Eskom Procurement Book 2015

SUPPLIER RELATIONSHIP MANAGEMENT

Means addresses the extent to which the company is realising those means that enable it to meet its goals. For example, to attain the delivery schedule target, it can evaluate its transportation system, which is the means that it uses to achieve the delivery schedule target. By assessing the extent to which both means and targets have been achieved, an accurate state of the relationship with a particular supplier will be reflected. These results can then be used to take action to improve on the relationship. Another approach involves four high-ranking factors that are generally considered to be fundamental elements of any business relationship in terms of their contribution to the development of trust between the partners; the level of power they possess in decision making; their involvement in SRM; and their contribution to the development of commitment to buyer-supplier relationships [3]. The measurement factors and their characteristics are illustrated in Table 5.2.

5.3.6.2 SRM Factor Method

Table 5.2: SRM measurement factors [3]. Factor

Characteristics of factor

Trust

Calculative: Actors would act in a trustworthy fashion only because it is in their interest to do so. Cognitive: Arises on the grounds of common cognitions amongst the involved parties. Normative: Characterised by a mutual understanding of expectations and responsibilities of the involved parties based on industry or societal norms (comply with organisational culture, honesty and openness). Trustworthiness: Characterised by keeping promises and having confidence in partner. Authority: Responsibility for taking decisions and issuing orders. Control: Arises from access to critical resources that give contextual pertinence to those that hold them. Influence: Indirect dimension of power arising from centrality in a network of actors. Complexity: Refers to the level of intricacy of a buyer- supplier relationship (number and level of individuals involved). Scope: Refers to the amount of resources devoted and the capabilities that are transferred between the partners. Intensity of interaction: Refers to the quantity of information exchanged between the parties. Personal contact and spatial proximity between the actors, and the early input of suppliers in a customer’s projects.

Power

Involvement

104 CHAPTER 5