Supplier–customer relationships: A case study of power dynamics. Issue 4 (December 2015)

• Record Type: Journal Article
• Authors: Lacoste, Sylvie; Johnsen, Rhona E.
• Is Part Of: Journal of purchasing and supply management. Volume 21:Issue 4(2015:Dec.)
• Page Start: 229
• Page End: 240
• Publication Date: 2015-12
• Subjects: Power dynamic -- Countervailing power -- Performance process services; Industrial procurement -- Europe -- Management -- Periodicals; Purchasing -- Europe -- Periodicals; Purchasing -- Europe -- Management -- Periodicals; Materials management -- Europe -- Periodicals; Industrial procurement -- Management; Materials management; Purchasing; Purchasing -- Management; Europe; Periodicals; 658.7205
• DOI: 10.1016/j.pursup.2014.12.006
• Languages: English
• ISSNs: 1478-4092

Abstract

Abstract: Against the backdrop of earlier research on power in supplier–customer relationships, our study focuses on the power dynamics, which lead low-power suppliers to re-balance their power relationship with strategic customers. An in-depth qualitative study is used to examine the case of a network made of several dyads (FMCG strategic customers/corrugated packaging suppliers). Our findings are slightly counter-intuitive: a new stream of literature tends to show that supplier performance is relationship-driven. We find here that the supplier performance is process-driven: to reach the targeted level of performance and to move out from a low-power position, the suppliers develop a two-step process. First, suppliers shift their focus from a product centric approach to a customer business process one, supplying "Process Support Services". Second, suppliers initiate "Performance Process Services" to position themselves to outsource the customer's business processes, hence creating interdependency and a countervailing power with the strategic customer. Highlights: We study how low-power suppliers re-balance the power dynamic with strategic customers. Suppliers develop a two-step service process to create a countervailing power. The study highlights some counterintuitive findings on supplier performance driver.