Strategies for enhancing supplier relationships

Strategies for enhancing supplier relationships

Procurement is an essential part of any organisation due to the need to source items, resources to support delivery of services and products of an organisation. In a competitive sector such as the oil and gas, it may be challenging to develop and manage relationships that lead to successful procurement process. Whether suppliers exist for business purposes only or more, their importance cannot be undermined in the oil and gas sector. Enhancing supplier relationship is therefore important amidst market analysis and other internal and external factors that may hinder beneficial relationship to the buyer. This research aims to critically assess strategies for enhancing procurement buyer-supplier relationships, and to identify factors influencing current supplier relationship within UAE oil and gas sector.

Through literature review, theories of supplier relationship and different supplier relationships were reviewed to determine appropriate relationship pattern and tiers for the oil and gas sector. Kraljic’s portfolio model (KPM) is applied to examine purchasing strategies and influencing factors. A total of 312 completed the online survey designed to examine purchasing strategies and factors influencing supplier relationship in UAE oil and gas organisation. The most effective purchase classification and supplier relationship were also identified, tested and evaluated to determine the current status of supplier relationship in ADNOC which is the case study organisation.

Reliability analysis and Cronbach alpha were applied for reliability and validity, using SPSS to show strong evidence of reliability and validity. Results indicate that supplier dominance and buyer dominance are the prominent supplier relationships in ADNOC for procurement of minor items and major equipment. Other results reveal that no supplier strategy is effective for major equipment procurement, supplier dominance is the identified as the most effective for procurement of consumables and minor items. Years of employee experiences in the organisation was detected as a major factor influencing purchase classification and supplier relationships in the organisation. This original contribution to knowledge informed recommendations for policy and practice as well as for future research.