Factors That Shape the Relationship Between the Buyer and the Suppliers

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Table of Contents

Abstract
Introduction
Factors Influencing Buyer-Seller Relationship
Strategy
Conclusion
References

Abstract

In the fast-developing business world, it is essential to continually follow the latest managing strategies to achieve the best relationship between the seller and the buyer. The purpose of this paper is to identify the key factors that appear to shape the business-relationship between the supplier and the buyer. They allow it to be possible to build a sufficient strategy for managing the relationship. This essay aims to discover the factors that create a basic understanding of supplier relationship management as well as determine the aspects that form a productive customer/vendor relationship.

Introduction

For successful, long-term cooperation between the buyer-supplier chains, the most crucial factor is to build a trustworthy strategy of managing the relationship. A close relationship between buyers and suppliers gives many opportunities and benefits; for instance, it may give a supplier a chance to get investors for their new projects or start-ups. The main factor in achieving a successful buyer-supplier relationship is through its effective management. Sharing information as well as communicating with your client is an essential requirement for supplier development activities (Sillanpää, Shahzad, & Sillanpää, 2015).

However, efficient management of business communication requires a lot of experience and leadership skills, as it is sensitive and individual to every person. Therefore, each client needs a unique management strategy to have a successful long-term relationship.

A key to successful communication between supplier and buyer relies on their mutual collaboration. In the modern world, managing relationships is no longer a one-sided strategy; it is dynamically changing toward the collaborative approach. It gives an advantage of constant competitiveness, which is a catalyst for continual improvement.

Factors Influencing Buyer-Seller Relationship

Efficient cooperation within a company requires a strong relationship between the buyer and the supplier. A successful supply chain relies on well-established contact between buyer and supplier; otherwise, further business will result in failure or ineffectiveness. Some factors are essential in terms of building a successful communication chain.

Trust

The first and most important of them is trust. Trust, in many ways, forms the core of the relationship between two parties. Trust can be identified as a willingness of one party to rely on their partner confidently. It is is the main factor affecting the strength of any inter-organizational relationships (Morsy, 2017). On the foundation of trust, most prosperous affairs are built; moreover, trust is an expectation for every business partner that is made on the assumption of the company’s reputation, reliability, and consciousness. It is one of the critical factors that influence the future of the relationship between the buyer and the supplier. The best existing communication strategy is built on the foundation of trust.

Commitment

Another essential factor in forming a prosperous buyer-supplier relationship is commitment. Commitment among business partners exists as a permanent ambition to continually maintain the ongoing relations. The degree of commitment shows both parties the willingness of each organization to put in as much effort in their regards, and promises full assurance. Such actions result in mutual benefits and sustaining satisfying relationships between both parties (Morsy, 2017). The primary condition on which commitment should be built is when each partner is assured that the cooperation is equally valuable for each side of this alliance.

Reputation

Spotless reputation is a significant factor in building a communication strategy between partners. The supplier’s reputation can be the main decisive factor for the buyers in supply chains. It often becomes the primary selection criterion when it comes to picking a business companion, as it may affect every party involved in the relationship. Reputation represents a firm’s perception of the capabilities of another organization (Morsy, 2017). A reputation is a crucial factor, as it becomes a valuable source of trustworthiness that clients seek in their relationships. In searching for an appropriate partner, reputation for performance and reliability becomes a vital measure when the partner is new and untested.

Communication

One of the essential aspects of the buyer-supplier relationship foundation is communication. It is common knowledge that communication is key to every successful working alliance, especially in the business sphere. Buyer and supplier have to have mutual understanding and excellent communication skills to achieve prosperous cooperation. They are not to avoid constant feedback and constructive criticism as it is a fundamental tool on the path to improvements and innovations.

Common Goals

The partnership must be built on common goals. Provided excellent communication, common goals are formed on the base of mutual need and interdependence. Moreover, shared goals are made to create a sustainable relationship. To effectively work with any client, shared goals and intentions must be set. Supplier development efforts should focus on future capabilities in technology and product development rather than on current quality and cost (Sillanpää et al, 2015). Acknowledging that and making those factors a clear common goal for both buyer and supplier can result in long-term fruitful cooperation.

Strategy

A well-built communication strategy between the buyer and the supplier may set a mood for the whole long-term partnership. Therefore, a supplier must carefully assess the situation and organize an excellent strategy to build long-lasting cooperation with the buyer. According to Kurnia and Wahjudono (2015), building a successful business partnership requires mutual benefits, mutual trust, and interdependence between related parties. Forming a successful strategy is vital for any buyer-supplier relationship. After a thorough analysis, a few of the most effective strategies were recognized based on the factors that shape communicational patterns.

Involving a buyer into the process of developing and distributing products is an excellent example of a successful communication strategy based on a robust and trustworthy foundation. Such buyer supported programs offer clients to be a part of assistance in the development of the programs receive a lot of positive feedback. Such strategy increases a company’s efficiency and profit as well as attracts new possible buyers.

Many automobile companies regularly use such buyer engagement strategies as an opportunity for clients to directly experience new production methods. Such an approach builds up trust and assures the buyers of suppliers’ full commitment, as well as creates an excellent reputation for the company. A combination of implementing these factors into a great communication strategy may result in successful long-term cooperation.

Buyers can also implement well-strategized communication plans. One excellent strategy is reward-based. Suppliers with exceptional performance, commitment, and dedication are motivated to receive awards from their buyers. In such a way, suppliers have an excellent motivation to improve the relationship with the particular buyer, increase their efficiency, and become more creative when it comes to interesting the buyer in new products. Such rewards may be of different forms, and should not be limited to a single process. With such a strategy, the buyer increases engagement with their suppliers, holds natural competitiveness, and enhances supplier’s motivation to show their full commitment as well as put clients focus on their common goals.

The simplest but most effective strategy between the buyer and the supplier is effective communication. The research states that “effective communication plays a key role between buyers and suppliers to motivate them; it enhances the mutual understanding of both parties and reassures the conflict resolution” (Sillanpää et al, 2015, p. 236). Effective communication between buyer and supplier results in minimization of conflict situations and misunderstanding, consequently forming a strong business relationship. A strategy of effective communication sets clear common goals, which create the plan of cooperation with no redundant misconceptions. Buyer-to-supplier communication openness induces a strong base for trust in clear motives from both parties and their genuine interest in a successful partnership.

Lastly, a great motivation to form a robust communication strategy is to rise above the competitors. It is especially practical and useful for suppliers. The development of constant competitive achievements is the key to a successful partnership. In such a way, clients recognize the urge to improve and the strategic approach of the other individual. When a successful buyer-supplier relationship is built, the first must develop a suitable plan to maintain a respectable partnership with better, in their opinion, suppliers, and show them exactly why they are better than the competitors.

Conclusion

In an extremely competitive environment, successful buyer-supplier communication strategy is the main factor of active partnership. Most of the organizations hold a relationship and develop a key plan for constant competitive achievement (Sillanpää et al, 2015). The many factors that influence well-developed communication between the buyer and the supplier, the most essential of them are trust, reputation, commitment, common goal, and communication.

With the combinations of smart strategic implementing of these five crucial factors, success in the communication between two partners is inevitable. There are many long-term developed strategies for effective supplier-buyer communication that can guarantee success in future cooperation. Among them are involving a buyer into the process of developing and distributing products, reward-based strategy, effective communication, and a competitive environment. With experience and well-developed communication plans, it is possible to establish a long-term partnership between the buyer and the supplier.

References

Kurnia, H. W., & Wahjudono, D. B. K. (2015). Buyer Supplier Relationship Analysis (A Case Study of C.V. CS). Journal of Management Research, 7(4), 233. Web.

Sillanpää, I., Shahzad, K., & Sillanpää, E. (2015). Supplier development and buyer-supplier relationship strategies – a literature review. International Journal of Procurement Management, 8(1/2), 227. Web.

Morsy, M. H. (2017). Buyer-Supplier Relationships and Power Position: Interchanging. International Journal of Supply and Operations Management, 4(1), 33–52. Web.

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