Epsilon Archive for Student Projects

Abstract

Buyer-supplier relationships can be important sources of value for both sides. From the buyer’s perspective, suppliers can ensure the access to critical resources that the buyer needs for the production of its goods. With the EU market deregulation, the competition on the European sugar market increased, where sugar is produced from sugar beets. Sugar beet prices dropped and reduced the profitability of sugar beet growing. Sugar producers subsequently face an increased competition, also for accessing the critical resource sugar beets, which is determining for the company’s survival. To ensure the access to sugar beets, sugar producers need to develop improved buyer-supplier relationships, that also hold under the new market circumstances.

Combining the crucial importance of the access critical resources with financial and labour resources relationship-development requires, shows that a structural approach of a strategy and tactics could contribute to improve the buyer-supplier relationships. The study therefore develops an analytical framework to deeply understand the often complex buyer-supplier relationships between a sugar producer and sugar beet growers. The frame unravels the relationship into interrelated elements. These depict the context the relationship is embedded in as well as the core of the relationship, that entails the interacting parties and the interaction process. At the same time this framework is used as a practical framework to offer a basis for developing a strategy and tactics for improved buyer-supplier relationships while taking both parties’ important aspects into account.

A qualitative approach in combination with a case study design with an anonymised European sugar producer as case object was chosen to illustrate and analyse the phenomenon. Six sugar beet growers from Germany and Sweden were interviewed to review important aspects for supplier side of the relationship. Participant observations and a literature review contributed to addressing the phenomenon.

Analysed findings show that sugar producer’s access to sugar beets is increasingly challenged since the EU market deregulation and the resulting increased competition for sugar beets. Sugar producers increasingly compete for growers while they can also choose to grow other crops other to sell the beets to other industries for other than uses. Interpreted findings also show that improving buyer-supplier relationships requires mutual profiting from the created value which implies to respond to the growers’ needs, such as an improved fairness or communication. Therefore, a strategy and tactics need to take both parties’ perspectives into account.

This study contributes to knowledge in Supplier Relationship Management as it offers a way of improving relationships with many and not just a critical few suppliers and specifically includes the supplier perspective, who is seen as an equally important party in the relationship. The study further offers framework that can be used to understand buyer-supplier relationships but also to develop strategies and tactics which can be useful for companies that are willing to improve the relationships and sweeten their suppliers.