Commercial relationships include the sum of all ways two or more organisations interact to create value. For example, a government department has a different relationship with a technology partner rolling out a department-wide software installation, than it has with the agency that manages it’s subscriptions to journals and periodicals. The number of touch points will be different, and the degree of organisational alignment will be different.The topic of relationships with trading parties has achieved widespread attention and in its current manifestation is referred to as supplier relationship management. The subject first attracted attention in the 1990s following research into how Japanese automotive companies achieved superior results to those of their Western counterparts. The reasons were more complicated than simply cooperation versus competition, although many of the initiatives which sought to change buyer-supplier relationships, such as partnership sourcing, alliancing and the new Engineering and Construction Contract attempted to institute cooperative behaviours in certain situations. Those initiatives were based on evidence that Japanese companies did not demonstrate the same indiscriminate selection of suppliers as their Western counterparts, and instead adopted a longer time horizon in their relationships. The outcome of these relationship choices was a higher level of trust, greater organisational alignment and more consistent supply chain processes.In practice, relationships adopted by Japanese companies outside Japan are perhaps more in line with traditional Western relationships, but the consequence of the explosion of academic research into supplier relationships has led to more organisations displaying a portfolio of supplier relationships and seeking to differentiate some relationships through the use of joint working teams and common cross-boundary processes. See also Cooperation, Lean Supply, Supplier Relationship Management and Trust.« Back to Glossary Index
Discover the world’s largest Glossary of Procurement terms
With over 800 Procurement specific terms (and growing) you will find everything you need to know or thought you knew about the Procurement function. Our aim is to provide you with a comprehensive list collated from the Comprara Groups hub of training and consulting source materials.The Procurement Glossary has been compiled by industry expert Paul Rogers.