Table of Contents

Sr. #

Title

Role of buyer-supplier integration

02

Factors driving organizations towards buyer-supplier integration

03

External factors

03

Internal factors

05

Advantages

05

Disadvantages

06

Barriers in buyer-supplier integration for small organizations

06

Acheiving Competitive advantage

07

Refrences

08

Page #

1. Role of buyer supplier integration

Buyer suplier integration plays a vital role in new product development. As Supplier is the key to
get start from. So ther e should be complete sharing of information about the product and
operation going in the firm and for this exchange of information there should be complete
integration at each level. Buyer should know where the supplier is with his assigned tasks and
supplier would know the same. So that they can develop the new product with in the time and
with required feauters. Buyer would tell the supplier what features he wants in new product and
supplier would respond accordingly and if there is any ambiguity in product or complexity in the
design supplier can guide buyer so that they can get rid of that before it would evolve after the
actuall manufacturing of the product. Secondly that integration is helpful if product have to be
launched in a tight schedual because proper integration wont let any delay happen in supply
chain and if there is any delay it can be anticipated before and can be handeled early on. Also
there is a smooth flow of operation at both ends which helps timey completion of new product. If
we move a bit forward after the manufacturing of the product its marketing and promotion gets
easier with supplier-buyer integration because buyer now knows what exactly his product is and
what he demanded for so that he can plan accordingly for marketing etc. Buyer-supplier also
helps in after sales services. If there is a manufacturing fault in the product buyer could easily
ask supplier to tackle that before he could make new products with the same supplies. That
integration also indicates where the problem is in a defected product. And all the production can
be stopped to analyse the deffected area of the supply chain either its miss comuunication or miss
intrepetation of data or supplies. This integration is helpful in JIT (just in time) total quality
management and theory of contsraints (TOC). Which ultimately results in reduced costs and
effective out comes. Buyer supplier also provides competitive advantage in the market. A batter
relationship between buyer and supplier comes out in improved, innovative, unique and up-todate product. Which ultimately is batter then competitors. At the end i would add up that buyer
supplier integration results in batter allocation of the resources at both ends, because neither time
nor the money is wasted just because of buyer supplier integration.

1. Factors driving buyer-supplier integration.

Here are the few factors which drive an organization towards buyer supplier integration.

External factors
Agility of supply chain.
As we know a supply or demand can be fluctuating, so our supply chain should be responsive
enough to tackle that fluctuation this responsiveness of supply chain can be termed as agility of
supply chain. It says supply chain system should be quick and flexible. For instance if demand of
a product increases suddenly then our supply chain system should be quick enough to provide us
that quantity. The faster the information and decisions move through supply chain the the faster it
can respond to those fluctuations. Procurement should be able to respond faster to the demand
and make product availble for end customers. Manufacturing company/unit of that product
should be so flexible that it can make more products then its routine production rate to meet the
change in demand. Similarly distributors and retailers should be quick and adjustable with the
change in supply and demand of some products.

Streamlined Processes
Streamlined processes means process with less flaws/erorrs and delays. It can be done by
elminating some bureaucratic restrictions which can cause seperation of supply and demand
information, actions or even processes which ultimately dont add value to the end customer.
These hurdles may be lengthy processes of order approvals, financial decisions, inventory
management delays etc. Streamlining means responding quick and leaving unncessary steps un
attended. In a supply chain it can be done by bringing supplier closer to the buyer, decresaing
storage levels and reduding redundancies.

Visibility of Information
As name suggests it is all about the clearity and transperencey of information/data in a supply
chain up or down from end to end level. Different partners in a supply chain can see where
products are or where is the progress in making/delivering that product to the end user and what

is the market trend for that particular product. This visibilty can be done by using technology to
collect, analyze and share data between all partners involved and to established a method that can
support planning and processes meanwhile it is clear that it may cause some ocst making all
information visibile. But this increase in cost help all partners to take some quick and rational
decsions to cut cost on their end.

Trust and Collaboration

It is obvious that there should be trust among all partners including in supply chain. This trust
should be internal or external i.e. inside a particular firm and out side it with the
firms/companies/organizations it is dealing with at any level. This trust can generate a good
collaborating environment which further improves effectiveness and effeiciency of business.
This trust and collaboration can be achived by regular communication betwen all partners,
meetings with partners at every level, proper documentation and reporting.

Alignment of Objectives
Alingment of objects is all about having aligned objectives and goals across organization
internally and externally so that consistancy and a flow is maintained in supply chain integration
process. If objectives are not aligned then cost may be increased because of excess and unwanted
inventory, poor raw material, delays at different partners ends, inaccurate forcast, poor customer
services etc. To make all objectives of different stakeholders aligned thier beifits and incentives
should be acknowledged and delivered when time is there. Then all partners will be motivated to
complete their tasks which will ultimately get that process in a consistant cycle.
Some other factors may include

Competitive advantage.
Long lasting relationship between both firms.
Technological uncertainities.
Linked Information Systems
Clock speed differences

Internal Factors:

Goal Difficulty
It refers to the agressiveness of goal. That how much aggresive a firm is to achieve its goals,
obviously difficult and complicated goals can be achieved untill and unless buyer and supplier
are not working with proper collaboration.

Past experience:
Working with the same supplier at buyers side or working with same buyer by a supplier helps
both to go for buyer supplier integration for another new product development because both
know each other very well and can communicate in more effective way then with some totally
new buyer or supplier.

Capability of both firms (buyer/suppliers)

Cost reduction
Accurate decision making.
R&D dependecy
Company size
Product complexity
Excahngeof information

2. Advantages and disadvantages of buyer-supplier integreation.

Advantages

Reduced cost
High quality products
Access to critical suppliers technologies.
Increased product reliability
Batter design solutions
Future buyer-supplier relationship
Lead time reduction.
Quick availibity and delivery of product.
Batter alternative product/supplies/ideas can be discussed with possible outcomes.
Batter performance.
Inter-organizational trust
Inter personal trust
Flexibility

Disadvantages

Access to deligate information by both ends

Need of new IT system development.
Contracting formalities and documentations are neccessary.
Less control over processes by both parties.
Have to bear other partys unethical practices as well within that organization.

3. Barriers of buyer-suppplier integration for small organizations

There are few barriers to the buyer-supplier integration those barriers include

Legal issues : there are some legal issues for export and import of products so it would
be hard for a small organization to have choose buyer/supplier from abroad which

obviosuly wont be integrated.

Lack of trust on small organizations. Organizations dun trust easily on small
organizations when it comes to payment issues. Because it is not sure that, those small
organizations would be able to pay on time or not because buyer-supplier integration dont
depent on sales of a product. They have to recieve the amunt they have decided on a time

which both agreed upon in contract.

Confidentiality: large organizations

confidentiality so they do not want to risk it because of working small organizations.

Resistance to change: there is reletuncy and resistance in accepting change so quick in

are pretty much concerned about their

small organization. Either whole organization is not able to accept changes or modify
some of its policies. Either it can not meet with the flexibility required in supply chain

integration. Etc.
Agility of buyer-supplier integration is hard to achieve for a small company
Hard to establish a vision of how financial and non-financial results will improve with
buyer-supplier integration

4. Achieving competitive advantage

By supplier-buyer integration a firm can have several competitive advantages like batter supplier
collaboration, batter buyer-supplier relationships, long term buyer supplier relation which could
be helpfupl in futre product developments, saving of time in selecting new supplier, long term
relation provides relaxation in payment and offer discounts as well.

With buyer-supplier integration a firm is well aware of the technologies been used by supplier,
and it can allocate its resources batter which reduces the development costs. Integration also
helps in reduction of manufacturing costs. Suppliers can use their refrences in the for its buyer to
provide benifits like marketing and transportation discounts.

Refrences:

Principles of Supply Chain Management: A Balanced Approach By Joel Wisner, Keah-

Choon Tan, G
Gadde, L.E. and Snehota, I., 2000. Making the most of supplier relationships.

Industrial Marketing Managemen

Laseter, T., 1998. Balanced sourcing: cooperation and competition in supplier

relationships. Jossey-Bass Publishers, San Francisco.

Supplier Relationships Lecture 7 by Briony Boydell Managing Business Relationships

(http://www.iuc-edu.eu/group/sem1_L2/2012%20MBR/9061%20Lecture%207.pdf)
Purchasing and Supply Management (Supply Management Integration for Competitive

Advantage chapter 4) by Monczka Handfield Giunipero Patterson