Supplier Satisfaction in Buyer–Supplier Relationships: Assessment from Supplier Perspective

Abstract

ABSTRACT Purpose A long-lasting buyer–supplier relationship is vital for any business organization to be successful. The purpose of this study is to explore the factors that affect the supplier satisfaction in buyer–supplier relationships and to explore their causal relationships. Methodology The work is an attempt to probe the issue of supplier satisfaction in a purchasing relationship and the various factors that might have a bearing on this relationship. An instrument, developed for this purpose after conducting wide-ranging discussions with Heads and Operations Officers of supplier firms as also the available literature on the subject, was validated through pilot testing. A selection of nearly 300 Indian suppliers comprised the respondent firms in our study who were invited to participate in our online or paper-based survey. Partial Least-Squares path modeling (PLS) was the technique chosen to evaluate the proposed model. Findings The paper builds on earlier research on the topic to replicate their study in a new context. The major findings of our research relate to the following aspects: (a) assess the importance of supplier satisfaction for the buying firm to receive preferred customer status, (b) re-establish the importance of cooperation as a precursor for managing the buyer–supplier relationship, and (3) apply the PLS analyses method to evaluate the factors and their order in terms of their contribution to the overall supplier satisfaction level. The results show that the important positive effects on supplier satisfaction in buyer–supplier relationships are the ones linked to cooperation, coordination, payment policy, and purchasing policy by this order. Research implications This study extends previous meta-analyses suggesting that proper cooperation could be the source of a competitive advantage enjoyed by the firms on both sides of the supply chain. The present study provides a guidance toward conducting future research on satisfaction measurement in buyer–supplier relationships from the perspectives of both buyers and suppliers. Practical implications The present study explores how factors like conducive policy, transparent communication, and coordination efforts by the buyer affect the value in the buyer–supplier relationships. Our findings present three direct implications for managers of buyer firms. First, the work provides an empirically grounded argument for making conscious efforts toward improving cooperation with supplier firms to achieve better supplier satisfaction. Second, the work provides guidelines to the managers for prioritizing synergetic investments in developing sustainable and fruitful relationships with suppliers. Third, the study results indicate a word of caution for managers who aim to simultaneously improve the buyer firm’s information technology (IT) capability while ignoring its integration with the IT infrastructure or the lack of it that exists in the supplier firms. Originality/Value This paper investigates why supplier satisfaction is relevant for buyer–supplier relationships and what are the relevant factors associated in this context. The findings expand the current understanding of these concepts by building upon practitioner inputs and survey results.