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1、The evolution of buyer-supplier relationships: an historical industry approach ByJared M. HansenArea of MarketingBelk College of BusinessUniversity of North Carolina at Charlotte9201 University City BlvdCharlotte, NC 28223Phone: (704) 687-7303Fax: (704) 687-6463Email: jared.hansenuncc.eduPrepared fo
2、r the Special Issue of The Journal of Business & Industrial MarketingAdam Lindgreen, Guest EditorBalzs Rvsz, Guest EditorSubmitted November 20, 2006Revision Submitted August 17, 2007Accepted November 20, 2007Projected Special Issue Publication: Spring 2009The evolution of buyer-supplier relationship
3、s: an historical industry approachAbstractPurpose To evaluate the evolution of buyer-supplier relationships from adversarial toward relational, or service-centered, emphasis for large-scale organizations.Design/methodology/approach Uses the historical method to review historical changes through synt
4、hesized qualitative (i.e., field notes and industry interviews) and quantitative (i.e., company reports, Compustat queries, trade reports, and survey) research.Findings Technology and information sharing in B2B relationships engender integrated value chains. Within these value chains, service-center
5、ed view of B2C relationships have been adopted in B2B relationships, resulting in changes in supplier roles and how they are measured. Research Limitations/implications By focusing on large scale buyer-supplier relationships within supply chains (e.g., Wal-Mart, Royal Phillips, ElecSound, China Minm
6、etals, The Peoples Republic of China), which may affect the generalizability to small-business applications, this article provides some guidance on which customer levels (in a value chain) an organization should focus on. The evolution of buyer-supplier relationships towards more cooperative relatio
7、nships results in changing roles such as co-managed inventory, where suppliers are authorized to write themselves orders. Practical implications A very useful source of information for practitioners and educators about recent trends in large scale buyer-supplier relationships, including slotting all
8、owances, co-managed inventory practices, and selling teams. It also provides a buyer-seller trust matrix that can be used for teaching or developing relational strategy in organizations and classrooms.Originality/Value This paper provides description of changes in sales force roles and measures, inc
9、luding the roles of responsiveness, empowerment, trust (both supplier and supplier representative), and information sharing not here-to-for found in the literature. Survey research establishes the external validity of the qualitative research. Keywords buyer-supplier relationships, service-centered
10、philosophy, integrated value chain, trust, co-creation, empowerment, purchasing, service-dominant logic, Wal-MartPaper typeResearchIntroductionThe call for research on the shift from adversarial, transactional relationships towards cooperative, service-centered relationships in purchasing orientatio
11、n (Lindgreen and Rvsz, 2006) is an important and timely outgrowth of the last three decades of business and industrial marketing literature. In the inaugural issue of the Journal of Business & Industrial Marketing (hereafter, JB&IM), Roberts (1986, p. 69) states “Most progressive companies today vie
12、w their customers, vendors, and suppliers as partners in the quality-price-service chain of events.” To adopt such a view usually requires, as stated by Kyj and Kyj (1987, p. 47), “that managers have a clear understanding of the standards of service within their industries.” Vargo and Lusch (2004, p
13、. 1) note that these standards have been changing over the last two decades, resulting in the surfacing of “relationship marketing” and “supply and value chain management.” Indeed, more recent research by Sharma, Krishnan, and Grewal (2001) suggests that business marketers must continually increase
14、their contribution to the value chain because of market changes. As a result, the lines between consumer and business marketing are increasingly blurred (e.g., Coviello and Brodie, 2001; Wind, 2006). For a more extensive review, see LaPlaca and Johnston (2006). Given this progression in business- an
15、d industrial-marketing thought, the subsequent discussion on the evolution of buyer-supplier relational logic toward a service-centered view in industry practice would be the next important step in the literature and JB&IM would be the best place. According to Vargo and Lusch (2004), the marketing d
16、iscipline is converging on a service-centered view that is relational in nature. For them, such a view implies that “marketing educators and scholars should be proactive in leading industry toward a service-centered model of exchange” (Vargo and Lusch, 2004, p. 14; italics added). Extending this imp
17、lication through analogy involving the performing arts provides a unique perspective: in order for one to lead in dance, the partner must be concurrently stepping ahead of the leaderby peeling the feet backwards blindly down the line of dance (i.e., history), allowing the leader (i.e., academe) to s
18、tep forward into the spot where the partner (i.e., industry) once was; otherwise, there would be no progression. This approach draws support from Websters (2006, p. xiv) assertion that a service-centered logic derives strength from the premise that “there are many innovative ideas about marketing th
19、at have their origins in business practice, not in academe.” Similarly, for Deighton and Narayandas (2004, p. 20), the answer to whether a new service dominant (hereafter, S-D) logic exists “lies in the inductive development of theory from phenomena closely observed and thickly described.” Drawing u
20、pon these assertions, this paper argues that what is needed in the literature is not evidence of the emerging relational logic in the literature being adopted in business and industrial buyer-supplier relationships, but rather evidence of critical historical events in industry being accounted for in
21、 the emerging logic. Such an approach would provide insight into the reciprocity between the evolution in the dominant marketing logic and the evolution in buyer-supplier relationships. Toward this goal, this manuscript focuses on one industry-based history of the emerging service-centered view not
22、heretofore experienced: how the “dance” between manufacturers and Wal-Mart, as it has risen to the apogee of retailing, has influenced several levels of B2C and B2B buyer-supplier relationships within supply chains. Specifically, three historical industry events provide great insights into the quest
23、ioning of Day (2004) and Rust (2004) on the “why now” and “so what” boundaries of a S-D logic for business and industrial buyer-supplier relationships: (1) the dynamic shift in retailer sales concentration over the last few decades, resulting in a precipitous decline of manufacturing power in buyer-
24、supplier relationships with retailers; (2) the adoption of Wal-Mart philosophy across business and industrial marketing relationships, providing an initial comparative advantage to Wal-Mart; and (3) the adaptation of Wal-Marts philosophy by manufacturers such as Royal Philips in part to stalemate th
25、e retailer(s) more recent attempts to increase comparative advantage through product packaging changes, global procurement, and private label merchandising. The resulta potential divergence in applying a S-D logic across business and industrial buyer-supplier relationships. The remainder of this man
26、uscript proceeds as follows: First, an investigation of the dynamic power shift between manufacturers and retailers, introducing both (1) reasons why scholarly research has not been able to verify the shift and (2) alternative measures that may provide more insight into it. Second, an overview of th
27、e diffusion and evolution of Wal-Mart philosophy through business and industrial markets, beginning with the transition from information sharing toward integrative value chains. Third, comments on several similarities between Wal-Mart philosophy and S-D logic, introducing potential foundational prem
28、ises surrounding empowerment, trust, and speed for the S-D logic as it relates to business and industrial buyer-seller relationships. Fourth, a discussion of how the emerging divergence between retailer and manufacturer strategies in applying the Wal-Mart service-centered philosophy may affect S-D l
29、ogic. Finally, an introduction of broader organizational consequences for practitioners and researchers.MethodConsistent with Chandler (1962), who proposes that historical events can reflect greatly on theory, this article contributes to the open source development of S-D logic for buyer-supplier re
30、lationships through an appraisal of changes witnessed through synthesized qualitative (i.e., field notes taken during four years of corporate buying employment at Wal-Mart and interviews with Wal-Mart and manufacturing executives; see Yin, 2002) and quantitative (i.e., company reports, Compustat que
31、ries, trade reports, and survey) research. The historical method provides critical evaluation of the time, place, and contexts in which phenomenon occur (Nevett, 1991), including buyer-seller relationships (see Schurr 2007). As noted by Low and Fullerton (1994, p. 174), the critical evaluation of hi
32、storical accounts “need not be negative in outcome.” Following Eisenhardt (1989), the emergent concepts are tied to existing literature in each section. Both Compustat data analysis and an industry survey are reported to provide initial external validity. Shifting buyer-supplier power S-D logic main
33、tains that events are historically-situated and path-dependent (Hunt, 2004; Hunt and Madhavaram, 2006; Vargo and Lusch, 2004). This paper asserts that the increase in retail sales concentration over the last half century is a historically-situated, path-dependent event of significant impact on buyer
34、-supplier relationships. The ratio between the largest annual retailer sales in 2005 (i.e., Wal-Mart) and in 1960 (i.e., The Great Atlantic & Pacific Tea Company) from the Compustat database is 59.9, or 9.4 after inflation adjustments (Sahr, 2004). See Table 1. Further, the annual sales ratio betwee
35、n the largest retailers is comparable from the 1960s through the early 1990s, at which point Wal-Mart sales growth began accelerating faster than its retail competitors. Adopting a more holistic, international lens, Wal-Marts retail sales are also larger than the next four largest retailers in the w
36、orld combined (i.e., Carrefour SA, Home Depot, Metro AG, and Royal Ahold NV). As a result, the relative negotiation strength of Wal-Mart should also have increased in its buyer-supplier relationships. Executives from multinational manufacturers across several industries and countries indicate in int
37、erviews with the author that Wal-Mart often represents 30% to 50% of the manufacturers unit sales. Thus, Wal-Mart could exert a strong buyer-supplier relational influence across many industries, potentially extracting large concessions from its estimated 61,000 manufacturer suppliers worldwide (Aila
38、wadi, 2001; Anderson, 2003, Enright, 2006; Farris and Ailawadi, 1992; Fishman, 2006; Useem, 2003). Still, according to Bloom and Perry (2001, p. 379), “the academic literature, however, has yet to provide conclusive evidence that such a shift has occurred,” citing challenges based on a lack of visib
39、le increases in slotting allowances, advertisement funding, and related concessions (i.e., Kim and Staelin, 1998; Lariviere and Padmanabhan, 1997; Sullivan, 1997). Reviewing the literature, Ailawadi (2001, p. 311) states that “it is still not clear whether slotting allowances are competitive or anti
40、tcompetitive.” The author agrees that such a shift should be accompanied with evidence. However, while the lack of visible increases in various trade allowances may have previously been indicative of a stronger manufacturing influence (i.e., when traditional grocers dominated retailing), it may curr
41、ently be indicative of an actually stronger retailing influence. The reason why? Because the more recent shift in retail sales leadership (i.e., to Wal-Mart) has been accompanied by a Wal-Mart philosophy that emphasizes the elimination of these “transaction costs.” That is, Wal-Mart currently attemp
42、ts to eliminate all slotting allowances and other supplier-based fundings and, instead, have these costs netted out of the initial cost of goods charged to the retailer (Walton and Huey, 1992). Indeed, the results of a field survey conducted by the author provides initial, exploratory evidence that,
43、 at least according to two dozen executives or senior managers of large-scale manufacturing organizations, there has been a shift in negation power accompanied by a change in seller-buyer activities interpretation. Indeed, not only do these executives report that they have to give less slotting, adv
44、ertising, fixture, and other trade allowances than 20 years ago on average, but they also indicate that they now have to spend more time managing databases for retailers, give more price concessions, take back more merchandise overstock from retailers, and decrease product size or quantity to remain
45、 profitable. Thus, the metrics and their interpretation will depend, in part, on the dominant retailers strategies. See Table II. Why would Wal-Mart philosophy emphasis an initial cost of goods approach? The answer is that lower initial costs are passed on in the value chain in the form of lower ret
46、ail prices charged to consumers. The lower retail prices result in higher sales volume as both (1) more customers buy and (2) customers buy more. The higher sales unit volume results in increased inventory rotation. The increased inventory rotation requires less retailer capital while maintaining an
47、 equal or improved initial profit margin compared to traditional grocery stores. This change in buyer-supplier negotiation emphasis from post purchase transactions (e.g., slotting fees) to initial cost of goods provides support for the approach that competition may have a more efficient or effective
48、 impact than regulation in addressing the continuing debate over slotting allowances (see Balto, 2002).Service-centered philosophy diffusion across industriesFrom information sharing to integrated value chainsA number of scholars have proposed that advances in technology and increases in information
49、 sharing have resulted in the convergence of research streams leading to the emerging service-centered, relational logic (e.g., Day 2004, p.18; Rust and Thompson, 2006, p. 382). According to Johnson (2002, italics added), Wal-Mart “was among the first retailers to use computers to track inventory (1969), just as it was
