Classification:
ITC

M5:U4:4
...
2-5

Is your business strategy compatible with
the supplier’s ?

Is the sector you are in a core sector for the supplier?
Is the purchase item part of a product-line that the supplier is
developing?
Is the supplier trying to break into your market?
How would you fit in with the supplier’s business strategy as a
customer?
ITC

M5:U4:4
...
2-7

How good is your financial situation & payment
record?

Will you pay on time?
Will you be able to make advance payments?
How good is your financial health?
How efficient are you in paying invoices?

ITC

M5:U4:4
...
2-9

Do you offer a good potential for future
business development & expansion?

What is your growth potential like?
Will you be able to buy additional items
in the future?

ITC

M5:U4:4
...
2-2

Supplier perceptions
Try to put yourself “in the shoes” of a potential supplier and ask yourself what
it might consider to be the good and bad points of dealing with your company
...
2-11

Action Point

4
...

Supplier:_________________
Factor

Kinds of information to obtain

Compatibility between your
company’s and the supplier’s
business strategies
Ease of doing business with your
company
Your company’s financial situation
& payment record
Association with your company as
a respected client
Business development potential
of your company
ITC

M5:U4:4
...
2-13

Action Point

4
...
2-14

The Supplier Perception Model:
positioning a supplier
H

M

Level of
attractiveness

How
Multichoice
sees us

L

N

N

ITC

L

M

Value of
business

H

M5:U4:4
...
4-1

Action Point

4
...
4-2

Supplier Perceptions
Develop

Core

Marginal
Exploit

ITC

M5:U4:4
...
4-4

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

M5:U4:4
...
4-6

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

M5:U4:4
...
4-2

Supplier’s perception of a buyer
A supplier offers the following four
different prices for the same product
to four different buyers:

Level of
attractiveness

$ 10 - to Buyer C
$ 8 - to Buyer D
The supplier’s fixed cost per unit is
$7 and its variable cost is $2
...
4-8

Likely supplier relationships:
Marginal

Routine

Low priority
spot purchases

Leverage
Bottleneck
Critical

ITC

Different suppliers’ perceptions
of your company’s business

Purchase
item
categories

Exploit

Develop

Core

Long-term
contracts
Spot or term
contracts

Term
contracts
Long-term
contracts
Partnerships

M5:U4:4
...
4-3

Item categories, supplier perceptions and contractual relationships
Product/service - In which category of the Supply Positioning Model does
this item belong?
Routine
Leverage
Bottleneck Critical
In which quadrant of the Supplier Perception Model is the supplier’s
perception of your company’s business located?
Marginal

Exploit

Develop

Core

Which is the type of contractual relationship that you currently are
envisaging with this supplier?
Which is the type of relationship that would be suggested by the previous
table?
If there is any difference between these two types of relationships, what are
the advantages and disadvantages of each option?
ITC

M5:U4:4
...
5-1

Action Point

4
...
4-1)

Does the rating coincide with your inner feeling of your supplier? If not,
why not?

ITC

M5:U4:4

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