How to cope with contradictory goals of buying cheap and building trust?

Current purchasing professionals face contradictory goals. While the ordinary administrative and transaction management goals of purchasing highlighting price, quality, and effectiveness remain valid, purchasers face additional goals of relationship management to build long-term close relationships with suppliers. Purchasers’ boundary-spanning roles are thus multifaceted in that they are responsible for establishing and maintaining supplier relationships, while they also need to respond to the needs of multiple parties within their organization.

Customer – supplier relationships are not faceless organization-level entities but inherently interpersonal arenas of interaction, making the role and action of individual purchasers and other supply management professionals important for network management. Networks and inter-organizational relationships differ from organizations in two ways. First, they do not have an owner and second, they cannot be managed on the basis of hierarchical position held by managers. In other words, purchasers do not have any formal authority over suppliers in the network. That is why they must use other means to influence network members.

Purchasers can use three different tactics when trying to influence suppliers.  They can take an authoritarian position which manifests itself in their communication as in utterances highlighting for example own firms position as a customer or own firms better knowhow on how things should be done. They can also take the role of buyer highlighting the threat of competition and in that way refer to competition or market situation in order to strengthen the influence of own message. Suppliers, for example, blame customers for using the ‘China card’ in negotiations or other interaction episodes, by which they refer to the customers’ urge to highlight the ‘another alternative’ from a low cost country. Business partners can also be influenced by using the relational tone in interaction. Relational interaction is based on trust, commitment and unity between the parties and the win/win principle is often highlighted as the basis for partnerships. The above authoritarian, competitive and relational tactics available for purchasers reflect general organizational ideologies of relationship governance.

To influence suppliers, purchasers can thus use rhetorical means when communicating with them. Rhetoric concerns the persuasion-oriented part of discourse and it is to bring about attitudinal or behavioral change. Referring to Aristotelian rhetoric, broadly defined as the art of persuasion, a task oriented goal in a conversation between a buyer and a seller can be boosted by emotional or other utterances in the discussion. A purchaser’s persuasion tactics rely on psychological influence to convince or compel a partner firm’s representative to assent to her position and act accordingly. For its persuasion-oriented part, boundary spanning behavior can be colored by the above mentioned organizational ideologies. Consider the following three examples of communication where a purchaser discusses supplier’s quality problems.

  1. “You have recently had serious quality problems in your deliveries. This low level of quality is hard to tolerate because there are plenty of qualified suppliers in the market and we seriously consider opening negotiations with one of those.”
  2. “You have recently had serious quality problems in your deliveries. As a customer we cannot tolerate this low level of performance from any supplier and expect you to tackle this issue as soon as possible.”
  3. “You have recently had serious quality problems in your deliveries. Would it be possible to look at the problem together with our specialists?”

The task oriented issue in each of the examples deals with supplier’s quality problems, but the rhetoric by which the message is expressed varies. In the first example (a), the speaker uses competitive tone, in the second example (b) hierarchic tone and in the last one (c) relational tone. Boundary spanning behavior thus refers to a particular type of rhetoric, which indicates how an issue is communicated.

In a recent study, we developed a tool to measure purchasers’ communication style when interacting with suppliers. The aim was to measure the tendency (or orientation) of individual purchaser’s communication. A data consisting of 349 purchasing professionals were analyzed and we found four different types of purchasers in terms of their orientation to persuade suppliers: Comprehensive, authoritarian / competitive, relational and neutral. The purchasers having a comprehensive orientation tend to use each means of persuasion (authoritarian, competitive and relational). Their colleagues with authoritarian / competitive orientation mainly used quite harsh rhetoric by taking an authoritarian role as a professional buyer. Purchasers with a relational style mostly refrained from using competitive and authoritarian rhetoric and position, but strongly highlighted trust, fairness, unity and the importance of long business relationships. Purchasers with a neutral style did not color their messages with rhetorical means, but concentrated on issues as such. To conclude, certain purchasing professional can combine seemingly contradictory rhetorical ways to influence suppliers. A subsequent follow-up study of five typical respondents of each category also revealed that where the purchasers with a comprehensive orientation were sensitive on varying situations the other purchasers were more or less stuck in their basic style. Especially the purchasers with an authoritarian / competitive orientation tended to be very inflexible with their communicative style.

What is then, the best possible style for a purchaser from the customer firm’s perspective? As said, supply chain management is a special managerial task in that managerial power is not at the purchasing agents’ disposal owing to a lack of direct authoritarian power. For that reason, other means to influence supply chain members become important to coordinate, develop, and manage relationships. From that point of view, a neutral purchaser orientation is probably not a style firms expect their purchasers to adopt. A relational purchaser orientation sounds good from the point of view of social acceptability. It is also currently connected to professional supply chain management as a boundary-spanning activity to build trust and long-term relationships. However, knowing the realm of practice with changing and critical situations requiring resolute managerial actions, a purely relational approach might be somewhat idealistic. The authoritarian / competitive orientation of purchasers as opposed to relational style, is something that do not fit very well to the era of networked business even if it may produce short-term wins. So, what is left is the comprehensive style with purchaser-specific sensitivity to varying situations and the capability to use a rich arsenal of persuasive tactics. This orientation and purchaser competence may offer a firm the best possible alternative to cope with partly contradictory supply chain management goals.

If supplier relationships are an important part of a firm’s supply chain strategy, then managerial consideration directed to boundary spanning behavior and issues alike becomes relevant. Boundary spanning behavior with various persuasion tactics offers important means to influence on suppliers. The point is deliberate definition of firm’s boundary spanning behavior tactics in a general level and particularly in different supplier categories where the effect of different persuasion tactics may vary. It may also be useful to fine-tune persuasion tactics even at relationship level, because firm’s and boundary spanning individuals differ from each other in so many ways.

 

Read more about network management:

Vesalainen, Valkokari & Hellström (eds.) (2017). Practices for network management. In search of collaborative advantage. Palgrave – MacMillan.

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