Creating reliable supply chains and sustainable supplier relationship management represent crucial aspects of ensuring a company’s competitive advantage. The major dimensions of supplier relations include strategic partnership with suppliers, level of sharing information, quality of shared information, as well as postponement (Li et al, 2006, p.108). Successful supply relationship management generates competitive advantage in a number of ways.
First of all, long-term mutually beneficial relations with suppliers may help a company lower the costs of manufacturing its products. In turn, such approach serves as a prerequisite for a company’s successful price differentiation or combined (quality and price) differentiation strategy (Jakoby, 2010, p.54). Moreover, mutually beneficial relations with suppliers help develop innovative products that consist of highly technological quality parts, ensuring their reliability and comfort for clients. That helps companies apply quality-based differentiation strategy and implement ambitious product development plans.
Secondly, established long-term supplier relationships guarantee timely supplies of goods that are crucial for retail sector. Timely supplies of quality products help a company develop professional reputation. In business context, professional reputation serves as an important intangible asset of a company.
Thirdly, established relations with well-known suppliers help build and improve customers’ trust to a company that retails goods, supplied by specific companies, and/or uses them to manufacture high-quality products. If a customer is aware about the high-quality reliable supply chain that a company is enjoying, he/she will necessarily prefer this company to others, whose supply chains are underdeveloped or seem to be unreliable.
References
Jacoby, D.(2010). The Economist guide to supply chain management. London: Profile Books
Li, S., Ragu-Nathan, B, Ragu-Nathan, S, Rao, S. The impact of supply chain management and organizational performance. Omega, 34(2), pp.107-124
