INTRODUCTION TO

SUPPLY CHAIN
MANAGEMENT

Dr. Pravin Kumar

DTU Delhi
 In the first half of the twentieth
century industry replaced agriculture, in
the second half of the twentieth century
–“service” has replaced “manufacturing”
-and right now, the knowledge industry is
beginning to replace the others.

−−George Kotzmetzk
 Lecture Outline
* Introduction
* What is Supply Chain Management?
* Why is Supply Chain Management
important?
* The origins of Supply Chain Management
* Important Elements of Supply Chain
Management:
- Purchasing
- Operations
- Distribution
- Integration
* Strategies for Supply Chain Management
What is a Supply Chain?
• A supply chain consists of the flow of products
and services Suppliers to the end customers
and in the case of reverse logistics from end
customers to the suppliers.

• Each entity of supply chain is connected by

agents, transportation and storage activities,
and

• Integrated through sharing of information,

planning, and processing activities.
 Flows in a Supply Chain

Information

Product
Supplier Customer
Funds
 Customers,
Field demand
Sources: centers
plants Regional Warehous
Warehous es: sinks
vendors es: stocking
ports stocking points
points

Supp
ly

Inventory
&
warehous
ing
Productio
n/ costs
Transportat
ion Transportat
ion
purchase costs Inventory costs
&
costs warehousing
 Typical Supply Chains

Production Distribution
Purchasing Receiving Storage Operations Storage
 Typical Supply Chain for
a Manufacturer

Supplier

Supplier }
Storage Mfg. Storage Dist. Retailer Customer

Supplier

Suppler
Internal Management Customer
Relationship
Relationship
Management
Management
Typical Supply Chain for
a Service
Supplier

Supplier
} Storage Service Customer
 What is Supply Chain
Management?
The design and management of seamless, value-
added process across organizational boundaries to
meet the real needs of the end customer
-- Institute for Supply Management
Managing supply and demand, sourcing raw
materials and parts, manufacturing and assembly,
warehousing and inventory tracking, order entry and
order management, distribution across all channels,
and delivery to the customer
-- The Supply Chain Council
 What Is the Goal of Supply
Chain Management?
 Supply chain management is concerned with the
efficient integration of suppliers, factories, warehouses
and stores so that merchandise is produced and
distributed:
– In the right quantities
– To the right locations
– At the right time
 In order to
– Minimize total system cost
– Satisfy customer service requirements
 Importance of Supply
Chain Management
Firms practicing Supply Chain Management:

1. Start with key suppliers

2. Move on to other suppliers, customers, and
shippers
3. Integrate second tier suppliers and customers
(second tier refers to the customer’s
customers and the supplier’s suppliers)
 Importance of Supply
Chain Mgt.
* Cost savings and better coordination of resources are
reasons to employ Supply Chain Management
-- Bullwhip Effect- the magnification of safety stocks
and costs based on separate forecasts and
uncoordinated planning and sharing of information
along the supply chain
* Reducing the bullwhip effect occurs through:
-- Process integration- Interdependent activities can
lead to improved quality, reduced cycle time, better
production methods, better forecasts, less safety
stock, etc.
 Important Elements of SCM
Purchasing- Supplier alliances, supplier management,
strategic sourcing

Operations- Demand management, MRP, ERP, JIT,

TQM

Distribution- Transportation management, customer

relationship management, network design,
service response logistics

Integration- Coordination/Integration activities, global

integration problems, performance
measurement
Important Elements of SCM
Purchasing

•Long term relationships

•Supplier management- improved performance
through-
-- Supplier evaluation (determining supplier
capabilities and performance)
-- Supplier certification (third party or internal
certification to assure product quality and service
compliance)
•Strategic partnerships- successful and trusting,
long-term relationships with top-performing
suppliers
 Important Elements of
Supply Chain Management
Operations
-- Demand management- match demand
to available capacity
-- Linking buyers & suppliers via MRP
and ERP systems
-- Use JIT to improve the “pull” of
materials to reduce inventory levels
-- Employ TQM to improve quality
compliance among buyers and suppliers
 Important Elements of
Supply Chain Management
Distribution:
-- Transportation management- tradeoff decisions
between cost & timing of delivery/customer
service via trucks, rail, water & air
-- Customer relationship management- strategies
to ensure deliveries, resolve complaints, improve
communications, & determine service
requirements
-- Network design- creating distribution networks
based on tradeoff decisions between cost &
sophistication of distribution system
 Important Elements of
Supply Chain Management
Integration
-- Supply Chain Integration- when supply chain
participants work for common goals. Requires intrafirm
functional integration. Based on efforts to change
attitudes & adversarial relationships
-- Global Supply Chains- advantages that accrue from
sourcing from larger global market e.g., lower cost &
higher quality suppliers. May involve operating
exposure, which is risk found in foreign settings
-- Supply Chain Performance Measurement- Crucial for
firms to know if procedures are working
 Strategies for SCM

All of the advanced strategies, techniques,

and approaches for Supply Chain
Management focus on:
Global Optimization
Managing Uncertainty
Tools and Strategies for
Optimization

• Decision Support Systems

• Inventory Control
• Network Design
• Design for Logistics
• Cross Docking
 Sequential Optimization
vs.
Global Optimization
Sequential Optimization

Procurement Manufacturing Distribution Demand

Planning Planning Planning Planning

Global Optimization

Supply Contracts/Collaboration/Information Systems and DSS

Procurement Manufacturing Distribution

Demand
Planning Planning Planning
Planning

Source: Duncan McFarlane

 Why is Global
Optimization Hard?

–The supply chain is complex

–Different facilities have conflicting objectives
–The supply chain is a dynamic system
–The power structure changes
–The system varies over time
 Uncertainty

• What is variation?
• What is randomness?
• What tools and approaches help us to
deal with these issues?
 Source of Uncertainties
Factors/Sources Description
Product characteristics Product life cycle, packaging, perishability, mix, or
specification
Process/manufacturing Machine breakdowns, labour problems, process reliability,
etc.
Control/chaos/response Uncertainty as a result of control systems in the supply chain,
uncertainty e.g. inappropriate assumptions in an MRP system
Decision complexity Uncertainty that arises because of multiple dimensions in
decision-making process, e.g. multiple goals, constraints,
long term plan, etc.
Organisation structure organisation culture
and human behaviour
IT/IS complexity The realisation of threats to IT use in the application level,
organisational level and inter-organisational level, e.g.
computer viruses, technical failure, unauthorised physical
access, misuse, etc.
End customer demand Irregular purchases or irregular orders from final recipient of
product or service
 Source of Uncertainties
Factor/Sources Description
Demand Amplification Amplification of Demand due to bullwhip effect
Supplier Supplier performance issues, such as quality problems, late
delivery, etc.
Parallel interaction Parallel interaction refers to the situation where there is
interaction between different channels of the supply chain in
the same tier.
Order forecast horizon/ The longer the horizon, the larger the forecast errors and
lead-time gap hence there is greater uncertainty in the demand forecasts

Chain configuration, Number of parties involved, facilities used or location, etc.

infrastructure and
facilities
Environment political, government policy, macroeconomic and social issues,
competitor behaviour
Disruption/natural earthquake, tsunamis, non-deterministic chaos, etc.
uncertainties
Can’t Forecasting Help?

 Forecasting is always wrong

 The longer the forecast horizon the worse the
forecast
 End item forecasts are even more wrong
 Why is Uncertainty Hard
to Deal With?
* Matching supply and demand is difficult.
* Forecasting doesn’t solve the problem.
* Inventory and back-order levels typically fluctuate
widely across the supply chain.
* Demand is not the only source of uncertainty:
– Lead times
– Yields
– Transportation times
– Natural Disasters
– Component Availability
 Supply Chain Variability
Manufacturer
Manufacturer Forecast
Forecast
of
of Sales
Sales
Volumes

Actual
Actual
Consumer
Consumer
Retailer
RetailerWarehouse
Warehouse Demand
Demand
Retailer
Retailer Orders
Orders to
toShop
Shop

Production
ProductionPlan
Plan

Time
Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998
 What Management
Gets...
Volumes

Consumer
Consumer
Demand
Demand

Production
ProductionPlan
Plan

Time
Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998
 What Management
Wants…
Volumes

Production
ProductionPlan
Plan
Consumer
Consumer
Demand
Demand

Time
Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998
 Dealing with Uncertainty
• Pull Systems
• Risk Pooling
• Centralization
• Postponement
• Strategic Alliances
• Collaborative Forecasting
 What’s New in Supply
Chains?

• Global competition
• Shorter product life cycle
• New, low-cost distribution channels
• More powerful well-informed customers
• Internet and E-Business strategies
Supply Chain Drivers and
Obstacles
 Drivers of Supply Chain
Performance
How to achieve
Efficiency Responsiveness

Supply chain structure

Logistical
Inventory Transportation Facilities
Drivers

Cross-
Information Sourcing Pricing Functional
Drivers
 1. Inventory

• Convenience: Cycle inventory

• Unstable demand: Seasonal inventory
• Randomness: Safety inventory
• Pipeline inventory
– Work in process or transit
 2. Transportation

• Air
• Truck
• Rail
• Ship
• Pipeline
• Electronic
 3. Facilities

• Production
– Flexible vs. Dedicated
– Flexibility costs
• Inventory-like operations: Receiving, Prepackaging, Storing,
Picking, Packaging, Sorting, Accumulating, Shipping
– Job Lot Storage: Need more space.
– Crossdocking: Wal-Mart
 4. Information
• Role in the supply chain
– The connection between the various stages in the
supply chain
– Crucial to daily operation of each stage in a
supply chain
• E.g., production scheduling, inventory levels
• Role in the competitive strategy
– Allows supply chain to become more efficient and
more responsive at the same time
– Information technology
– Customer orders automatically sent to the
factory.
 Characteristics of the Good
Information

Information Global Coordinated Supply Chain

Scope Decisions Success

Strategy Analytical $$$

Models
Information
• Accurate?
• Accessible?
• Up-to-date?
• In the Correct form?
 5. Sourcing
• Role in the supply chain
– Set of processes required to purchase goods and services in a supply
chain
– Supplier selection, single vs. multiple suppliers, contract negotiation
• Role in the competitive strategy
– Sourcing is crucial. It affects efficiency and responsiveness in a supply
chain
– In-house vs. outsource decisions- improving efficiency and
responsiveness
• Texas Instruments: More than half of the revenue spent for sourcing.
• Cisco sources: Low-end products (e.g. home routers) from China.
• Components of sourcing decisions
– In-house versus outsource decisions
– Supplier evaluation and selection
– Procurement process:
• Every department of a firm buy from suppliers independently, or all together.
 6. Pricing
• Role in the supply chain
– Pricing determines the amount to charge customers in a supply chain
– Pricing strategies can be used to match demand and supply
• Role in the competitive strategy
– Use pricing strategies to improve efficiency and responsiveness
– Low price and low product availability; vary prices by response times
• Amazon: Faster delivery is more expensive
• Components of pricing decisions
– Pricing and economies of scale
– Everyday low pricing versus high-low pricing
– Fixed price versus menu pricing, depending on the product and
services
• Packaging, delivery location, time, customer pick up
• Bundling products; products and services
 Major Obstacles

• Supply Chain is big in the terms of:

– Variety of products/services
– Spoiled customer
– Multiple owners (Procurement, Production, Inventory, Marketing)
/ multiple objectives
– Globalization

Local optimization and lack of global

fit
 Major Obstacles
• Dealing with Multiple Owners / Local Optimization
– Information Coordination
• Information sharing / Shyness / Legal and ethical
issues
– Contractual Coordination
• Mechanisms to align local objectives with global
ones
– Without coordination, misleading reliance on metrics:
• Average safety inventory, Average incoming
shipment size, Average purchase price of raw
materials, Revenue
 Major obstacles
• Instability and Randomness:
– Increasing product variety
– Shrinking product life cycles
– Customer fragmentation: Push for customization, segmentation
– Fragmentation of Supply Chain ownership: Globalization

Increasing implied
uncertainty
 Common problems
• Lack of relevant SCM metrics: How to measure responsiveness?
• How to measure efficiency, costs, worker performance, etc?
• Poor inventory status information
• Theft: Major problem for furniture retailers.
• Transaction errors: Retailers with inaccurate inventory records
for 65% of SKUs
• Information delays, dated information, incompatible info.
systems
• Misplaced inventory: 16% of items cannot be found at a major
retailer
• Spoilage: active ingredients in the products are losing their
properties
• Product quality and yield
• Lack of visibility in SCs
– Do you know the inventory your distribution centers hold?
– Do you know the inventory your fellow retailer holds?
 Common problems

• Poor delivery status information

• Not knowing the order status
• Poor IT design
• Unreliable, duplicate data
• Security problems: too much or too little
• Ignoring uncertainties
• Internal customer discrimination
• Giving lower priority to internal customers than external
customers
• Poor integration
• Elusive inventory costs
• Accounting systems do not capture opportunity costs
 Push/Pull View of Supply
Chains
Push/pull view: processes in a supply chain are divided into two
categories depending on whether they are executed in response to a
customer order (pull) or in anticipation of a customer order (push)
Procurement, Customer Order
Manufacturing and
Cycle
Replenishment cycles

PUSH PROCESSES PULL PROCESSES

Customer
Order Arrives
 Supply Chain Managers

The philosophy behind supply chain management

is that by visualizing the entire supply chain,
supply chain managers can maximize strengths
and efficiencies at each level of the process to
create a highly competitive, customer-driven
supply system that is able to respond immediately
to changes in supply and demand.
Supply Chain Management

Communicator
Communicator of of customer
customer demand
demand
from
from point
point of
of sale
sale to
to supplier
supplier

Physical
Physical flow
flow process
process that
that engineers
engineers the
the
movement
movement ofof goods
goods
 Benefits of Supply
Chain Management

Supply chain oriented companies

commonly report:
• Lower inventory, transportation,
warehousing, and packaging costs
• Greater supply chain flexibility
• Improved customer service
• Higher revenues
• Increased performance and profitability
Supply Chain Integration
Relationship Firm-to-Firm
Firm-to-Firm Social
Social
RelationshipIntegration
Integration
Interactions
Interactions
Measurement
MeasurementIntegration
Integration
Operational
OperationalPlanning
Planning
Technology and
andControl
Control
Technologyand
andPlanning
Planning
Integration
Integration
Material
Materialand
andService
Service
Supplier
SupplierIntegration
Integration
Internal
InternalOperations
Operations
Integration Customer
CustomerIntegration
Integration
Integration

Customer
CustomerIntegration
Integration
 Supply Chain Integration

The
The ability
ability of
of two
two or
or more
more
companies
companies to to develop
develop social
social
Relationship
Relationship connections
connections thatthat serve
serve to
to guide
guide
Integration
Integration their
their interactions
interactions when
when working
working
together.
together.

The performance assessment of

Measurement the supply chain as a whole that
Integration also holds each individual firm or
business unit accountable for
meeting its own goals
 Supply Chain Integration

The creation and maintenance of

Technology information technology systems
and planning that connect managers across
integration and through the firms in the
supply chain

Requires firms to link seamlessly

Material and to those outsiders that provide
service goods and services to them so
supplier that they can streamline
integration processes and provide quality
customer experiences.
Supply Chain Integration
Internal Links internally performed work
Operations into a seamless process that
Integration stretches across departmental
and/or functional boundaries,
with the goal of satisfying
customer requirements

A competency that enables firms to

Customer offer long-lasting, distinctive, value-
Integration added offerings to those customers
who represent the greatest value to
the firm or supply chain
Key Business Processes
1. Customer relationship management
2. Customer service management
3. Demand management
4. Order fulfillment
5. Manufacturing flow management
6. Supplier relationship management
7. Product development and
commercialization
8. Returns management
Customer Relationship
Management
Customer
Customer Allows companies to
Relationship
Relationship prioritize their marketing
Management
Management focus on different customer
(CRM)
(CRM)Process
Process groups according to each
group’s long-term value to
the company or supply chain
 Customer
Service Management
Customer
Customer
Service Presents a unified
Service response system to the
Management
Management
Process customer whenever
Process complaints, concerns,
questions, or comments
are voiced
 Demand Management

Seeks to align supply and demand

Demand
Demand throughout the supply chain by
Management
Management
Process anticipating customer requirements
Process
at each level and create demand-
related plans of action prior to
actual customer purchasing
behavior
 Order Fulfillment

A highly integrated process,

Order
Order often requiring persons from
Fulfillment
Fulfillment
Process multiple companies and multiple
Process
functions to come together and
coordinate to create customer
satisfaction at a given place and
time
 Manufacturing Flow
Management
Concerned with ensuring that firms in the
Manufacturing
Manufacturing supply chain have the needed resources
Flow
Flow to manufacture with flexibility and to
move products through a multi-stage
Management
Management production process
Process
Process
 Supplier Relationship
Management

Supplier Closely related to the

Supplier
Relationship
Relationship manufacturing flow
Management
Management management process and
Process
Process contains several
characteristics that parallel
the customer relationship
management process
Product Development and
Commercialization

Product Includes the group

Product
Development
Developmentand
and activities that facilitates
Commercialization
Commercialization the joint development and
Process
Process
marketing of new offerings
among a group of supply
chain partner firms
Returns Management

Enables firms to manage

Returns
Returns volumes of returned product
Management
Management
Process efficiently, while minimizing
Process
returns-related costs and
maximizing the value of the
returned assets to the firms in
the supply chain
 Logistics

Logistics is…
the process of strategically managing
the efficient flow and storage of raw
materials, in-process inventory, and
finished goods from point of origin to
point of consumption.
Logistical Components
of the Supply Chain

Sourcing
Sourcing&&Procurement
Procurement

System
Information System Production
ProductionScheduling
Scheduling
LogisticsInformation

Supply Order
OrderProcessing
Processing
Chain
Team Inventory
InventoryControl
Control
Logistics

Warehouse
Warehouse&& Materials
MaterialsHandling
Handling

Transportation
Transportation
Sourcing and Procurement

The
The Role
Role of
of Purchasing
Purchasing

 Plan purchasing strategies

 Develop specifications

 Select suppliers

© iStockphoto.com/Maria Toutoudaki
 Negotiate price and service levels

 Reduce costs
 Production Scheduling

Traditional Focus Customer Focus

Push / Pull
Push Pull
Strategy
Start of Inventory- Customer-Order
Production Based Based

Manufacturing Mass Production Mass Customization

Just-in-Time Manufacturing

JIT
JIT
A process that redefines and
simplifies manufacturing by
reducing inventory levels and
delivering raw materials at the
precise time they are needed on
the production line.
 Benefits of JIT

 For manufacturers: reduces raw

material inventories; immediate
shipping of products
 For suppliers: daily or hourly deliveries
rather than weekly
 For customers: lower costs; shorter
lead times; products tailored to
customer needs
 Order Processing
An Order Processing
System is…
a system whereby orders are
entered into the supply chain
and filled.

Order processing is becoming more automated

through the use of computer technology known
as ELECTRONIC DATA INTERCHANGE (EDI).
Inventory Control

Inventory A method of developing

Inventory
Control
Control and maintaining an
System
System adequate assortment of
materials or products to
meet a manufacturer’s or
a customer’s demand
 Inventory Control
Tools for managing inventory include:
 materials requirement planning (MRP) or
materials management – supplier to
manufacturer
 distribution resource planning (DRP) –
manufacturer to end user
 automatic replenishment programs – minimal
forecasting
 Warehousing and Materials
Handling
A Materials-Handling
System is…
a method of moving inventory into, within,
and out of the warehouse.

Most manufacturers today have moved to

AUTOMATED materials-handling systems to
minimize the amount of handling.
 Transportation

Airways

Water

Pipelines

Motor Carriers

Railroads
Transportation Mode Choice

 Cost
 Transit time
 Reliability
 Capability
 Accessibility
 Traceability
Criteria for Ranking
Modes of Transportation
Trends in Supply Chain
Management

Advanced
Advanced computer
computer technology
technology

Outsourcing
Outsourcing of
of logistics
logistics functions
functions

Electronic
Electronic distribution
distribution
 Advanced Computer
Technology

 Automatic identification systems

- Bar coding
- Radio frequency technology

 Communications technology

 Supply chain software systems

 Outsourcing Logistics
Functions

Outsourcing
Outsourcing Benefits
Benefits

 Reduce inventories

 Locate stock at fewer plants and distribution

centers

 Provide same or better levels of service

 Electronic Distribution

Electronic Distribution is…

a distribution technique that includes any
kind of product or service that can be
distributed electronically, whether over
traditional forms such as fiber-optic
cable or through satellite transmission
of electronic signals.
 Green Supply Chain
Management
• Requires integrating green thinking into all
phases of the supply chain
– Green materials sourcing
– Environmental impact of packaging,
shipment, use
– Incorporate end-of-life management
• Recycling
• Clean disposal
Global Logistics and Supply Chain
Management

Logistical challenges of global

markets:
• Understanding and coping with the
legalities of trade in other countries
• Uncertainty regarding shipping
Supplier Relationship
Management
 Managing Purchasing
and Supply Relationships
 Selection of a supply base
Stage Supply base
Innocence The organisation uses a large number of
suppliers and selects them in a random
fashion. There is clear scope for
improvement.
Awareness The organisation still uses a large number of
suppliers, but most spending is on just a few
of them.
Understandi The organisation has reduced the number of
ng its suppliers still further, and appreciates the
benefits of a good working relationship with
suppliers.
Competence There is a partnership with suppliers for key
procurement items. There is multi-sourcing
of other (non-key) items.
 Features of transactional
purchasing

Competitive bidding for contracts

Many competing suppliers
Typically standard products
Wide supply markets
No need for or benefit from a high degree
of trust
No supplier power
 Collaborative Relationships
• Benefits of doing business together arise from ideas
of sharing as well as exchanging
• Buying organisation seeks to develop a long-term
relationship with supplier
• Both organisations share common interests, both
benefit from adding value in the supply chain
• Supplier participates with buyer looking for
improvements and innovations
• Both parties jointly set targets for improvements in
cost and quality
• Meet regularly to discuss progress
• Proactive relationship looking for improvements
• NOT a long-term COSY customer-supplier relationship
Customer-supplier relationship
develops over time through

• Growing trust, length of relationship provides

reassurance
• Customer reducing the number of suppliers it deals with.
• Supplier assigning specific assets to the exclusive use of
working on orders for that customer.
 Collaborative relationships –
the benefits
Benefits of a collaborative relationship to the
supplier
• The buyer will appoint a vendor manager to develop
the relationship. The supplier will always know who
to deal with in the buyer organisation.
• The vendor manager will introduce the supplier to
the managers in the organisation responsible for
buying decisions.
• The supplier will be kept informed of the buyer’s
forward plans.
• The supplier will gain a much better understanding
of the buyer organisation and its needs.
• The buyer and supplier will set up joint quality-
improvement teams, that both parties will benefit
 Collaborative relationships –
the benefits
Benefits of a collaborative relationship to the
buyer
• The buyer focuses attention on improving the
relationship with key suppliers.
• The supplier’s awareness of the buyer’s
requirements will mean that the supplier is more
likely to be successful in meeting them.
• The supplier will be actively involved with the
buyer in the quality improvement process.
• The supplier should develop a high level of trust
and confidence in the buyer.
 Collaborative v Competitive
Relationships
• Competitive approach squeezes the profit
margins of the supplier, and by doing so the
buying organisation obtains some of the value
that the supplier would otherwise keep for himself
• Developing collaborative relationships takes time
and effort – unrealistic to try creating more of
these relationships than a buyer can effectively
manage
• Where a failure in supply would not be damaging,
it is not worth the time and effort to create a
collaborative relationship
 Why develop customer and
supplier relationships?
• Supply chains compete, not companies
•Most opportunities for reducing costs and
enhancing value in the supply chain occur at the
interface between supply chain partners
•Adding to the competitiveness of a supply chain
calls for a value-added exchange of information
between the supply chain partners
•The integration of the supply chain implies the
integration of process in the supply chain
•Achieving supply chain competitiveness requires a
collective determination of strategy by the supply
chain partners
Features of a true supply
partnership
• Joint mutual search for greater efficiency and
competitiveness
• Joint planning for the future by the customer and
the supplier
• Agreed and shared objectives
• Understanding that it takes a joint effort to
eliminate waste from the supply chain to achieve
competitive advantage
• Transparency and openness
• Seeks to meet and exceed each other’s
expectations
• Relationship is one of equal partners
 Relationship types and
characteristics
Relations Characteristics
hip type
Adversarial Buyer and supplier are ‘opponents’, each striving to
relationship obtain advantages at the other’s expense. There is
little trust, communication and cooperation, and
there may even be conflict.
Arm’s This is a distant relationship where the buyer does
length not need frequent access to the supplier. Purchases
relationship are infrequent and of low volume, and the trouble of
a closer relationship is not justified.
Transaction This is very similar to an arm’s length relationship,
al with perhaps a more frequent requirement on the
relationship part of the buyer, but still referring to low-value, low-
risk supplies.
Closer This refers to a situation where the trouble of a
tactical close, collaborative relationship is not quite justified,
relationship but where the buyer is concerned to ensure that he
is dealing with a very competent supplier, who
Thanks