MNP370-3
SUPPLIER RELATIONSHIP MANAGEMENT
Good day students
I want to sincerely apologise for my absence on myUnisa this semester. We have been busy with arrangements
for an international conference which kept us quite busy. I also have personal problems with my health, but
none of these reasons should affect you as students and I therefore want to say that I am sorry. As per your
study guide, at point 4.2 on page viii, I am not allowed to provide you with any tips for the exam and also, at
point 4.6 on page ix, no memorandums to previous papers. I have however decided to guide you with focus
points for the upcoming exam and I hope that it will maybe make up for my absence in some small way.
For the long questions and case study, you should focus on the following study units: study unit 1, 3, 6 and 8.
Also make sure that you will be able to answer the self-evaluation questions at the end of these specific study
units.
The multiple choice questions will come from all the other study units.
I am also posting a few more questions on the case study about Nissan provided in the discussion forum. I will
include the suggested answers, in order for you to see the extent of which we expect the answers to be. We will
not be awarding any half marks in the exam. PLEASE make sure that you APPLY the information in the case
study to the theory that you have studied.
Discuss what establishes a buyer/supplier relationship? (6 marks)
A buyer/supplier relationship constitutes any interaction between a buying organisation and a supplier, which
can be positive or negative. The interaction takes place at different levels between the buying and supplying
organisations and it also differ in intensity and formality. A wide spectrum of relationships between buyers and
suppliers can exist based on the type of interaction between the buying organisation and the supplier. The
spectrum stretches from transactional relationships to alliance-type relationships.
Explain how a relationship between a buyer and supplier is formed. (10 marks)
Remember that you cannot just start listing actions, episodes, etc. The question asks you to explain HOW a
relationship is formed. If I only read "actions", I am going to ask you "what about actions?" Remember with all
questions, to read your answer to yourself again and then ask yourself - does this answer what is asked?
Now a suggested answer:
A relationship will be formed based on the type of interactions between a supplier and buying organisation.
These interactions may range from a single exchange to the portfolio of relationships of one particular
enterprise. It can also be explained that the interaction may only involve a onetime action or it may involve a
partner base. The interactions that form a relationship may be divided into 5 levels:
1. Actions: individual initiatives by the buying organisation, such as a telephone call or plant visit, that may
relate to products, information, money or social contacts.
2. Episodes: groups of interrelated actions, such as a negotiation encompassing a number of actions.
3. Sequences: larger and more extensive entities of interactions. This level may be defined in terms of a
contract, product, campaign or project. A sequence represents a time-framed commitment, which is defined by
the particular sequence.
4. Relationships: comprised all the sequences, which, in turn, comprise all related episodes and actions in one
particular relationship between two organisations.
5. Partner base: the relationship portfolio of a particular enterprise – that is all the relationships that a
particular enterprise has at a particular time.
1|P a g e
, What is the main objective of adversarial (or competitive) negotiations?
The objective of adversarial negotiation is to ensure that the best possible deal is reached for our negotiation
party at the expense of the other negotiating party, therefore aiming for win-lose results.
Discuss the three functions in a contract that will be necessary to complete the level of compliance
management. (6 marks)
To manage a supplier's level of compliance with the contract, the following three functions should be in place:
1. Monitoring - Suppliers should be constantly monitored against the minimum requirements and key
performance indicators set in the contract between the buyer and supplier. This comparison provides a
mechanism to judge the performance of the supplier fairly.
2. Measurement - By measuring the actual performance against the baseline, management will be able to
detect precise deviations from the desired performance, which provides a clear action plan for corrective
action.
3. Feedback - Identifying the difference between the supplier's actual and expected performance, whether
positive or negative, will enable the supplier management team to provide feedback to the supplier about their
performance - what implications it has and what remedial action should be taken, if any.
How does supplier relationship management differ from strategic sourcing? (2 marks)
Strategic sourcing can be regarded as a process whereby spending is analysed and categorised according to the
importance and cost of the purchases, and the complexity of the supplier base. The supply base is then
investigated to ensure that the correct relationship is formed with suppliers in the various categories of goods.
The strategic sourcing process is managed by cross-functional teams according to best practices in support of
strategic business objectives.
Supplier relationship management however shifts the focus to the maintenance of these buyer/supplier
relationships by the buying organisation in order to obtain superior performance from the suppliers for the
span of their association. This is achieved by establishing a supplier relationship management process in the
buying organisation with the aim of continuous improvement through the increased significance of effective
contract and performance management.
Explain the supplier perception model and use examples to clarify your answer. (12 marks)
The supplier perception model identifies how suppliers see a buying organisation by focussing on two aspects
(1) the value of the business offered by the buying organisation in terms of the supplier turnover levels and
(2) the level of attractiveness that the buying organisation’s business has for the supplier.
Each of the quadrants in the model implies a different view of the buying organisation on the part of suppliers.
The marginal quadrant indicates that a supplier views the buying organisation’s current business as
nonessential, and that a buyer/supplier relationship is not worth developing. This is as a result of the low value
of business offered to the supplier, added to a low level of attractiveness of the buying organisation. An
example would be a supplier of large volumes of coffee supplying coffee to a car dealership to offer prospective
clients.
The exploit quadrant indicates that a supplier views the buying organisation’s current business as worth
exploiting, because although the value of business offered is high, the level of attractiveness is still low. An
example would be a South African tour operator (supplier) offering tourist services to a tourist resort
destination in Thailand (buyer) – the value of the business will be high for the tour operator, but the
attractiveness of the business is low, because of the unstable political situation, therefore the tour operator will
tend to exploit the buyer/supplier relationship to maximise their own gain.
These two supplier views account for the least positive quadrants in the supplier perception matrix.
2|P a g e
