A model for evaluating customer-supplier relationship development

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School of Engineering | Master's thesis
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The international competitive arena forces manufacturers to look continuously for ways to improve their customer value. At the same time, they have to work continuously on product and process innovation. Suppliers are able to, and should, contribute to these objectives. In addition, many companies feel the need to improve relationships with customers and suppliers. In order to work together, thrive together and grow together, buyers and suppliers must understand one another in the modern business world. They must understand each other's business, needs, values and services and, equally important, one another's limitations. These relationships should result in a better value proposition on the company's end markets. The following research question was formulated for this thesis: How to identify and understand the key customer's purchasing processes and evaluate the drivers for long-term customer partnership building with customers in the growing customer business segment? The thesis consists of four main parts. First, a literature study was carried out to address the research question in general. The literature study resulted in a relationship development model, which provided a structure for the factors that influence partnership formation, management over time of relationship, and outcomes. Second, an empirical multi-case study was implemented to address the research question in particular by utilizing the developed model for data collection in research. Third, a model for evaluating customer -supplier relationship development is presented. Finally, the research results and recommendations are discussed, and their reliability, validity, and generalizability are evaluated. The main results of this thesis are the detailed analysis of three customer - supplier relationships, the factors affecting successful and beneficial relationship development within studied cases, and the model for evaluating customer -supplier relationship development. The factors that were found to have influence on successful relationship development and contribution to partnership drivers are mutual goals, communication, social interaction, innovation and R&D, performance, cooperation, adaptation, trust, and commitment. The importance of factors in particular relationship should be analysed and assessed individually, and the level of each factor should be evaluated in the context of specific relationship. The systematic analysis framework, a model for evaluating customer -supplier relationship development can be utilized when establishing, analysing, evaluating or developing a business relationship within a company. As a result, the framework was considered as a useful tool when developing mutually beneficial long-term relationships with the key customers.
Heikkilä, Jussi
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Roth, Matti
customer-supplier relationships, partnership model, factors influencing relationship development, purchasing strategy, portfolio management
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