Creating and Managing Supplier Relationship






Creating and Managing Supplier Relationship

Question 1)

Several reasons can be attributed to the success of ISO 14000 registration in Japan and China, compared to United States. When the ISO 9000 was first introduced, Japan held high regards for its quality management and were slow in adoption. This hit them hard when other international companied required their suppliers to be registered under the standards (Pan, 2004). This had a set back in Japan who adopted the ISO 9000 at the last moment. When the ISO was introduced, Japan had already learnt their lesson, and was quick to adopt ISO 14000. China, on the other hand, has recognized the importance of such standards considering they are growing rapidly as a major exporter in the world, and many companies require suppliers to have these standards (Wilcox, 2007). United States in the other hand adopted the ISO 9000 at its early stages. However, many of the American companies do not have full trust of the ISO 14000 (Corbett, & Luca, 2002).

  1. Japan learnt form the ISO 9000 when they failed to adopt quickly
  2. Japan and China have been hit hard by environmental issues du to their population, and the standards encourage reduction of pollution.
  3. Japan and China have recognized the importance of having such standards for the company’s mage
  4. China’s government has set up organizations that look into the issue of these standards in order to encourage them

The following table shows several reasons why these countries adopted ISO 14000.

Reason for certification China Japan United States
Customer demand 3.11 3.19 3.26
Environment concern 4.06 4.10 3.86
Marketing 3.71 3.60 3.49
Community relation 3.53 3.69 3.42
Export reasons 2.27 2.21 2.48
Corporate image 4.15 4.25 3.88


Question 2)

            A good buyer-supplier relationship is crucial for the success of any company. Establishing a strong partnership can be of great importance to the company in terms of reducing lead-time, enhancing just-in-time production strategy and increasing efficiency of the company. There are crucial factors to consider in creating a good relationship with the suppliers (Chapter 3, 2004). The first factor is ensuring a long lasting cooperation with the supplier. If there are conditions required by the supplier such as a mode of payments, cooperating will be the first step towards a good relationship. Sharing of risks is very crucial in ensuring both sides are not left to carry a burden too heavy to bear that could lead to either side losing. Efficient communication is the other factor that must be present for the relationship to be strong. Without communication, there cannot be any relationship (Hsiao, 2010). It is through efficient communication that the buyer and supplier transact business. In any organization, communication is the key to establishing better relationships. Having a shared vision and objectives is another factor, where both parties should state their objectives in the relationship (Charantimath, 2003). Building trust in the relationship is another crucial factor determining the success of the relationship. With trust, people are wiling to transact business and take risks with each other, which allow the relationship to go on even after something goes wrong.

  1. Establishing a long lasting cooperation to avoid creating difficulties for the other party
  2. Sharing the risks involved within the transactions to avoid overburdening one party
  3. Ensuring there is efficient communication to keep both sides well up to date concerning current issues
  4. Having a shared vision and objectives upon which to build a relationship
  5. Building trust to ensure free willingness to transact business together
Success factor Importance
Cooperation Both parties require several standards, such as abiding to certain principles. Both parties should cooperate in ensuring all work in harmony
Sharing risks With every business, there are risks involved. They should be distributed equally to both parties to ensure a win-win situation
Communication This is the key to every business transaction. Communication should be free between the parities to ensure informed decisions and smooth flow of business


Shared vision and objectives Without a common vision and objective that both parties wish to achieve, it would be hard to establish a relationship if all will pursue their own
Trust Within any business, trust determines how far the other party is willing to enter into risk with the business. Without trust, it may be hard to establish a relationship.


Question 3)

            In ensuring a long lasting buyer supplier relationship, rewarding suppliers is particularly important. Upon agreeing on performance metrics under which both parties should perform as well as a performance measure, there is a need for recognizing the best supplier (Chapter 3, 2004). Through such awards, the supplier is motivated to keep improving services continuously. Such programs have an assessment criterion that suppliers must meet to win the award. The criterion in many cases is such as high quality, efficient an effective delivery and cost reductions. Such a criterion only calls for the supplier to keep improving their performance in respect to the criterion. This results in improved relationship between the buyer and supplier, since a shared objective is achieved (Wisner, Tan $ Leong, 2008). In general, this is a way of improving efficiency within the company through ensuring suppliers are playing their part well (Chapter 3, 2004). Lists of the reasons for supplier award programs are:

  1. To celebrate suppliers who perform well to improve the efficiency of the company
  2. To encourage the suppliers to adopt a continuous improvement strategy by following the award program criterion
  3. They act as a motivation and role model for other suppliers to improve their services
  4. To strengthen the relationship with the supplier

A criterion can be represented as shown in the following table for comparison of all suppliers.

Performance measure Rating for each performance measure Weight for each performance measure Final score = rate × weight
Quality 7 0.25 1.75
Delivery 8 0.25 2
Technology 9 0.25 2.25
Cost reduction 5 0.25 1.25
Operations efficiency 7 0.25 1.75
Environment concern 8 0.25 2
Response to issues 7 0.25 1.75





Chapter 3. (2004). Creating and Managing Supplier Relationships. New York, NY: Cengage Learning.

Charantimath. (2003). Total Quality Management. India: Pearson Education India.

Corbett, C.J. & Luca, A. (2002) Global Survey on ISO 9000 and 14000: Summary of Findings. The AndersonSchool at UCLA.

Hsiao, J.M. (2010). Buyer-Supplier Relationship. LAP Lambert Academic Publishing

Pan, J. N. (2004). Comparative Analysis on an International Survey of ISO 9000 and ISO 14000 Certif9ication. Department of Statistics, NationalChengKungUniversity, Tainan, Taiwan R.O.C.

Wilcox, K. (2007). ISO 14002: An Analysis. GraduateSchool of International Relations and Pacific Studies.

Wisner, J. D., Tan, K. $ Leong, G. K. (2008). Principles of Supply Chain Management: A Balanced Approach.New York, NY: Cengage Learning.

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