Industrial marketing relationships and open‐to‐tender contracts

Abstract

Explores the complexity of supply‐chain management businesses, such as the motor industry and electronics, looking at new initiatives which are emerging between role partners in an effort to reconcile the needs of quality, cost reduction, innovation and customer satisfaction. Observes current trends towards achieving these difficult objectives which promote closer buyer‐seller relationships, joint ventures and strategic alliances, yet notes that the open‐to‐tender bidding process is still extensively used for a number of key components and services. Based on a study within the Scottish electronics industry, examines the effects of open‐to‐tender contracts on total quality management and on buyer‐supplier relationships. Suggests that, while both buyers and their suppliers are talking the relationship game, the reality is that the rules are seldom explicit, communication between the parties is inadequate and therefore relationships tend to be on a superficial level, and lacking real commitment on joint product development, cost reduction strategies and effective integrated systems. Found that competitive tendering came into conflict with the total quality management philosophy, and that attempts to build and sustain long‐term relationships were undermined by short‐term competitive pressures.