chapter  9
16 Pages

Supplier Alliances

In recent decades, the competitive arena of fi rms has become more dynamic. Markets have become fragmented, technological developments have undermined fi rms’ competitive advantage, and customer demands are continuously changing. This has pushed fi rms to compete not only using their own capabilities, but with their entire supply chain, which has caused a shift from transaction-based exchanges to supplier alliances. A supplier alliance is a collaborative arrangement between a buyer and a supplying fi rm, formed within a supply chain setting, in which one party (i.e. buyer) transforms the output of another party (i.e. supplier) into end products. These partnerships, also referred to as purchase, vertical or buyer-supplier alliances, are forged to achieve long-term results, including enhanced market offer to customers and reduced channel costs. However, interdependencies between buyers and suppliers increase in supplier alliances, creating coordination issues and the risk of opportunistic behaviour. Accordingly, managers are confronted with a unique challenge. By establishing a supplier alliance instead of conducting a transaction-based exchange, buyers and suppliers sacrifi ce independence in order to improve their competitive advantage. This requires from (purchase) managers that they need to become aware, learn, and adopt alliance management practices to establish win-win supplier alliances. The fi rst section discusses this supplier challenge and the following section elaborates on initiatives that managers can use to deal with it. In the third section, a supplier alliance is associated with the alliance development framework in order to develop guidelines for decision-making. The chapter concludes with a summary and a case illustration.