How Contract Management can Enhance Long Term Supplier Relationships, and in the Long Run May Contribute to Competitive Advantage for Organizations The WritePass Journal

How Contract Management can Enhance Long Term Supplier Relationships, and in the Long Run May Contribute to Competitive Advantage for Organizations Introduction How Contract Management can Enhance Long Term Supplier Relationships, and in the Long Run May Contribute to Competitive Advantage for Organizations , Van der Meer, 2008, Van Milligen, 2012). Another factor that is critical to the success of supplier relationships is sharing all resources in order to solve problems. 1.3Challenges in Supplier Management Although the literature has highlighted supplier relationship as a favorable act, however it is critical to the success of a business to keep in mind all the challenges they are faced with. A number of challenges that company can be faced with are as follows: 1.3.1 Overreliance on Suppliers In the last few decades companies have shifted more from in-house development to something called outsourcing (Steenbeek et al., 2012, Van der Meer, 2008, Van Milligen, 2012). This increased trend of outsourcing is based on capitalizing other supplier’s resources for making their end product (Steenbeek et al., 2012, Van der Meer, 2008, Van Milligen, 2012). In doing so, the risk that prevails is sheer reliance on vendors have lead to the problems of supply risks. However, most of the companies have no mechanisms of managing these supply risks. 1.3.2 Mismanagement of contracts Companies in order to outsource their tasks to another firm are not sure about what is required by the business. This leads to just signing the contract without any clarity on the roles executives have and responsibilities for both the supplier and the business. In such a chaotic situation, where roles are blurred, leads to a poor supplier relationship management and most of the efforts are duplicated. These duplicating efforts all lead to wastage of money and effort. 1.3.3 Supplier not to be Held Accountable for Performance One of the common problems is that most of the people from the business do not have any knowhow on what the role of supplier is and what is the responsibility of business. In situation where there is no clarity on the actions business can take when anything goes wrong, leaves the business is a challenging situation (Binder and Clegg, 2010, Foerstl et al., 2010, Le Nguyen Doan and Nguyen Phu, 2011). 1.3.4 Suppliers are not Partners Many of the firms while signing a contract with suppliers do not consider supplier as an outside and allow them access to everything. It is important to keep in mind that suppliers can never be strategic partners and the companies need to keep an eye on the cost baseline (Yung et al., 2009, Zhang and Jiang, 2011). 1.3.5 Confusing aims and objectives Many firms are unaware of what is required by the business to be rectified. This confusion aggravates when another party of suppliers get in involved. Literature stresses that suppliers give an objective view on the problem but many a times businesses themselves do not know what is required and hence for the suppliers to first understand the problem and then devising solution gets difficult (Oruezabala and Rico, 2012). 1.3.6 Too Many Vendors In most cases empirical evidence suggests that due to outsourcing too many activities of the business, the companies are not just over relying on the vendors but it’s also leading to a number of complacency issues. Critics have argued that because company has so many suppliers, it gets too tedious and challenging in order to deal with them on daily basis. Therefore, companies indulged in too many suppliers experienced that almost all employees were involved in dealing with suppliers, which resulted in wasted efforts and redundant work (Le Nguyen Doan and Nguyen Phu, 2011, Lu, 2010). 1.4 Rationale of Topic Extant literature available on this topic focuses more on single product development projects and therefore fails to answer the inter-organizational supplier relationships. This project will attempt to address all the relevant issues that hamper supplier relationship management and the key factors that facilitate long-term relationship of trust and risk sharing, from a perspective of inter-organizational supplier relationship. The rationale for choosing this topic that there is a gap in literature from inter-organizational perspective within the UK. 2 Methodology This research proposes to highlight the topic of contract management and examine the related issues and challenges that are associated to contract management. Additionally, the researcher will explore any benefits the stem as a result of supplier relationship and the role trust plays in allowing firms to gain competitive advantage against rivals. With a hope to examine the way relationship management leads to critical success of the company, the researcher has proposed to explore a UK based super market company. The rationale for choosing a supermarket is significant because the structure of super market is such that many intermediaries are involved and the chance of exploring risks, challenges and benefits of supplier relations, leading to competitive advantage is easier. The researcher proposes to maintain contact with the senior manager of the super market. This is important because senior manager has all information on the supplier relation. Another gatekeeper for this research will be at least one or two suppliers for the super market. 2.1 Research Aims and Objectives This research aims at: To explore the field of contract management from UK environment perspective To examine the way inter-organizational relationship among suppliers and businesses can be maintained. To add to the pool of literature on the topic of contract management 2.2 Research Questions Can supplier relation management lead to business success? What is the role of trust in supplier relationship management? What are the benefits of supplier relation management? What are the challenges that are erected by relying on external suppliers? 2.3 Research Techniques This research proposes the use of mixed methods approach (Creswell, 2006), as a method to explore any benefits and challenges that are involved in the supplier relation in contract management. Mixed methods have been used by many past social science researchers, in order to understand their problem at hand (John, 2008). Questionnaires will be used as instruments to gain knowledge on the topic of relationship management, additionally as part of the qualitative strand this research has proposes the use of in-depth interviews (Sharlene, 2010). In-depth interviews will be carried out in order to know the in-depth knowledge on the issues that the company faces with as a result of supplier relationship. In depth interviews will also allow the researcher to gain information on the benefits that the company and supplier are cherishing in the shape of long term trust. This technique of using mixed methods approach is that results will be triangulated by comparing results of questionnaires and that of interviews. 2.4 Target Audience The researcher will maintain a contact with the senior managers and actual suppliers of the super market company. This research proposes to distribute at least a total of 100 questionnaires. These questionnaires will be distributed among their suppliers of the super market. 50 questionnaires will be distributed among one supplier and another 50 among the second supplier of the super market company. Additionally, a total of 15 in-depth interviews will be carried out among the senior manager of the super market and the mangers of the suppliers. 5 interviews will be carried out with the senior manager of the super market itself and the other 10 from the senior managers of the suppliers (5 interviews with each supplier). The basis that the gatekeepers are chosen will be the random sampling technique. In case if the super market has many suppliers, any two suppliers will be chosen randomly. The identity of the super market company that the researcher has chosen cannot be revealed due to privacy issues. References ATUAHENE-GIMA, K. 1995. Involving Organisational Buyers in New Product Development. 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