M.Sc.in supply chain management (DT351) Purchasing Assignment

M.Sc.in supply chain management (DT351) Purchasing - Assignment Example Although, it was considered before that the supplier is happy to form relationship with the company and same was the case considered for the buyers i.e. buyers are looking to form relationships with the company and this is the reason why they are buying the product from the company. However research shows that this is not the situation in most of the cases. The needs and satisfaction of suppliers and customers do not match in different cases and either one of these parties loses their money in forming relationship. Therefore in order to discuss the relationship between the buyers and suppliers, a four quadrants purchasing portfolio from the perspective of buyers has been presented below: (Santema and Verheul, 2012) The above four quadrants represent four different situations of buyers. However the focus of this section of the report has been on the second quadrant which is ‘Routine’. Therefore, the routine quadrant has been discussed in detail in this part of the report. The other sections of the report discusses about the other three quadrants and the relation of buyers with the suppliers in the other three quadrants. Moreover, the report applies the above matrix on New Bridge Cutlery Company in the last part of this report. QUADRANT #2: ROUTINE The second quadrant is ‘Routine’ which includes products that are purchased on a regular or routine basis by the consumer. This quadrant means Process reduction which means that the cost of demand are not equal to the value given by the consumer, thus the value will be low as well as the complexity. Santema (2011) has said that in routine cases, the products and services are available in the market; therefore there are no high rewards in forming relationships with the suppliers for the buyers. Moreover, Santema (2011) added that in such cases, the buyers are looking for transactional exchange. Gelderman and Weele (2002) have stated that buyers in routine cases are looking for more efficient pr ocesses. It has been said that buyers do not put much effort in order to create the relationship in this quadrants. On the other hand, the suppliers have to go an extra mile in order to make sure that the customers are satisfied and they are able to receive the products or service they want to. Therefore there has been a drastic mismatch between the two stakeholders. Buyers are not likely to pay attention in routine products. As there are many suppliers available, thus this mismatches the demand and supply of these routine products and this reduces the risk and therefore consumers do not give high attention. In such a scenario, the buyers are the dominators (Gelderman and Weele, 2002). Identifying a preferred supplier and then working solely with that supplier could change the position. This could result in reducing the valuable purchasing management time. Portier et al (2011) have claimed that generally buyers do not form such relationships or do not prefer any supplier for routine products or services and buyers do not form supplier relationship. This relationship has been termed as the Key Supplier Management. The main reasons for such relationship not being formed are the barriers that restrict them. These barriers include inability to integrate the purchasing or procurement activities with the other activities, complexities involved in building relationships of supplier portfolio and implementing them, and limited knowledge about value co-creation between