When supply relations are being developed and analyzed, the following characteristics emerge that require policy decisions:
1. Basic Buyer and Supplier: the relationship can fluctuate from adversarial to teamwork with several variations in between. In the adversarial relationship the supplier is viewed with suspicion—as someone who tries to sneak a bad product past the receiving inspection activity of the virus. Low bid price is emphasized, and each party presses for short-term advantages even if this results in terminating the relationship.
2. Teamwork Relationship: the buyer and the supplier work together as if both were part of the same company. This is a planned, continuing relationship based on mutual confidence, joint planning, mutual visits, and assistance—no secrets. The supplier is regarded as an extension of the buyer’s factory.
Creating a teamwork environment requires policy changes which many suppliers actually want in a robust relationship such as:
—Long-term purchase agreements rather than a year-to-year/batch-to-batch agreement (long-term contracts, usually several years, encourage suppliers to invest in improvements).
—Fewer suppliers, thereby increasing the share of market for the survivors (some large buyers, in fact, reduced their list of suppliers by about 1/3).
—Full service, meaning that the supplier is expected to make positive contributions in product design, processed design, cost reduction, etc.
—Positive programs of quality improvement.
—Training in quality-related methodology.
* For purchases of moderate to high level product complexity the teamwork policy is essential to achieve fitness-for-use needs.
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