Structuring vendor-client relationships–a combinatorial approach

Purpose –Vendor-client (VC) relationships play an important role to a company’s general strategy and goals. However, managing these relationships can be a complex undertaking. The purpose of this paper is to assist in identifying the most important factors in assessing a VC relationship and provide a framework leading to a heuristically determined optimal solution for a company.

Design/methodology/approach –Weighting Factor Comparison (WFC) and scale metrics are used in order to holistically determine a firm’s position regarding relationships with potential vendors. Each contributing factor is analyzed separately using different sub-frameworks, both qualitative and quantitative.

Eventually a score is provided, which will be used as input for the holistic framework for the realization of the analysis. Data from a case study of a large multinational company and its relationship with three of its vendors has been used for validation purposes, whereas other factors have been compared to empirical data from literature research.

Findings – The framework presented combines various approaches when handling vendor-client relationships and, therefore, minimizes subjectivity. The factors that have been proven significant for the company’s VC relationship are, in order of significance from higher to lower, Compatibility, Risk, Quality, and Cost.

Practical implications – This study offers a holistic decision making framework for practitioners for continuously determining the most adventitious relationship state between the firm and the various suppliers. Further research – All frameworks, including the general VC framework, are advised to be implemented to companies.

Originality/value –Although research material is quite extensive regarding various approaches about supplier selection, it is very limited in relation to the evaluation of a vendor-client relationship. Furthermore, when such a relationship is evaluated, only one conceptual framework is chosen, leading to several limitations.

This paper combines different frameworks in order to create a holistic framework which incorporates several parameters to determine the value of a vendor-client relationship; thereby exposing potential weaknesses and/or strengths of the relationship.