Explain SIX reasons why a firm might attempt to actively manage its relationships with its suppliers.

Six reasons why a firm might attempt to actively manage its relationships with its suppliers:

(a) Dependency upon particular suppliers:

A firm might attempt to actively manage its relationship with its suppliers due to its dependency on that supplier. The dependency will be greater if there are only a few suppliers in the industry or the raw material involved is crucial to the production of the final product.

(b) Influence:
A firm might attempt to actively manage its relationship with its suppliers in order to positively influence the price paid and negotiate discounts for swift payment, loyalty or bulk orders, etc.

(c) Competitive advantage:

One aim of actively managing its relationship with its suppliers may be to gain a relative competitive advantage over rival firms which do not currently practice relational procurement and operations.

(d) Quality of supply:

Relationships might be formed to ensure suppliers are performing well, in particular to ensure the quality of supply. This is especially important where the purchasing firm is attempting to operate TQM or JIT approaches, etc.

(e) To establish long-term relationships:

A more contemporary view is rather than emphasize price, firms should build relationships with suppliers in order to jointly manage the entire supply chain better so that mutual benefits can accrue.

(f) Continuity of supply:

To help ensure a continuity of supply and goodwill, strong relationships are needed with suppliers. A firm might attempt to actively manage its activities with its suppliers because it recognises that it may need a supplier's cooperation orders or changes when in production there requirement are' rush at short notice.