Criteria for achieving efficient contractor‐supplier relations

Abstract

Purpose

Despite numerous examples of benefits when adapting supplier relationship management in the manufacturing industry, the construction industry still lags behind in such areas as long‐term relationships with suppliers and continuous cost‐reductions. This may be because the characteristics of the construction industry differ from those of the manufacturing industry due to their project‐based structure, its inherent tendency for sub‐optimization and the vast number and variety of suppliers. The purpose of this study is to identify criteria for achieving efficient contractor‐supplier relations in the construction industry and for large contractors.

Design/methodology/approach

The paper draws on the literature on efficiency and differentiation of efficient buyer‐supplier relationships as well as a two‐year case study based on participatory observations and interviews with strategic purchasers at a large Swedish contractor.

Findings

As it is not always possible to increase efficiency in the interface‐related value‐creating processes by only aiming the development and improvement efforts directly at these processes, relationship enablers such as total cost focus, aligned core values as well as willingness and capability for collaboration and development must first be in place. In order to achieve this, the contractor has to adopt a long‐term orientation towards the relationship with the suppliers, which is a decision for the management to make.

Practical implications

Drawing from the findings, this paper elucidates the connection between increased efficiency and input variables in the contractor‐supplier relationship, which might be difficult for contractors to see. Furthermore, contractors need to take responsibility over their own processes in order to be an attractive customer to the supplier.

Originality/value

Even though research within construction has focused on relations between different actors, mostly client and contractor, this paper widens the perspective and takes a grasp of the relationship between contractor and supplier.

Citation

Frödell, M. (2011), "Criteria for achieving efficient contractor‐supplier relations", Engineering, Construction and Architectural Management, Vol. 18 No. 4, pp. 381-393. https://doi.org/10.1108/09699981111145826