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Case study
Buyer Supplier Relationships


SUBMITTED BY
Muhammad Hanif
Sarfaraz ul Hassan
Ghulam Nizam u din
Safdar Sohu


SUBMITTED TO
Mr. Usman Yousaf


DATE

13-04-2014


Quaid-i-Azam School of Management Sciences,
Quaid-i-Azam University, Islamabad



Q: 01 Characterise the Different Types of Buyer Supplier Relationships



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Various types of buyer supplier relationship can be enlisted after reading the case. To cope with
the current era demand of low cost, Firms try to minimize their costs by entering various modes
of contracts. Innovation and development has been the main focus of many firms. To ensure the
customer from the fear of leakage of information, firms are going beyond the limits. Like Acer
separated its own PC making industry from the other units that were involved in contract
manufacturing. Communication between the partners has been much improved.
Commitment
Trust and Quality
Customer Satisfaction
Innovation & Development
Information Exchange
Interdependence
Cost reduction


Q: 02 Differences
Toyota: Corporation
General Motors was not focusing the suppliers relationship initially. But with the change of
CEO, it started building good relationship with the suppliers. Many new were included in the
suppliers list. New benefits were to make them loyal. This act gave the firm a lot of price and
other benefits afterwards.
Microsoft maintained the monopoly by making it compulsory to purchase other softwares due to
their sole presence in the Operating system industry. It earned many benefits by violating the
antitrust laws and regulations.
Hon Kong container terminal was one of the busiest ports in the world. The traffic was very high
at the terminal. The port tried to capture the market by lowering their prices compared with the
nearby port. The policy was very much successful.
Hollywood industry was focusing on the contracts that were signed for individual projects. The
huge law fees were born to ensure the contract accuracy. The stars are signed for more than one
movie or show to ensure the low cost availability of the star in case the firm wants to continue
with the next episode or the sequel of the movie.
Prato wool industry was working to maintain its good communication with all the partners. The
communication was the key focus that can lead the industry to the top in the Europe. The quality,



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design and latest trends in the manufacturing were made possible by the effective
communication process.
Airbus was trying hard to compete with Boeing which was its main rival in the industry. For this
purpose, Airbus tried to set up long term relationship with the suppliers. Large number of
suppliers was contracted so that the mistake of a single partner would not affect the production
process.
Acer was suffering from the main issue of secrecy of information of its customers products. The
main share of Acer business was based on contract manufacturing. The customers were afraid of
leakage of product information. Such information could be used by any competitor or the Acer
itself as Acer was producing its own products in the PC industry.

Q: 03 Best Approach toward Buyer Supplier Relationship
Toyotas approach is the best in our point of view. Toyota has established an institution named
as Toyota Support Centre. This centre is working to make the suppliers learn the basic
ideology of Toyota Production System. The institute helps the suppliers to formulate the
strategies for implementation at their own plants. More than 100 supplier companies have
attended this institute.
Toyota made a supplier association in 1943 to build good relationship and to make the exchange
of information easier for business purposes. The same was done for the American suppliers
afterwards and it proved very successful.
Toyota follows Just in Time concept (JIT) for its production system. The implementation of JIT
was made possible by clustering the suppliers, within 35 miles, around Toyota technical centre
and the headquarters in Toyota city. Internal parts suppliers are within the 10 miles distance from
the headquarters. Affiliated firms and the independent firms are located within 30 miles and 87
miles respectively. Such location makes the timely delivery possible when and as required.
Toyota selected those suppliers who were committed towards reducing the cost, providing the
best quality and who were trying to build a trustworthy relationship. Toyota performs the design
function itself. The supplier is given this responsibility only when he has won the trust of
management at Toyota. Even then the information related with the core parts like engines are not
shared with him.






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Q: 04 Future of Buyer Supplier Relationship
Supplier-buyer relationship has been evolved much with passage of time and the improvements
in the technology. Online resources are being used extensively. Supply chain management has
been given much more importance than the old times. Outsourcing in various industries has been
increased to a greater extent. Firms are trying to maintain lower levels of inventory in order to
cater with the pressure to increase the profits. Firms are supposed to decrease the number of
suppliers and retain only those who can work as good partners. The low cost advantages of
online auctions have been realized and are practiced extensively. The inclusion of the Chinese
and the Indian firms have changed the face of global suppliers competition due to their low
costs. The outsourcing of suppliers has created stress for old and established firms to maintain
their profits at a good level. As the technology is improving gradually, this would give birth to
new dimensions in the buyer supplier relationships.