Purchasing and Supply

“Relationships between organisations develop on the basis of common interests and dependencies and may reflect tensions between autonomy and interdependency, self-interest and team spirit, competition and cooperation (Nouwens and Bouwman, 1996). A company strategy to operate with various suppliers can utilise a portfolio of relationships to meet the requirements of different types of transactions. Using electronic commerce facilitates information exchange and enhanced communications between organisations and may also reduce costs, risk and uncertainty while also increasing interdependency and joint investment.” (Roberts and Mackay,1998:177)

The quote from Roberts and Mackay (1998) above emphasizes how relationships in purchasing might create a tension between autonomy and interdependency. The research article also indicates that the purchasing approach within the organisational setting is driven by proactive supplier management, than the impact of the external environment. The relationship between the supplier and buyer has its benefits, of cost, risk and uncertainty reduction as well as the challenges of increased interdependency and joint investment.

Select a small-medium or a large sized organization from which to carry out primary research (if access is not possible you can use secondary research). Any sector may be considered, including services, (not just manufacturing) e.g. councils, transport, media, insurance, healthcare, hotels/catering, airport services, utilities, public services. Within the selected organization discuss Roberts and Mackay’s (1998) statement above. Based on your findings, discuss whether the statement is still valid today, and assess the extent to which you agree or disagree with the statement.