Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e- Business and
Organizational Customers
and Their Buying Behavior
Text © The McGraw−Hill
Companies, 2002196 Chapter 7
Operational linkages are direct ties between the internal operations of the buyer
and seller firms. These linkages usually involve formal arrangements and ongoing
coordination of activities between the firms. Shared activities are especially impor-
tant when neither firm, working on its own, can perform a function as well as the
two firms can working together. John Deere’s relationship with MetoKote, described
at the start of this chapter, involves operational linkages.
Operational linkages are often required to reduce total inventory costs. Business
customers want to maintain an adequate inventory—certainly enough to prevent
stock-outs or keep production lines moving. On the other hand, keeping too much
inventory is expensive. Providing a customer with inventory when it’s needed may
require that a supplier be able to provide just-in-time delivery—reliably getting
products there justbefore the customer needs them. We’ll discuss just-in-time sys-
tems in more detail in Chapter 12. For now, it’s enough to see that just-in-time
relationships between buyers and sellers usually require operational linkages (as well
as information sharing). For example, Wal-Mart might want a producer of socks to
pack cartons so that when they are unloaded at a Wal-Mart distribution facility all
of the cartons for a certain store or district are grouped together. This makes it easier
and faster for forklifts to “cross dock” the pallets and load them onto an outbound
truck. This also reduces Wal-Mart’s costs because the cartons only need to be han-
dled one time. However, it means that the supplier’s production and packing of socks
in different colors and sizes must be closely linked to the precise store in the Wal-
Mart chain that places each order.
Operational linkages may also involve the routine activities of individuals who
almost become part of the customer’s operations. Design engineers, salespeople, and
service representatives may participate in developing solutions to ongoing problems,
conduct regular maintenance checks on equipment, or monitor inventory and coor-
dinate orders. At the DaimlerChrysler design center, for example, 30 offices are set
aside for full-time use by people employed by suppliers.
Linkages may be customized to a particular relationship, or they may be stan-
dardized and operate the same way across many exchange partners. For example, in
the channel of distribution for grocery products many different producers are stan-
dardizing their distribution procedures and coordinating with retail chains to make
it faster and cheaper to replenish grocery store shelves.IBM, I2, and Ariba have formed
an alliance to work together
cooperatively and develop closer
relationships with business
customers, no matter what the
customer’s e-commerce
purchasing needs may be.
Operational linkages
share functions
between firms