●Supplier markets. Suppliers or vendors are the providers of physical
resources to the business. Sometimes these resources will be aug-
mented by services but typically they will be characterized as the
upstream source of raw materials, components, products or other tan-
gible items that flow on a continuing basis into and through the cus-
tomer business.
●Alliance markets. In a sense, alliance partners are suppliers too. The dif-
ference is that typically they will be supplying competencies and capa-
bilities which, more often than not, will be knowledge based rather than
product based.They may well provide services and often these alliances
will have been created in response to the perceived need to outsource
an activity within the company’s value chain.
In the mid-1980s, the Austin Rover car manufacturing company had
well over 1000 suppliers with whom it had arms’-length, often
adversarial, relationships. Ten years later a transformed company,
now called the Rover Group, had fewer than 500 preferred suppli-
ers with whom it had the closest possible relationships.
The UK-based high street retailer BhS at the beginning of the
1990s purchased clothing products from 1000 suppliers. By the end
of the decade it was working closely with only 50 strategic suppli-
ers.
These two examples reflect the significant change that has taken
place in the way companies view their supplier base. Similar dra-
matic changes have occurred in the use of alliances with other
organizations in order to import resources, capabilities and expert-
ise into the business instead of trying to keep everything ‘in-house’
as previously was the case. Hence British Airways seeks a strategic
alliance with American Airlines to enhance its access to North
American markets. Andersen Consulting, IBM and Ryder team up
to provide a global, information-based logistics solutions capability.
Unipart and Yotaku-Giken combine their manufacturing and tech-
nological expertise to bring innovation in catalytic converters to
market.
These new style relationships are markedly different from the
previous focus on vertical integration, whereby as much of the
value-added in the final product as possible was brought into the
same legal ownership. Ford in its early days in North America
owned the steel mills that made the steel for its cars, as well as
most of the factories that made the components. Courtaulds estab-
lished a vast, vertically integrated business in textiles with the
162 Relationship Marketing