Integrating customer relationship management and supply chain management 495
suppliers and their customers – whether those
customers be distributors or manufacturing
intermediaries. This hostility has been mutual
and there has been little attempt to co-operate
and to seek win–win solutions. Now, however,
there are increasing signs in many industries
that this is changing. There is a recognition by
suppliers that intermediaries and distributors
often hold the key to the marketplace. Similarly,
customers are realizing that closer relations
with suppliers can lead to quality improve-
ments, innovation sharing and cost reduction.
The trend is increasingly towards ‘single
sourcing’, meaning placing all of the purchase
requirements for an item with just one supplier.
This is the reverse of the conventional notion
that purchases should be spread between com-
peting suppliers to avoid placing ‘all of the eggs
in one basket’. Companies like Rover Group in
the automobile industry a few years ago had
over 2000 suppliers; it is now down to nearer
- Nissan, in the UK, by contrast, starting their
operations with a ‘clean sheet of paper’, have
only 200 suppliers. The advantage of develop-
ing closer relations with a limited number of
suppliers is that opportunities for mutual bene-
fit through a partnership approach become a
reality. Instead of win–lose it is possible to move
to win–win. Many companies have adopted
just-in-time (JIT) manufacturing strategies, but
have done so by pushing the responsibility for
inventory holding upstream to their suppliers.
In such cases there will probably have been no
overall cost reduction in the distribution chan-
nel, only a transfer of costs. Indeed, sometimes
the total costs may increase because of the need
for the supplier to make more frequent deliv-
eries of small quantities to the JIT customer. In
contrast, companies working in partnership
seek to identify opportunities to reduce or
eliminate costs, not to simply play an industrial
version of ‘pass the parcel’.
In retailing, as in other forms of distribu-
tion, there is also now a growing recognition
that co-operation, rather than conflict, in the
marketing channel can build competitive
advantage. Major suppliers to the retail trade
such as Unilever and Nestl ́e are putting as
much effort into ‘trade marketing’, as it is
called, as they expend on traditional brand
marketing. There is a strong desire by such
companies to broaden the relationship with
their customers away from the fairly limited
connection shown in Figure 19.6(a), in whichFigure 19.6 The move towards trade marketing