Telespecialists Ltd Supplier Relationships

First, formal partnerships help in ensuring reducing and controlled cost of supplies (Schuh et al, p. For such a company some deals require time to complete and long term formal relationships will help in offsetting the supply costs. The costs involved in renegotiations, retendering or exits will be avoided when there is a properly established formal relationship. Formal partnerships and interactions will to fewer problems in managing the supplier relationship which will in turn lead to lower and controlled costs. Secondly, lack of formal partnerships with suppliers will result to reduced efficiency and poor communication. Too much reliance on one supplier may be costly when the supplier goes out of business or falls short of supply. Thus dual sourcing will ensure constant supply of key items for the business to remain in operation.

Secondly, when using a single supplier they have the upper hand in pricing the supplies. This offers the single supplier a chance to overprice the products. However, when there are two suppliers there will be a bit of competition thus a suitable control of the prices (Yang et al, p. An opposing relationship will tend to scare away the best suppliers. First, an adverse supplier relationship may scare away the leading suppliers. When the leading suppliers fail to tender, the company will only consider tenders form suppliers who tendered. This might lead to the purchase of inferior products by Telespecialists Ltd. Secondly, when the supplier is forced to supply at lower prices he or she will opt to supply cheaper and poor quality products.

Secondly, it promotes communication on how to make improvements in product and service delivery. Each party can report problems so that the two can work together to seek solutions. Suppliers get a voice in the supply chain which helps in building more trust. Next, lack of constant meetings hinders flexibility and efficiency. Meetings allow the company and supplier to meet and discuss the required adjustments in times of peaks or troughs (Cousins et al, p. When suppliers complain competitors will be on the watch and will seize the opportunity to get the word out. A bad reputation is not good for any company as it reduces the demand for products and services for the company which lowers the income levels. Thirdly, it might lead to loss of top and important suppliers.

When there is no consultation suppliers may opt to sell their products elsewhere. This will potentially result to the loss of crucial suppliers which will create problems for the business. First, it reduces the risk involved in case the supplier fails to oblige. When all the parties have agreed to the terms of a contract which is marked with signatures the chances that one party will fail to obey are unlikely. In case a supplier fails to deliver the products promised in the contract, legal action can be taken to make sure that they repay. Secondly, it provides more clarity on the purchase agreements. This is because it outlines what is required from the supplier and at what time. However, proper formal supplier partnerships can eliminate most of these costs.

The partnerships allow the company to establish mutually valuable relationships with the key suppliers which ensures quality in delivery, availability and lack of delays in supply. Such helps the company a lot financially through savings. Secondly, formal partnerships will provide a chance for improvements in operations through sharing of ideas. Formal partnerships enable sharing of important ideas on how to improve the profits made. Adversarial relationships will not bring much benefit to the company as compared to collaborative relationships. The benefits to be realised from a collaborative relationship and the use of market prices include the following. First, it will ensure that the company receives discounts from suppliers. Proper payment allows the company to take advantage of some discounts that are associated with appropriate payments and on time payments.

A lot of pressure on the supplier will deny the company the financial benefit of discounts. Just as the old proverb says, “you get what you pay for”, (Koufteros et al, p. Negotiations help in arriving at the best price for the company and the supplier as well. In the case of competitive pricing one will tend to buy the cheapest product and may end up buying the lowest quality. Negotiations ensure that the company gets the best bargain for high quality products which lead to quality manufacturing. Next, negotiations are useful when purchasing costly items and key items in manufacturing. Meetings inform the supplier of what is required in the future which allows them to plan accordingly. The continuity of supply helps in making sure that products are always available for manufacturing which speeds up the process.

This will impact positively on the company through increased sales and revenue. Thirdly, it saves time where the company gets to meet many potential suppliers at a go. This helps in saving the costs that would be incurred in organizing and holding a meeting with each supplier. When payments are made late it tends to push its own cash flow problems onto the suppliers which is not fair and it is also an abuse of trust. When there is consultation an environment is created where both parties can work together, be truthful to each other, share the risk and be honorable in each undertaking (Sarmah, Acharya and Goyal, p. This way everyone benefits from one another. Next, the change will help in building a good reputation and image for the company.

Good corporate image and reputation is very essential for any company. This will ensure that they get the products at lower prices. Savings will be made from this and the funds saved can be used for other growth purposes. Such contracts are made when the resources in the economy are expected to rise up in terms of cost in the future. Secondly, contracts helps in preventing financial losses in case the supplier fails to deliver as promised. The contract can be used by the company to sue the supplier who fails to deliver for a recovery of the funds and a compensation for any damages (Ghosh and John, p. Performance measurement in strategic buyer-supplier relationships: the mediating role of socialization mechanisms.