Small suppliers are more likely to put more resources into their relationships with big supermarkets if they feel fairly treated by the retailers, according to the University of East Anglia (UEA).
The research explored the concept of relational justice, specifically how small-scale food and drink producers perceive their treatment by ‘key customers’ – supermarkets, in this case – and the impact it has on their performance.
The research shows that the way supermarkets treat suppliers has a greater influence on the suppliers’ performance that their status as a ‘key customer’. It also found that suppliers do not look more favourably on poor treatment with supermarkets they have worked with over a long period of time. UEA says that suppliers form their perceptions of fairness soon after a relationship begins, so supermarkets should look to establish a positive working relationship from the outset to ensure high performance.
Dr Ricardo Santana, from UEA’s Norwich Business School, said: “Positive and negative exchanges can have unexpected consequences that ultimately determine the health of a relationship and resulting performance outcomes.
“Managing the buyer-supplier relationship is, therefore, a challenging social task that involves tackling behavioural issues and power dynamics between the buyer and the supplier.
“Larger retailers should design strategies to enhance necessary elements of relational justice and should empower and encourage buyers and category managers to foster social elements, for example, by offering the supplier the opportunity to provide input on decision that affect the relationship, and fairly rewarding the suppliers who invest in the relationship by meeting standards and deadlines.
“Such strategies can help weaker suppliers feel that their voices are heard, concerns are addressed in the relationships, and their account managers are treated with dignity, courtesy and respect.”
Larger customers can establish commitment from suppliers at an early stage in their relationships, by respecting the principles of relational justice in their dealings with suppliers. The authors say such principles can be easily incorporated into personal development plans of retail buyers, and their adherence easily measured through supplier assessments.