Introduction of Bensaou model to manage long-term relationships with suppliers

Empirical study of Bensaou determines four types of management relationship with suppliers:

·         Market-Exchange Management                                          

·         Captive-Buyer Management

·         Strategic Partnership Management

·         Captive-Supplier Management

Bensaou put three key factors when managers dealing with the type of relationship to prevent misunderstandings of the relationship which is “(1) the product exchanged and its technology, (2) the competitive conditions in the upstream market, and (3) the capabilities of the suppliers available” (Bensaou, 1999)

Let us measuring this model upon the retail business,

We are like any large company, we need to make our relationship with suppliers Strong and long-term But unfortunately we do not have a clear policy for the management of this relationship. As I mentioned earlier, we have a large number of suppliers so I think the issue will be more complicated Where we cannot use a single model for the management of the relationship with all suppliers “. As these inter-firm relationships increase in number and variety, organizations cannot manage with only one design for all relationships They need to manage a portfolio of relationships” (Bensaou, 1999). Initially Bensaou suggest two steps to identify relationships with suppliers “identify which type of relationship matches the competitive conditions surrounding the product or service exchanged and second design the appropriate management model for each type of relationship” (Bensaou, 1999),

According to this we can identify two types of the supplier relationship the one is strategic partnership and the second is captive supplier, 60 % of suppliers representing suppliers of medicines and  they are apply to them the strategic partnership, where our chain of pharmacies the second largest chain in the KSA market it seem like a brand so medicines suppliers so keen to provide their medications within our pharmacies and it is a huge loss of sales for them if their product are not available, Similarly for us failure to provide medications is a loss in sales and a loss of customers and lead to the weakness of the company's image in the market, so it is the mutual benefit and goals. In this relationship we will exchange information, fully collaborating with suppliers and mutual support. In the second relationship captive supplier which is 40% of cosmetic and baby product, this account 30% of sales they are quite keen to enter their products in our pharmacies to increase their sales, for us, we can replace most of them by other smaller agents, any way Providing products inside our Pharmacies, is interesting them  more than  us. So the mutual goals are limited for us. 

Bibliography

Bensaou, M., 1999. ‘Portfolios of Buyer-Supplier Relationships. MITsloan Management Review.