Evolution of Buyer-Supplier Relationship from Past to Present - Coursework Example

Contents Introduction 2 Definition 2 Buyer Supplier Relationship in the past 3 Evolution of Buyer Supplier Relationship from past to present 3 Supplier Buyer Relationship 3 Supply Chain Management 5 Supply Chain Management Process 5 Logistics in Supply Chain Management in book industry 7 Supply Chain at Shell 9 Advantage of Supply Chain Management 10 Advancement in Supply Chain Management 10 Future of Customer Supplier Relationship 13 Conclusion 14 References 15 Appendix 17 Introduction Companies with intensifying competition are laying special stress on Customer Supplier Relationship, Supply Chain Management and Manufacturing. Organisations are looking forward to include it in the management thinking process and look towards improving their image in the society. Companies can expand its reach and developed their offerings be ensuring that they look after the society and environment and include this things in their planning process. This will help to ensure that customers are managed well and retaining them becomes easier. Customer Supplier Relationship will help the companies to develop their strategies for the future. It will ensure that business is able to build a pool of customer which will warrant regular sales and ensure that customer is able to get what they want. An example of Shell has been provided by concentrating on the different factors which helps to develop customer buyer relationship and also looking towards the supply chain management at Shell. With globalisation taking place the world has become a small place. Today, there is intense competition. People have lot of options. This is making companies to be more aggressive and at the same time see that customer are satisfied. One of the most important thing companies are working is on improving their logistics. This will ensure timely delivery. Since, there are a lot many options so having this in place is very important. Definition Customer Supplier Relationship is “a business strategy of engaging customer and developing a relationship with him which is based on trust and loyalty and ensuring that they buyer is able to get a steady supply of goods from the suppliers”. (Kale, 2009) This definition highlights and covers various aspect of customer supplier relationship. Loyalty here is “the inclination of the customer to purchase the same product over and over again as the attitude matches with his requirements”. (Kale, 2009) Buyer Supplier Relationship in the past Maintaining healthy relation with the customer is vital every time. Previously it was easy to “remember every customer by their face and name as the spread was small and with little technology customers preferred their local destinations”. (Kale, 2009) It was easy to remember all the customers’ needs and requirements. The business units on the basis of it were able to deliver it. With the changes in technology and advancement it has gone rapid changes and maintaining a healthy relation today is vital. It was easy to ensure that the requirements were met by the local suppliers but with integration of technology and advent in different areas more importance is being laid to developing relationship with the supplier. Evolution of Buyer Supplier Relationship from past to present A study shows that “business units have slowed down their response to customer feedback and queries by email as the percentage of companies responding within 24 hours has come down to 33% in 2008 as compared to 63% in 2002”. (David, 2008) This is making many businesses realize the potential of this technology and the importance customer buyer relationship has. This has also made sales go down and business loosing vital customers. This is making companies revert back to maintaining healthy relation with the customer so that they are able to tap the customers and develop a relationship with the suppliers. Companies to maintain this relation has done many changes. It was seen that “an IT company to improve customer relation ensured that customer who enters their building are guided by the guide to the place concerned and while doing so the guard ensures to walk with the customer there by creating a friendly environment”. (Kale, 2009) This is a step in building customer relation and ensuring that development of relation with the customer is on an upswing. Supplier Buyer Relationship Shell has been able to build strong relation with the supplier and customer because of the sound strategies followed by Shell. This has ensured that the relationship between the company and person associated with those improves. Shell to diversify their business has entered into alliance and is a strategy followed by Shell. Shell has “entered into a strategic alliance with Hyundai Motors to ensure that lubricant are available at the correct time which will enable both brands to improve their technological expertise and improve their business relations”. (Business Wire, 2010) This will also result in improving the research and development and will help to come with better products for the customers. Another alliance between Shell and Transfield Services, Australia also shows that Shell has followed a strategy of entering into alliance. The strategic alliance between the two ensured that “along with trust and flexibility the relationship improved which resulted in labor saving and innovation is services to improve the relation with customers”. (Burdon, Chelliah & Bhalla, 2009) Thus improving alliances has been a strategy which Shell has being following which has finally converted in improving customer satisfaction and loyalty. Entering into alliance has helped Shell to improve its relationship with the suppliers. Shell by enduring its policies towards suppliers has resulted in “broadening market competition, spur innovation and create new methods to solve problems and improve the overall relation with them”. (Burdon, Chelliah & Bhalla, 2009) This has benefited the organization as it has ensured that supplies are timely and time is not wasted and efficiency has improved. The overall resultant for Shell has been impeccable as it has helped them to develop a strong network. Improving relationship with both the customer and supplier has ensured that “hardware and energy cost reduces, improves reliability, availability and scalability, simplified management and also had an environmental impact resulting in improving the reputation of the organization”. (Morris, 2010) The alliances and strategies have resulted in application of just in time technology. This makes the good available from the suppliers when needed. At the same time timely deliveries are made to the customer. This has built an understanding among the two and has resulted in winning confidence of both. Shell has also worked on various with the logistics department. This has ensured that goods are delivered on time. Shell also ensures that even weather conditions are accounted for and strategy are framed after considering those. Shell relation has also improved as they have integrated information from all departments. They have ensured that everyone associated with the company works together. This has improved the focus. This has thereby transformed the way business is conducted. Supply Chain Management Supply Chain Management has gained valve. “Effective logistics help to manage the effectiveness of the supply chain and deliver the correct product at the right time”. (Krishna, 2007) Supply Chain Management in education sector is a distinct field and companies are working to improve it. For the education sector “both the buy side and supply side plays a crucial role”. (Krishna, 2007) The process of supply chain management followed by education sector for the books is vendor based. Here, “the books are delivered by the vendor to the universities after the demand for books have been placed i.e. books are delivered after receiving the customer order”. (Krishna, 2007) Here, “vendor inventory management works and books are delivered only after orders have been placed”. (Krishna, 2007) The process resembles as above. “Here the vendor after receiving the order process it and then ships the product so that the books reaches the university at the correct time so that there is utility and timely delivery of books”. (Nagporewalla, 2007) Supply Chain Management Process The supply chain management process covers the different areas of logistics to ensure that the goods are available on time. With boundaries between nations disappearing the importance of supply chain management is magnifying. The process of supply chain management looks as follows This can be even seen from the above diagram. We see here that customization due to individual wants of the customer has led to a more concentrated effort. We see that after the companies decide on the goods as per the customer requirements the orders are placed. Then they are processed and finally the companies receive their goods and pass it on to the customer thereby developing customer buyer relationship and ensuring that there is satisfaction at all levels. This has increased the utility function. Customers can now avail it anywhere. They have access to the internet and using the password they can purchase the products. This has also made timing very important as it is easier to deliver goods through this method as the delay in shipping is saved from. This also reduces the extra burden the company had to bear to deliver the product. Another research shows that “having delivery of goods directly to customers has also helped to control emissions and improve the energy consumption by using more sustainable delivery network system compared to the traditional ones”. (Kim, Ming, Allenby & Williams, 2008) This is due to the fact that newer and better methods of delivery and improvement of logistics is designed. A research shows that “e-commerce has affected the logistics business environment which is considered as a backbone of every business organisation”. (Delfmann, Albers & Martin, 2002) This is due to the fact that “e-commerce has so widely increased that the original providers of logistics i.e. companies are missing and this has led to new developments”. (Delfmann, Albers & Martin, 2002) Another research shows that “organisations supply chain measurement depends upon three factors and they need to devise strategies to remove the bottlenecks present in the system for more timely delivery and better utility function”. (Gray & Khalid, 2006) Logistics in Supply Chain Management in book industry Now, we try and have a look at how the logistics system works in the education sector. This will help us to realise the importance of logistics and also how it has evolved over time. It will help to identify the way technology has improved the education sector and helped to increase the utility for students by having more timely deliveries. When we have a look at how universities decide upon the books they are going to order the process flow chart resembles something as shown above. Here the course director has to discuss with other like the course co-ordinator on the type of books they need to order for their students. While deciding they make a report which is finally given to the course head. On the basis of the report they decide what they need to teach the students. Here they also ensure that the course is according to industry requirements. After this a final recommendation is made and a vendor is selected to whom the order has to be placed. (Rushton, Oxley & Baker, 2006) Now, when we look at a detailed picture from the supplier of books till the books are delivered it looks something as shown above. Here, we see that after the order has been placed. The vendor goes about managing the required book from the publisher. If he has the book in his stock then he ships those. Else, he makes a request order and after receiving the books from the publisher they are stored and shipped. “Transportation becomes a hurdle as many times they are delayed”. (Rushton, Oxley & Baker, 2006) “The other reason is that even getting the books from the publisher sometimes delays the entire process” (Rushton, Oxley & Baker, 2006) and this creates problems in the logistics as universities have to sometime wait for the books to arrive. Supply Chain at Shell Shell’s supply chain management has undergone tremendous change. Shell has moved from the traditional method which had inventory piling up to a more innovative supply chain management by implementation of SIMON. The implementation of SIMON and improving the supply chain management has made them improve the demand and supply function. Implementing a similar service like “IBM’s eServer iSeries implemented in data warehouse has improved Shell’s business as it responds to the changing market demand, manage data across various business units and integrate both the demand and supply function to improve efficiency” (Shell Canada, 2004) Shell has thereby also implemented Enterprise Resource Planning (ERP) which has “ensured coordination of all resources, production and information both from the customer and supplier view point in an organization”. (Wilmer, 2010) The ERP has been designed as per the requirements of the company. This helps to gather information and track the customer needs and manage the time required to deliver the products to them. ERP in Shell “is a data base which contains information about customer, helps to track their requirements and provides description of what have been send and the time it will take to deliver”. (Joseph, 2007) It appears as shown in the appendix. The usage of ERP solution has also allowed Shell to integrate their suppliers into it. This helps Shell to ensure that raw materials are delivered on time. The usage of ERP software has also resulted in improving vendor management. The improvement in supply chain due to integration of IT with the requirements of the business has resulted in “improving the supplier chain initiative to manage the stock that the supplier will keep at retail outlets”. (Lee & Cetinkaya, 2000) The use of vendor inventory management has thus ensured that “the procurement cost for materials is low which helps in easy forecasting and ordering process”. (Lee & Cetinkaya, 2000) This has improved performance for Shell by integrating software called SIMON which helps them to integrate the information of both the customer requirement and the supplier. The overall improvement resulted in “improving relation with the customer and regularly meeting with them ensured that their requirements were matched by the companies supply”. (Greenbaum, 1997) This has helped Shell to gather the entire requirement and compile them which has made it easy for Shell to develop the requirement sheet. Advantage of Supply Chain Management The improvement of supply chain has thereby given Shell the following advantage Reduce the inventory level thereby reducing the amount parked in working capital Timely and low cost of procurement as paper work has been reduced and ensured better management Ensured quicker and timely response thereby improving the overall efficiency of the management. Thus, improvement in the supply chain process has brought about a change in which Shell performed and had improved their functioning. This has resulted in divulging time in other important matters and ensuring efficient management. Advancement in Supply Chain Management Changes in technology and advancement due to globalization have seen changes in the method the work was carried out. This has led towards the development of supply chain management and brought about the manner in which business needs to be conducted. Today, with electronic media developing it has become easier. With electronic commerce gaining prominence and with high usage of internet it has become easy to deliver goods. Today, the usage of electronic media have increased manifold. An example of the changes in the supply chain management of books is as follows Here, we see that after the customer places the order with the vendor and after the books are determined then in this process instead of dispatching it used sea or road it is send through electronic media. This means that books are send through the computer. It’s in the form of an electronic book. The advantage is that it helps in quick transfer of book. It also saves the delay and cumbersome process of sending the book. At the same time it reduces cost. It also helps to increase the utility function. As the books are delivered via the electronic media and everyone has a password to access so students can access the books from anywhere. This has helped the students and made it more productive for students. At the same time since it can be used anywhere students have an advantage of timing also. They can read it anywhere they feel like and at any time. This has also reduced the process of delivering and the time lost in sending this books and the unnecessary delay caused. When we have a look at how the transportation logistics look will help us to better understand the problems faced . Sender Carrier Addressee Loading Unloading Here, we see the process of transport that takes place and how it affects the delivery. “Since many services and department are involved in the transport of books from the vendor to universities it delays the process”. (Janos, 2002) This is due to the fact that “agencies like clearing and forwarding, packaging, timely delivery depending on some external factors affect the delivery process”. (Janos, 2002) In the above diagram we see how cumbersome the process is. Every stage has to be passed through to deliver the books. With the involvement of different agencies the process gets more complicated which further delays the delivery of goods. This affects the utility function. As there is delay this affects the curriculum as students don’t have the advantage of studying and it affects him. The other problem which the logistics face for timely delivery is that “sharp rise in price of energy used in transport is also affecting the logistic sector”. (Economic commission for Europe, 2009) This is so because it is putting extra burden and since books are revised and published with a new edition every year its utility reduces if there are delays. The other problem faced is “shifting of mode of transport i.e. the books once shipped has then to be send by road thus adding extra pressure to shift from one container to the other adding extra cost and time and also resulting in mishandling”. (Economic Commission for Europe, 2009) Thus this affects the utility function if there is better transport system and timely delivery it helps to ensure that the books reaches the institute on time and it will help to impart knowledge. Since, books come with new edition every year so it’s utility depends on the timely arrival. If it is delayed then it affects the overall process. With advancement and newer technology this has become better. Students have options. They can decide on the course of action they would like to follow and this helps and makes studies fun. It also at the same time reduces pressure on universities as they don’t have to handle the books but instead pass it on to the students through electronic transfer which can be accessed by students from wherever they feel like. This has enabled to develop customer supplier relationship and taken it to a new platform were the different units work in tandem to ensure smooth transformation of goods from one place to the other. Future of Customer Supplier Relationship Customer supplier relationship management is going to gain prominence in coming years. With competition intensifying and companies looking for ways to capture and retain the customer this will hold prime importance. Companies will be lying stress on the fact that maintaining healthy relation with the customer and suppliers is stressed upon. Companies will also ensure that technology and strategies are crafted to ensure loyalty and delivering on the promises to ensure satisfaction for the customers. This will be based on the backdrop of a healthy relationship with the supplier thereby helping to improve the relationship with the customer and developing a policy of growth for the future. Conclusion Customer supplier relationship is thus on an upswing and with development in the supply chain model with different tools and instruments this is bound to grow. The example of Shell supply chain and the logistics model being followed in the book industry highlights the growing importance of developing relationship between the supplier and the buyer. The process of supply chain management has gained importance due to globalization as highlighted in the study. It is also evident that due to globalization companies are laying stress on developing tools and models which helps to deliver quality goods to the customer at the appropriate time. This has allowed companies to take extra leverage and develop their relationship both with the customer and the supplier. Companies today have realized the importance of buyer supplier relationship and with development in supply chain this is bound to grow. This will be beneficial for the society as it will ensure that they get the best products at the lowest price thereby helping business units to pursue it more aggressively. Thus the importance of buyer supplier relationship is bound to grow and the world will witness changes in this field which will improve the manner in which business is carried out. 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The ERP which is achieved through SIMON helps to find what has been sold and when will those goods be delivered. It looks as follows Read More