R.B. H<strong>and</strong>field, C. Bechtel / Industrial Market<strong>in</strong>g Management 31 (2002) 367–382 369customer optimization is that <strong>supply</strong> cha<strong>in</strong> participants havea solid mutual underst<strong>and</strong><strong>in</strong>g <strong>of</strong> the underly<strong>in</strong>g bus<strong>in</strong>essprocesses <strong>and</strong> capabilities <strong>of</strong> their selected partners [48].While <strong>supply</strong> base optimization represented an opportunityfor those supplier rema<strong>in</strong><strong>in</strong>g <strong>in</strong> the pool ‘‘after thecuts,’’ it also resulted <strong>in</strong> a new breed <strong>of</strong> customer thatdem<strong>and</strong>ed <strong>in</strong>creased responsiveness <strong>and</strong> flexibility to adynamic set <strong>of</strong> requirements. In these new <strong>supply</strong> cha<strong>in</strong>s,buy<strong>in</strong>g firms are purchas<strong>in</strong>g not only their suppliers’products or services, but also their suppliers’ systems <strong>and</strong>capabilities, which <strong>in</strong> turn require high levels <strong>of</strong> coord<strong>in</strong>ation[67]. Second, buy<strong>in</strong>g firms <strong>in</strong> such <strong>relationship</strong>sprovide more than just f<strong>in</strong>ancial compensation to theirsuppliers. Buyers share <strong>in</strong>formation with their suppliers<strong>and</strong> they also provide suppliers with guarantees <strong>of</strong> futurevolumes <strong>and</strong> prices, resources, <strong>and</strong> creativity, which maybe tied to suppliers’ cost reduction <strong>and</strong> quality improvementefforts [27]. Mutual <strong>in</strong>terdependence, close organizationalcooperation, <strong>in</strong>creased levels <strong>of</strong> <strong>trust</strong>, <strong>and</strong> a strongtendency towards <strong>in</strong>formation shar<strong>in</strong>g thus characterizesuch <strong>relationship</strong>s [49].Despite the strong drivers for closer <strong>supply</strong> cha<strong>in</strong><strong>relationship</strong>s, the managerial processes <strong>and</strong> success <strong>of</strong>these <strong>relationship</strong>s is fraught with pitfalls. An excellentillustration <strong>of</strong> the difficulty <strong>of</strong> ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g <strong>in</strong>tegratedsupplier–customer <strong>relationship</strong>s is the breakdown betweenOffice Max <strong>and</strong> Ryder Integrated Logistics [51]. In thiscase, Office Max sued Ryder Integrated Logistics for 21.4million dollars, for breach <strong>of</strong> contract after 21 months <strong>of</strong> a7-year contract (<strong>in</strong>itially dubbed as a ‘‘strategic alliance’’).Ryder Integrated Logistics countersued Office Max for 75million dollars. Moreover, it is becom<strong>in</strong>g clear that adelicate balance between formal (economic <strong>and</strong> legal)<strong>and</strong> <strong>in</strong>formal (social–psychological) factors is necessaryto susta<strong>in</strong> long-term <strong>in</strong>terorganizational <strong>relationship</strong>s[31,63,67,71]. Managers require a bluepr<strong>in</strong>t for action thatTable 1Rationale for <strong>in</strong>clusion <strong>of</strong> key study variablesVariable <strong>of</strong> <strong>in</strong>terestHuman-specificasset <strong>in</strong>vestmentsSite-specificasset <strong>in</strong>vestmentsRepresentativetheoretical studies Range <strong>of</strong> possible managerial actions Impact on <strong>supply</strong> cha<strong>in</strong> responsivenessSupplier membership on NPD teamsInformation shar<strong>in</strong>g Communication <strong>and</strong> visits by buy<strong>in</strong>g team[16–19,32,53,72,73,76] Supplier colocation [16–19,32,53,72,73,76] Investments <strong>in</strong> specific equipment, capacity,or personnel to support customer <strong>relationship</strong> Investment <strong>in</strong> specific <strong>in</strong>formationsystems or tra<strong>in</strong><strong>in</strong>gBetter supplier underst<strong>and</strong><strong>in</strong>g <strong>of</strong>customer requirementsReduced use <strong>of</strong> forecasts Alignment <strong>of</strong> buyer/supplierprocess requirements Reduction <strong>of</strong> unique items withlong cycle times Better alignment <strong>of</strong> multiple <strong>supply</strong> tiersReduced equipment setup time Fewer capacity bottlenecks Inventory position<strong>in</strong>g with<strong>in</strong> the <strong>supply</strong>cha<strong>in</strong> to reduce delays Better alignment <strong>of</strong> supplier processcapabilities with buyer’s product requirementsContracts [42,47,57,60,63] Specific performance metrics withevergreen clauses Detailed legal documents Informal ‘‘h<strong>and</strong>-shake agreements’’Clear communication <strong>of</strong> expectations Conflict resolution techniquesLess reliance on litigation as a means<strong>of</strong> resolv<strong>in</strong>g issues Evergreen clauses create <strong>in</strong>centives for cycletime improvements Dedicated supplier <strong>relationship</strong> managerTrust [12,25,63,67,71] Detailed precontractual supplier assessment Buyer underst<strong>and</strong><strong>in</strong>g <strong>of</strong> supplier performance<strong>and</strong> capacity limitations Ombudsman <strong>and</strong> other problemresolution mechanisms Improved forecastsBuyer-dependence(on supplier)[12,22,24,26,28,58] Reduce/<strong>in</strong>crease dependence throughs<strong>in</strong>gle/multiple sourc<strong>in</strong>gSupply base optimizationInsourc<strong>in</strong>g/outsourc<strong>in</strong>g Us<strong>in</strong>g <strong>in</strong>dustry st<strong>and</strong>ard products Improved communication <strong>and</strong> <strong>in</strong>formation-shar<strong>in</strong>g On-go<strong>in</strong>g problem-resolution <strong>and</strong> communication<strong>of</strong> <strong>in</strong>formation Paves the way for B2B e-commerce applications Increased competition for bus<strong>in</strong>ess can create<strong>in</strong>centives for cycle time improvements Fewer suppliers results <strong>in</strong> simplified <strong>supply</strong> cha<strong>in</strong>networks <strong>and</strong> reduces transaction complexityAutomated purchas<strong>in</strong>g systems Potentially creates greater supplier loyalty
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