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The buyer-supplier relationship at Booker, a food wholesaler, is expanding into a more service oriented position in response to consumer needs (Pendrous 2007:27). Booker is making a transition from linear supply chain models to incorporate a forward looking expansion based on customer service and choice (Pendrous 2007:27). This includes altering the supplier involvement into a stronger, more collaborative relationship that focuses on expansion and efficiency (Pendrous 2007:27). A large portion of the alterations within the supply chain focuses on market routes and better dialogue with suppliers (Pendrous 2007:27). Merchandising solutions that reduce lead times and reducing costs along the supply chain through improving stock management are also part of Booker's strategic planning. The new streamlined process does show a commitment to improving the state of the business, which can increase the ability of Booker to maintain strong supplier relationships.
The characteristics of the new supply chain strategy that impacts the buyer-supplier relationship between Booker and its suppliers lend towards an innovative, discovery based relationship. Primarily, Booker is expanding its delivered wholesale services with the goal of developing a customer centric supply chain. Thus, the supply chain logistic and procurement strategy will be largely based on customer validated needs and service quality. The supplier will deliver stock to Booker, and Booker will deliver final products to the customer, based on the needs of customers in catering and retail sectors. An interesting characteristic of Booker's new buyer-supplier relationship methods is that it is requesting more supplier involvement in reducing packaging and increasing customer satisfaction. As a characteristic of the relationship, this offers new responsibility for the suppliers, particularly as increased visibility and responsibility towards the final recipient of the end goods, which is a portion of the supply chain that rarely involves the actual suppliers (Leenders, Johnson, Flynn and Fearon 2006:495). Booker is focusing strongly on quality improvement programs for the end customer, which requires increased supplier participation. This places additional pressure on the supplier to maintain an imaginative, aggressive, and future-looking effort to the end customer (Leenders, Johnson, Flynn and Fearon 2006:495). Part of this new supply chain strategy will require suppliers to have business characteristics that allow the supplier to create and manage new resources while improving previous resources, or removing them all together (Leenders, Johnson, Flynn and Fearon 2006:495). The new characteristics of the buyer-supplier relationship may cause a gap between the new needs at Booker and the availability of suppliers to maintain the innovative relationship. This is because supply chains are not only a logistics procedure, but also hold some need for philosophical compatability (Leenders, Johnson, Flynn and Fearon 2006:495). Booker's philosophy is coming towards the supplier with almost too much strength, they seem to be prepared to make internal changes such as stock management, but also force these changes onto the suppliers.
The changes in Booker's stock management strategy mean that suppliers will have different requirements. The suppliers will want Booker to be strongly involved in the relationship to ensure that Booker's new supply chain strategy is not conflicting with the supplier's capabilities and philosophical supply chain strategy (Leenders, Johnson, Flynn and Fearon 2006:497). In this, it can be said that the supplier does want a strong and communicative relationship, but not to the detriment of its internal capabilities (Leenders, Johnson, Flynn and Fearon 2006:497). Suppliers will want Booker to focus on efficient replenishment by examining its internal requirements as much as its external needs. The supplier truly needs Booker to be engaged in procurement beyond the purchase and delivery logistics and towards physical merchandise solutions, particularly when Booker is building a new supply chain strategy that is customer, rather than supplier, centred (Leenders, Johnson, Flynn and Fearon 2006:497).
The expected benefits for the supplier are positive. First, Booker's focus on supplier collaboration will allow suppliers to have additional say in the end product, which may bolster consumer confidence in the supplier's manufactured items. The focus on cooperation between the supplier and Booker's is important to the supplier's expected benefits from this new supply chain strategy. It has the capability of reducing the unknown procurement strategy from Booker's end of supply chain management, which in turn will allow the suppliers to develop products according to need rather than inventory (Leenders, Johnson, Flynn and Fearon 2006:499). This also means that suppliers will have a voice in the end product's delivery, which can increase leverage towards the supplier. Those in Booker's that will deal directly with the supplier, when communication is open and collaborative, can help suppliers recognise both opportunities and problems. In turn this will create faster response to changing consumer markets, which traditionally means that the supplier will sell more to Booker's when they are able to respond quickly and fluidly to the needs. In short, Booker's new supply chain management strategy has the expected impact of increasing the supplier's bottom line, decreasing unknowns, and developing quicker routes of communication.
The relationship between Booker and the suppliers also has threats. If the personnel involved are not knowledgeable about Booker and the supplier needs, then continued improvement, which is one of the main reasons for the new supply strategy, will fail (Leenders, Johnson, Flynn and Fearon 2006:494). This is an internal threat, and possibly the largest. The ability of supplier and buyer agents to maintain open and honest communication built on a strong knowledge base is imperative to building the collaborative, customer centric supply chain Booker is looking for from the suppliers (Leenders, Johnson, Flynn and Fearon 2006:494). For the suppliers, additional threats can be seen. Booker has a history of cutting inventory and poor financial growth. These, combined with the seemingly forceful manner in which Booker is pressuring its suppliers, can create a gap in the relationship that can not be overcome, and the supplier may lose a significant sales portion (Leenders, Johnson, Flynn and Fearon 2006:494). The status of the supply's ability to respond to Booker's demanding position within the organisation can impact the ability of the both parties to maintain credibility and quality determinants across the supply chain. The concern is that Booker will not be able to encourages these determinants across the organisation, which would negatively impact the ability of the supplier to respond to the new and increased demands arising from Booker's innovations.
The food supply chain in Great Britain has a wider network and international context that impacts the development of the relationship between Booker's and suppliers. From the supplier perspective, the dramatic changes occuring at the government level in Great Britain mean that
manufacturers have been seeking insulation from future price volatility and lock in adequate supplies in Great Britain (Scott 2007:9). For example, Cargill, the country's largest grain trading agent, said it was increasingly required to build strategic links and handle risk management for buyers and suppliers, and predicted more contract-growing and forward buying methods (Scott 2007:9). The forward buying method is the focus of Booker's new strategy, which means that there is an increased risk for suppliers to meet needs of consumers.
A forward looking supplier with fluid ability to meet Booker's changing demands should proceed with further development in the buyer-supplier relationship. This can be completed by increasing personnel knowledge and communication with Booker's, especially when it concerns focusing on the end-product. This will create more supplier engagement, which allows suppliers to focus on delivering more quality service through the supply chain (Leenders, Johnson, Flynn and Fearon 2006:494). Part of this development can be implemented by creating a team of agents specifically for communicating with Booker, including understanding Booker's business needs in products and services that are broadening to respond to the customer base. However, implementing such a programme means that personnel must trust internal philosophy and strategy as well as that of Booker's (Leenders, Johnson, Flynn and Fearon 2006:495). Without communicative trust, neither side will be able to implement any strategy. Supplier implementation should include discussing end consumer needs with Booker to develop opportunities for building the customer base. The relationship should not be maintained as is for most suppliers because Booker is not maintaining status quo. In fact, Booker is asking for more supplier involvement in the procurement process, which may indicate that suppliers have not been historically involved, and therefore the suppliers should look at increasing engagement with Booker. The relationship should be terminated if the supplier feels that the buyer demands are extended beyond the suppliers means (Leenders, Johnson, Flynn and Fearon 2006:496). This must also be implemented via open and honest communication, which may prevent the need of the supplier to terminate the relationship. The best option is for the supplier to grow in kind with Bookers, which mutually ensures a strong and collaborative relationship of caring for each aspect of the business (Leenders, Johnson, Flynn and Fearon 2006:496).
The supplier has many options even though Booker is altering its supply chain philosophy. While growing with customer needs certainly improves Booker sales, there is the concern that the changes at Booker may occur too quickly and without proper supplier introduction to the altered methods. The appropriate response is to create and maintain the lines of communication. There shouldn't be a large need for suppliers to terminate the relationship as long as Booker's management is forward looking and respective of the suppliers capabilities and weaknesses. In conclusion, as long as both parties understand their abilities and disabilities within the organisation, and maintain strong communication, both supplier and buyer can develop opportunities while working on each other's weaknesses. This allows for a stronger competitive edge for both the supplier and the buyer because supply systems and supplier relationships will ultimately satisfy changing customer needs and meet upcoming changes at the national and international level.
Leenders, Michlel; Johnson, P. Fraser; Flynn, Anna; Fearon, Harold (2006) "Purchasing and Supply Management" 13th Edition. International Ed. London:The McGrawâˆ’Hill
Pendrous, Rick (2007) Supplier Help Needed To Drive 'delivered Wholesale' December 2007 Food Manufacture Vol. 82 Issue 12, p28-28
Scott, Sue. (2007) Guarding Against A Grain Drain. Food Manufacture, Oct2007, Vol. 82 Issue 10, P9-9, 1/2p