Question

Business is becoming more and more competitive, and organisations have realised that purchasing and Supply Chain Management (SCM) are key factors in satisfying customers. Buyers and supply chain managers can contribute significantly to the organisation's profits. An organisation can spend as much as 50% of its sales revenue on purchasing parts, services, components and raw material. Therefore, efficient, mutually beneficial and constructive relationships with suppliers are very important to the organisation's short-term financial position and long-term competitive power.

1. Differentiate between constructive and competitive negotiation. (10)
2. Discuss the guidelines for maintaining positive supplier and customer relationships. (10)

Answer 1

Ans1- A Constructive Negotiation- is targeting on mutual interest where all the parties can get a constructive solution. It can be a favourable situation for all the parties.  Analysis and manage the process to achieve the agreement effectively. An agreement should be long-lasting, strong and beneficial. It can full fill the needs of all the parties. In terms of buyers -suppliers relationship they should be agreed in one platform that will be a constructive negotiation.  

A Competitive negotiation- Negotiators set a target and eager to reach the desired agreement. It is a situation where "I win and you Lose". It is more focus on the outcome and achieves a short-term goal to establish their name in the market.

Ans2- In every company suppliers play the main role for your any important plan. A company grows on the basics of good customer relationships and good reliable suppliers. That makes the name of the company in the market. It also reflects the health and growth of the company. Building a relationship with your customers as you have a good supplier also. Here are the guidelines:-

1. Pay your bills on time. It developed a personal relationship if you are paying all your bills on time. It makes an impression and if you place a sudden order then also you will get the delivery because you are in his good list. You will become be considerate as loyal and paying customers. You will always get an extra benefit for that. You can get a cash discount also if a company pay their bills on time.

2. Provide a decent lead time. Give your supplier adequate time for placing the order. Until and unless if there is a competitive reason but inform him how much is the actual need and what are the important changes required in that estimate.

3 Interpersonal relationship with the suppliers. Ice brake parties can be organised that can make smooth communication between the buyers and the suppliers. Keep visiting his office and even invite them to your office too.

4. Share information, some of your strategic meetings. Share your honest projection about the need and the actual demand, new products, special promotions. Any significant changes you really need his services. Some times, good suppliers can help to find new customers.

Now how the supplier can impact the company:-

1. Quality is the essential thing that no one can compromise on it. Higher the quality higher the customer satisfaction level.

2. Competitiveness in the market. Pricing, quality, reliability, technological upgradations can make you "UP" in the market. Innovation new product development. They this information what is the new trend is going on in the market and can even help you give new ideas.

3. Finance, if the company's health and wealth are good then tap to your suppliers for additional finance. That finance can be a form of a new product purchase, investments in your company.