Inducing Competition between Supplier Partners: How Buyers are Reconfiguring Inter-Industry Trading

In their relations with suppliers, industrial customers combine cooperation and competition. Cooperation meets needs for reciprocal adjustment of production systems, technical know-how sharing, shared problem-solving dynamics, while competition helps control prices. Seven cases of intervention by the Buyer function in situations where suppliers are heavily collaborating with their customers were analyzed. Focus on the Buyer function allows for explaining how that function works to organize supplier interchangeability: the point is to reduce the singularity of internal needs and specify how they are formalized while acting on suppliers in such a way as to induce the set of them to offer comparable levels of service. This is how the buyer works to shift the balance of power in favor of the customer. Particular attention is paid to the conditions under which internal customers and suppliers come to accept this way of proceeding: how can the buyer escape discouraging suppliers from investing in the service relationship the internal customer depends on? Inducing competition between "supplier partners" is thus akin to constructing strategies and policies inside both customer company and supplier network. Adapted from the source document.