1. Background
The public sector is one of the most important customer groups for many suppliers and services providers. This is due to the size of the sectors and the volume of public expenditure (Hugo & Badenhorst – Weiss 2011:287).
Maintaining positive relationships with suppliers is increasingly being recognised as a critical factor in sustaining a competitive advantage (Stevenson 2009:525).
SARS as one of the government entities, it is legislated and must follow due process when procuring any goods and/or services. SARS Procurement employs different procurement mechanisms depending on the circumstances to procure its goods and/ or services. SARS spend valuable time and resources in sourcing and negotiating best contracts and selecting…show more content… It is through communication and sharing of information and ideas that better outcomes are provided for both parties. According to Bailey, Farmer, Jessop and Jones (2005:12), mutual supplier-buyer relationships provide benefits in terms of sharing and exchanging information, with the emphasis on building a ‘satisfactory outcome together’ in a range of areas.
2.2 Supplier Segmentation
2.3 Supplier engagement - supplier engagement model for each supplier will vary depending on the outcome of the segmentation process, which will affect the supplier performance measurement, the level and frequency of executive engagement. The frequency of the engagement will be different from suppliers. E.g. Strategic suppliers will have an executive sponsor meeting once a year, with other recurring meetings scheduled during the year. However, the tactical suppliers will have quarterly meetings with business to review their performance measurements and contractual…show more content… Most companies rely on timely delivery, price reduction and service quality offered by their suppliers in order to gain more profit (Cohen et al., 2008). Supplier performance directly affects the quality of the whole supply chain making it essential to establish an efficient mechanism to enhance it, accelerate its improvement and ensure the quality of services and/or products (Jiang and Bai, 2010). Through the evaluation and comparison of supplier performance, companies can ensure and maintain the best service and eliminate suppliers who fail to comply with performance requirements (Cohen et al., 2008).
The purpose of investing in a good relationship with a supplier is to improve their performance in fulfilling the needs of the buying organisation; equally, the buying organisation may have to implement changes in order for the supplier’s performance to improve. Performance and monitoring performance are at the core of SRM
Having a strong supplier-buyer relationship can open new opportunities for both parties. Both organizations become stronger when they work together in a collaborative