Buyer Seller Partnership the Buyer Seller Relationship

Buyer Seller Partnership

The buyer seller relationship paradigm is one of great importance, particularly in the 21st century global competitive economy. Most scholars and psychologists actually see the relationship as having three basic levels -- adversarial, barometric and complimentary. It is the goal of organizations to move to the relationship through these stages so that a win-win arrangement is made that becomes a more stable model. Of course, the adversarial portion is the beginning of the relationship, neither party really trusts. The barometric stage is one in which both sides "regularly check the pressure" or test the environment. There is a level of trust, but there is still uncertainty and CYA (cover your assets) mentality. Finally, the goal is to reach a true, integral partnership relationship in a complimentary stage. Both sides value the other, each understands their own needs and how to best maximize those needs so that there is a long-term, continuing, and proactive win-win scenario (Rigsbee, 2012).

Part 1 -- How Suppliers can be involved in the product development process -- Part of the natural maturation of a business is the evolution of products and services that fit the needs of the market, technological innovations, and industry/competitive standards. This has become even more critical in the 21st century with a global economy and the potential of global customers. Product development does not exist in a vacuum, however, but requires that the organization build or offer what is possible through the materials available at a reasonably competitive price. In this sense, the idea of product development as a process should include a partnership between the organization and its suppliers. In fact, the more this partnership is coveted, the likelihood of successful launch into the market increases, as does the ability of the organization to cost-effectively service its stakeholders. However, to do this, the organization must view its supplier as part of the process, part of the stakeholder group, and integral in planning. Siemens, for instance, has a module within their management training that shows managers how to leverage suppliers for strategic information (Siemens, 2012).

Research tells us that market globalization and the rapid change in technological offerings requires that organizations differentiate themselves and remain innovative. Manufacturers are now facing shortened product life-cycles, increased pressures to shorten time to market, and most especially, stakeholder fickleness and the consumer's desire to purchase the newest and most innovative products before anyone else. This means that organizations must involve the supplier within the new product development process. The supplier, for instance, must be aware that a new product is being offered so they too can plan from their own suppliers, their own manufacturing or inventory models, and above all, the right specifications of the product when their customer needs it (Kruse, 2004).

This paradigm, of course, requires a great deal of communication, fore planning and trust. The supplier may have hundreds of clients, but the organization must count on their discretion in order to retain a competitive edge. They must also count on the supplier's ability to find source materials in a cost-effective way, and really become PART of the process, rather than simply an ancillary phone call (Petersen, et al., 2005). BMW, for instance, has a specific computer system application that not only helps manage supply chain issues, but brings real time data to suppliers throughout the product development process (Handfield, 2003). Bringing suppliers to the team, most research notes, can make design, manufacturing, benchmarking, and anticipated errors far less than simply providing them a worksheet and organizational model (Petersen, et al.).

Part 2 -- How can such partnerships lead to cost savings? Suppliers are businesses too, they must plan for inventory, peaks and valleys, staffing and are subject to delays from their sources as well. By involving the supplier in the product development process, the organization partners with the supplier to find the best possible product solution at the least possible cost. Not involving them until the last minute means no planning time, no ability to search through the universe of raw materials suppliers, no time to negotiate, and above all, a hurried atmosphere in which shipping is more expensive, inventory management problematic, and a lack of communication leading to a set of transactions that are reactive instead of proactive (Petersen). In addition, for an organization to be healthy, it is necessary to balance fixed and variable costs, particularly in the 21st century global economy when almost every aspect of the business happens more quickly. To balance fixed and variable costs, experts suggest that the infrastructure should be flexible and planned on reality rather than complete projection. Supply chain management will help provide a relationship with vendors so materials can be delivered quicker and when needed through just in time inventory (Gish, 2013).