Discuss the development of the buyer/supplier relationship in an increasingly competitive and sophisticated commercial environment

Abstract

The commercial environment has increasingly become sophisticated, complex and competitive due to globalization. Business and project managers require strategies to acquire, plan for and utilize the material and human resources to realize objectives. Buyer-supplier relationships serve the mutual interests of the parties involved while reducing costs and enhancing reliability and dependability, hence are desirable for economic entities that desire to be competitive. The increased involvement of buyers in supplier’s activities presents proprietary rights challenges, hence such relationships should be centered on legal agreements that involve all the principles of contract law, and exploit international institutions to assure the success and security of the relationship. Trends such as just-in-time procurement, sustainability in supply chain management, and outsourcing/offshoring practices by multinationals have defined and influenced buyer-supplier relationships. The contracting and tendering frameworks of most organizations follow a five-step process which include prospect identification, expression of interest, tendering, tender submission and tender awards. However, the study established that organizations in buyer-supplier relationships do not utilize the linear five-step contracting process, but have formed complex relationships with suppliers to reduce costs and enhance dependability, as was evident from Toyota’s case. Further, the study established that infrastructural projects that involve large financial undertakings require robust and convincing business cases that will justify project financing. Such projects use project financing tools and special-purpose vehicles to pool resources from the various stakeholders to develop the project, meet its financial obligations, and manage its benefits. This study presents four key elements of the project business case for project financing, and why the business case is significant for projects that require SPVs