The role of risk management in buyer-supplier relationships with a preferred customer status for total quality management

Abstract

Purpose

This paper provides a comprehensive risk management framework for buyer-supplier relationships where the buyer has the status of a preferred customer with the supplier.

Design/methodology/approach

Empirical evidence is offered with a case study on a large multinational organization in the Fast Moving Consumer Goods (FMCG) industry, with some real-life perspectives on the main risks, mitigation strategies, and issues faced when applying the risk management framework.

Findings

The results show that several risks may affect buyer-supplier relationships: not only traditional supply risks but also risks linked to specific initiatives and/or relationships, as well as risks specific to buyer-supplier relationships with a preferred customer status. Customer attractiveness and supplier satisfaction are found as core drivers for the mitigation strategies, which are built to protect the relationship with the supplier, rather than the buying firm alone, knowing that being a preferred customer with preferential resources allocation may increase a firm’s competitive advantage.

Originality/value

The research brings important contributions to the academic literature and interesting insights to strategic purchasing practitioners, by enhancing the existing knowledge on supply risk management in buyer-supplier relationships with a preferred customer status, as well as providing strategic purchasing practitioners a comprehensive view of the risks, which may affect the relationships with a preferred customer status, as well as possible ways to mitigate them.

Citation

Pellegrino, R., Costantino, N. and Tauro, D. (2020), "The role of risk management in buyer-supplier relationships with a preferred customer status for total quality management", The TQM Journal, Vol. 32 No. 5, pp. 959-981. https://doi.org/10.1108/TQM-04-2019-0107