Comparing public and private organisations in their quest to become a preferred customer of suppliers

Abstract

In industrial procurement, the concept of supplier satisfaction has gained increasing attention. Satisfied suppliers have been found to provide better prices, more innovations and priority in bottleneck situations. This paper aims to analyses in how far the concept of supplier satisfaction can be transferred to the public procurement domain.,Two large quantitative data sets are compared, one from a sample of suppliers evaluating their industrial clients, the other from a public customer being evaluated by its suppliers.,The same criteria which explain supplier satisfaction with its customer, which are relevant in the private and industrial case also hold true for the public case, namely, growth opportunity, profitability, relational behaviour and operative excellence are important criteria for distinction. Only relational behaviour by the customer scored significantly higher in the public sample, indicating that this is more an influencing factor for public organisations.,Showing the relevance of supplier satisfaction also for the public domain paves the way to further research better understanding how to measure satisfaction and how to increase suppliers’ satisfaction.,Buying organisations are asked to apply a form of “upstream marketing”, in which they actively try to promote their organisation with their suppliers and increase its attractiveness. This is a new way to get access to better services from suppliers.,Analysing supplier satisfaction, on the one hand, allows to improve public purchasing acts, which generate social benefits in better using public money. On the other hand, caring for the well-being of suppliers is per se contributing to a socially more desirable world.,Supplier satisfaction is a new concept in the public procurement domain. This is the first paper to introduce this approach.