Master Thesis Supplier satisfaction in long-term buyer-supplier relationships: a narrative case study

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Master Thesis

Supplier satisfaction in long-term buyer-supplier relationships: a narrative

case study

Supervisor: dr. J. Veldman Co-assessor: dr. ir. N.J. Pulles

June 24th, 2019

MSc Supply Chain Management Faculty of Economics and Business

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CONTENT

2.2 Dimensions of supplier satisfaction..……….……….. 7

2.3 Satisfaction over time..……… 8

2.4 Conceptual model……… 10

3. METHODOLOGY……….…………. 12

3.1 Research method/design……….. 12

3.2 Sample/case study selection………. 12

3.3 Data collection & measurement………... 14

3.4 Data analysis and interpretation………... 15

4. FINDINGS……….... 16

4.1 Case introduction……….… 16

4.2 Dimensions of supplier satisfaction in long buyer-supplier relationships….….. 19

4.2.1 Growth opportunities……….……... 19

4.2.2 Reliability……….………. 20

4.2.3 Relational behaviour……….……… 20

4.2.4 Profitability……….……….. 21

4.3 Comparison of supplier satisfaction with new suppliers………. 22

4.4 Development over time of supplier satisfaction……….. 23

5. DISCUSSION……….……….. 24

5.1 Theoretical implications……….………..24

5.2 Managerial implications………...25

5.3 Limitations………... 25

5.4 Suggestion for further research……… 26

6. CONCLUSION……… 27

7. REFERENCE LIST……….……… 28

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ABSTRACT

Supplier satisfaction is known to play a role in becoming a preferred customer in a buyer-supplier relationship. Four dimensions are known to influence buyer-supplier satisfaction: growth opportunity, reliability, relational behaviour and profitability. This research addresses the influence of those dimensions on supplier satisfaction in long-term buyer-supplier relationships. This is done by conducting a narrative case study. Eight cases are included which are all long-term suppliers of a Dutch retailer. Findings show that the importance of the dimension change between new customers and long-term customers of suppliers. This indicates that suppliers value different dimensions higher over time. The change of importance is however not caused by events, as mentioned in the literature, but instead it happens linear. This is useful for buying firms that want to satisfy their suppliers in order to receive preferential treatment and now have better insights about what satisfies their suppliers. In the past literature, there have not been any differences of supplier satisfaction over time but this research implies that it does change over time and that is has to be explored further.

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1. INTRODUCTION

Buying firms often reduce their supply base to receive benefits such as larger economies of scale and lower transaction costs. However, this behaviour causes supplier scarcity and more dependency on suppliers (Lavie, 2007; Vos, Schiele & Hüttinger, 2016). In a situation of supplier scarcity, suppliers are in a position to decide to which customer they allocate their resources. Buyers who can satisfy their suppliers receive the best resources and ultimately a preferred status over other buyers (Hüttinger, Schiele & Veldman, 2012). If a supplier is unsatisfied with the relationship with a certain buyer, this one is unlikely to be the winner in the resource allocation decision of the supplier (Schiele, Ellis, Essig, Henke & Kull, 2015). Therefore, a good relationship with suppliers is known to offer many opportunities for a buying firm (Pulles, Schiele, Veldman & Hüttinger, 2016).

Belonging to the group that wins the resource allocation decision of the supplier is important for buying firms that rely on external resources (Hüttinger, Schiele & Schroër, 2014). The buyer that is able to obtain the best resources is often considered to be the preferred customer. Customer attractiveness and supplier satisfaction are known to play a role in becoming a preferred customer (Hüttinger, Schiele & Veldman, 2012; Pulles et al., 2016; Schiele, Calvi & Gibbert, 2012; Schiele, Veldman, Hüttinger & Pulles, 2012). Customer attractiveness is seen as an ex-ante expectation while supplier satisfaction is an ex-post experience (Hald, 2012). Thus, whereas expected value of a future relationship is an important indicator for customer attractiveness, perceived value in a current relationship defines the supplier satisfaction (Pulles et al., 2016).

5 Prior work found the dimensions that affect supplier satisfaction. However, what is missing in the literature is an examination of the effects of these dimensions on supplier satisfaction over time (Hüttinger et al., 2014; Vos et al., 2016). In addition, the relationship between buyer and supplier results in supplier satisfaction when the quality of outcomes meets or exceeds the supplier’s expectations (Schiele et al., 2012). However, with every interaction between the buyer and supplier, the supplier will create new expectations and there will be new outcomes. Therefore, interactions that will happen in a relationship will also affect the supplier satisfaction. When supplier satisfaction is measured in different points in time, one can capture supplier satisfaction in different stages of a relationship. This can lead to changes in supplier satisfaction between new and long-term suppliers and could potentially also lead to different importance in the dimensions. To understand that shift in importance between the dimensions is important for buying firms that want to satisfy their supplier in the long-term.

In order to extend the literature by taking a deeper look in what effect time has on supplier satisfaction, this paper will add time as a key element in the development of supplier satisfaction. Therefore, the research question for this paper will be: “How do the dimensions of

supplier satisfaction establish over time in a long buyer-supplier relationship?”.

In order to answer the research question, the research approach of this paper will be a narrative case study. A narrative study can capture the dimensions of supplier satisfaction in different points in time and can investigate how the dimensions change over time by looking at the past interactions between the buyer and supplier (Pulles et al., 2016). Interviews will be conducted at suppliers of a Dutch retailer, with suppliers that are connected to the company for at least 15 years, ensuring we can map the influence time has on supplier satisfaction. Buying firms can learn from this paper on how they have to act and what they have to do in order to satisfy their suppliers and to maintain a preferred status.

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2. THEORETICAL BACKGROUND

In the past, the main focus regarding satisfaction in a buyer-supplier relationship has been on customer satisfaction which has been recognised as relevant to business success for decades (Hüttinger et al., 2012). Recently, the focus in literature has shifted from customer satisfaction to supplier satisfaction. This section will discuss the existing literature on supplier satisfaction, the dimensions of supplier satisfaction and on satisfaction over time. This chapter will be concluded with a conceptual model.

2.1 Supplier satisfaction

7 Only in recent papers, researchers were able to show, empirically, that significant key dimensions exist in supplier satisfaction: growth opportunity, reliability, profitability and relational behaviour (Hüttinger et al., 2014; Vos et al., 2016). These two papers are the first two papers that focussed on the dimensions that could cause supplier satisfaction. However, both of these papers highlighted these dimensions as important for measuring supplier satisfaction but did not evaluate them further. It still remains unknown what the most important dimensions are in terms of weights and over time. In line with that, Hüttinger et al. (2014) indicated that their results can hardly be generalized to all industry settings and other weights could emerge in other industry settings. This could mean that even when buyers cannot offer a large economic value to customers, these buyers can still influence the suppliers’ satisfaction and receive a preferred customer status. Therefore, this paper will also focus on the weights of importance of each dimension. However, as Hüttinger et al. (2014) mentions, measuring these constructs once to see if a supplier is satisfied is not sufficient. Regular supplier satisfaction measurement and feedback rounds may pave the way forward to improve buyer-supplier communication in the supply chain. This indicates that supplier satisfaction will change over time due to different events in the buyer-supplier relationship.

2.2 Dimensions of supplier satisfaction

The dimensions of supplier satisfaction can be divided into two categories: economic dimensions and relational dimensions. Growth opportunities and profitability are economic dimensions and relational behaviour and reliability are social dimensions.

Relational behaviour refers to “the buying firm’s behaviour towards the supplier with

regards to the relational focus of exchange capturing multiple facets of the exchange behaviour such as solidarity, mutuality, and flexibility” (Hüttinger et al., 2014: p703). The fact that

8 cultures apply reciprocity principles varies (Cropanzano & Mitchell, 2005). However, it is clear that it is a dimension that could influence the satisfaction of a supplier.

Reliability is defined as “the suppliers’ perception that the buying firm acts in a

consistent as well as reliable manner and fulfils its agreements” (Hüttinger et al., 2014: p703).

In the research of Hüttinger et al. (2014), reliability was mentioned as most important influencing factor of supplier satisfaction by the suppliers. The suppliers found it very important that buying firms comply with their made commitments. Maunu (2003) and Wong (2000) mention adherence to arrangements and payments habits as influencers of supplier satisfaction which are covered by reliability. Trust and commitment are also known to influence the reliability of a buying firm. Collaborative activities, such as information sharing, joint relationship effort, and dedicated investment lead over time to trust and commitment (Nyaga et al., 2010; Pulles et al., 2016; Dyer & Hatch , 2006). This is also supported by SET, which explains that relationships evolve over time into trusting, loyal and mutual commitments (Cropanzano & Mitchell, 2005).

Next to the relational dimensions, the economical dimensions of supplier satisfaction are equally important dimensions of supplier satisfaction (Essig & Amann, 2009). Growth opportunities refers to “the suppliers’ ability to grow together with the buying firm and to

generate new potential business opportunities through the relationship” (Hüttinger et al., 2014:

p703) whereas profitability refers to the profit, in terms of money, that the supplier receives in relation with the buying firm. Both dimensions influence the supplier satisfaction according to Kauser & Shaw (2004) and Nyaga et al. (2010). Growth opportunities can help large buying firms to create value for their supplier because they have a valuable reference effect that enables suppliers to access new markets (Walter et al., 2001). Also small buying firm with very high growing potential can help suppliers to grow along with them.

2.3 Satisfaction over time

9 perceptual “calculation” by the supplier which can lead to supplier satisfaction (Hald, 2012). Therefore, supplier satisfaction can change over time depending on the events that happen between the buyer and supplier. If an event occurs that disappoints the supplier, this may immediately or over time result in a downgrading of the supplier satisfaction. Hald (2012) state that the events that are triggered by interaction partners should have a magnitude or a relative importance high enough to be remembered. However, it still remains unknown what events cause this shift in satisfaction and how satisfaction will change over time in terms of what dimension becomes more or less important. This is a key aspect to know for buying firms to understand the satisfaction of their suppliers and the development of it.

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2.4 Conceptual model

If buying firms want to maintain their preferred customer status, they have to make sure the supplier is satisfied at all times. As mentioned, this research will focus on four dimensions that are known to influence supplier satisfaction: growth opportunities, reliability, relational behaviour and profitability. To keep suppliers satisfied, various events have to be identified that happen over time that influence the relationship of those dimensions on supplier satisfaction. It is also important to link specific events to the relationship to see what the effects are. Also, the longer the relationship the more interactions between buyers and suppliers will take place.

It is important for buying firms to know which dimensions is most important for supplier satisfaction in which stage of the relationship. This can help in keeping all suppliers satisfied and to discover what the best ways are to do this. Each dimension can be ranked in terms of importance from top to bottom. It is known that the importance of dimension change over time in customer satisfaction. Therefore, this paper will also take a look at the changes of importance of each dimension of supplier satisfaction. Vos et al. (2016) and Hüttinger et al. (2014) have not specifically ranked the dimensions in their papers. However, according to the standardized beta coefficient (how many standard deviations a dependent variable will change per standardized unit increase in the independent variable) in the relationship between the dimensions and supplier satisfaction from their researches, it is possible to make a ranking (table 2.1).

Vos et al. (2016) Hüttinger et al. (2014)

1. Profitability 1. Relational behaviour

2. Relational behaviour 2. Growth opportunity

3. Reliability 3. Reliability

4. Growth opportunities

Table 2.1: Ranking of dimensions of Vos et al. (2016) and Hüttinger et al. (2014).

11 relational behaviour (Vos et al., 2016). This paper will investigate how those differences can occur and what causes this. This will be done according to the following conceptual model:

+/-

+ +

Figure 2.2: Conceptual model

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3. METHODOLOGY

As shown in the previous chapter, the time aspect in the rise and development of supplier satisfaction is still unclear. What causes these changes is also not clear. In this section it will be explained how we are going to study those elements.

3.1 Research method/design

In order to empirically ground theory development, this study will take an inductive approach through a case study. Case studies are suitable for inductive theory building, allow to study the phenomenon in its natural setting and are useful when the phenomenon is not completely understood (Karlsson, 2009). This paper will collect process data in order to understand how the dimensions of supplier satisfaction evolve over time and why it evolves this way (Van de Ven & Huber, 1990). Process data consists largely of stories about what happened and who did what when – that is, events, activities, and choices ordered over time (Langley, 1999). This will provide information in terms of the sequence of stories which will lead to an outcome. This will be done by doing a narrative case study on multiple different cases. Narrative research is an umbrella term that captures personal and human dimensions of experience over time (Clandinin & Connelly, 2000). Narrative research involves a construction of a detailed story from raw data (Langley, 1999). The aim of this is to achieve understanding of organizational phenomena, not through formal propositions but by providing experiences of a real setting in all its richness and complexity (Lincoln & Guba, 1985). This richness will lead to detailed stories of the interviewees which could influence the relationship between the dimensions of supplier satisfaction and supplier satisfaction over time.

3.2 Sample/case study selection

The unit of analysis in this research will be the dimensions of supplier satisfaction. The narrative case study will be conducted at different suppliers of a Dutch retailer. Within these cases, the research will investigate respondents from different hierarchical levels to create a rich pool of data with different experiences and events. This will lead to a broader scope on events and a better view on what effects the relationship between the dimensions and supplier satisfaction.

13 see a change in the dimensions of supplier satisfaction. This also leads to more information from the respondents whilst they could have experienced more events over the years. The respondents have to be located in the Netherlands for reasons of proximity in both distance and language.

Suppliers of the Dutch retailer which meet the criteria mentioned above were selected and approached for participation in this research. The suppliers were approached via a telephone call and later a meeting was arranged via e-mail. All approached suppliers were willing to cooperate in the research and were asked to think about events which affected their satisfaction over time in preparation of the interview. Eight cases were used in order to capture as much events as possible at the respondents. Narrative research normally only uses one or two cases which are very rich, which leads to very high accuracy but low generality (Langley, 1999). The narrative case study is mostly used to understand stages or phases in processes, and to investigate a phenomenon within its environmental context (Gilgun, 1994). This enables us to explore and find more events and to be able to generalize the events more and to get a better external validity. Therefore, this paper will therefore use eight cases instead of only one or two.

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Nick-name

Function Product group Buyer-supplier relationship

Interview duration

1 Mat Sales manager Household 20+ years 45 min

2 Paper Customer service Stationary & hobby 15 years 42 min

3 Textile COO Multiple (5) 20+ years 54 min

4 Bucket All rounder Household 20+ years 36 min

5 Light Buying & logistics Decoration 13 years 34 min

6 Towel Team manager Linen 20+ years 68 min

7 Perfume Buying & sales Multiple (5) 15 years 73 min

8 Paint CEO Do-it-yourself 20+ years 54 min

Table 3.1: overview of the interviewees

3.3 Data collection & measurement

The main source of data in this research will be interviewees. The interviews will be semi-structured, which is a common collection tool in narrative case study. This paper also chooses to use an semi-structured interview approach in order to build a rich data source with a focus on the concrete particularities that create powerful narrative stories (Connely & Cladinin, 2000). The goal of the interviews is to create a timeline with events from each supplier which will indicate what happened and what the effect was on the relationship of supplier satisfaction. When the interviewee mentions an event, the interviewer will make sure the events will be explained extensively by the interviewee and the effect on supplier satisfaction will be clear. When this is clear, the interviewee can proceed to the next event that he wants to mention that influenced their satisfaction. However, some questions will be prepared in order help the interviewees go back in time and to discuss the different dimensions of supplier satisfaction. So the interviews will be divided in two parts: the timeline of events will be created and the interviewer will discuss the dimensions of supplier satisfaction with the interviewees. In Appendix A, a more detailed research protocol can be found which also includes the interview protocol.

All interviews will take place at the site of the suppliers. The interviews will be conducted by one researcher. Doing interviews with two researchers have advantages in terms of noting and observer bias, however this is not possible due to resource constraints (Karlsson, 2016). Therefore, all interviews will be transcribed, in accordance with the suppliers, in order to keep all the details mentioned in the interview remained.

15 Documents will also be used to get background information of the suppliers participating in the research, where we look at their developed over time and their products.

3.4 Data analysis and interpretation

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4. FINDINGS

In the findings section, the results of the interviews will be discussed. This section will start with a small introduction of each case. The dimensions of supplier satisfaction will be discussed separately afterwards, to understand what is important for suppliers and how satisfaction is defined for them within those dimensions. After that, the dimensions will be discussed over time to see if the importance of the dimensions change over time and how these change over time.

4.1 Case introduction

The first case which is used for this research is of a mat supplier, which resulted in the nickname

mat for this supplier. This supplier produces a big variety of mats, from doormats to turf. They

have done this since the beginning of the retailer. The respondent of this supplier is a sales manager but has done multiple functions (administration, optimisation, sales) within the company for over 15 years. The supplier praises the Dutch retailer for the direct contact they have with them. They will have once or twice a year an evaluation with the buyers of the buying firm. The retailer is a big customer for them. Although they are a production company, they have capacity for more than 17.000 pallets inventory to be able to deliver fast. “If they (retailer)

cannot deliver to their stores, then we can also not deliver to their DC’s, it always has to continue”. They are very satisfied with the retailer and the main aspects for that is that they

give continuity, their short lines of communication, same culture and growth. Over time, mainly

the communication has changed due to new technologies (e-mail, mobile phones) which has affected the satisfaction positively because it is faster and easier. They try to keep every customer happy but in case of emergency, the retailer will get a preferential treatment because their importance in the company is so large.

17 multiple designers in the companies who know what the trends are and what trends are going to be popular in the future. However, the retailer still decides by themselves what they like and which designs they want. Despite this, the supplier has always been satisfied and considers this as an incident that will happen in all relationships and is not big enough to cause dissatisfaction.

Case three is a company which delivers a lot of different articles, mostly textile and decoration, to the retailer. The nickname for this supplier is textile. Articles are bought by the supplier and delivered to the supplier, both by trailer as well as by container. Every task that is between the buying of their articles and the selling of their articles, is the task of the respondent who is active since 2010 at the supplier. Openness and speed of communication are reasons to be satisfied as well as fairness and understanding according to the respondent. Compared to their customers in Germany and France, the buying firm is more flexible and give suppliers also more independence in for instance choosing the time to deliver goods. The respondent also states that the retailer has become more transparent over the years and gives the supplier also the opportunity to be more open. This also helps the relationship to become more flexible. However, the satisfaction has always been good and there are no reasons to be dissatisfied.

In case four, a supplier of plastics which consists of for instance buckets, lunch boxes and plastic gloves, was interviewed. Their main items is their bucket so this is also their nickname in this research. This supplier is a small family business where three people are employed. They all do everything and are also a supplier of the retailer from the beginning. Satisfaction is according to this supplier caused by communication, easiness, personal contact and profit. The respondent states that the communication was better in the past and thinks that the communication is getting more important as the relationship progresses. However, they have always been satisfied but in the past a bit more due to the better communication.

18 retailer uses and has no disruptions in the communication between both parties. They have always been satisfied and there are no specific moments that caused dissatisfaction.

The sixth case entails a linen supplier. They are specialized in kitchen- and bath towels, which leads to their nickname towel. They have been supplier since the beginning of the retailer and have grown along with them. The respondent in this case is a team manager who is in charge of all different departments that are in contact with the supplier, for instance selling and logistics employees. The team of the respondent discussed about the aspects of satisfaction and concluded that clear communication, fairness, continuity, clearness and transparency have the biggest influence on satisfaction. They think the retailer always scored good on these aspects are therefore they have been satisfied since the beginning. This supplier is also very pro-active in gathering information, not only from the retailer but also from the market as a whole. They rely on their own information and in this way challenge the retailer to gather information as well and be able to compare if they have the same view of their market.

The seventh case is another supplier who delivers articles in multiple categories. The products differ from household goods to personal care with for instance articles as deodorant or toilet paper. They also sell perfume to the retailer so that is their nickname. They are a supplier for 15 years and their company is also not much older than that. The respondent of this case is an experienced employee who has worked in multiple companies which are suppliers of retailers and supermarkets. Communication is for them a big influence on satisfaction, but also transparency and growth. However, communication is mentioned a lot in this interview. The respondent is mentioning the speed of communication as a downside of the retailer. However, slow communication is very common in the world of retailers and supermarkets according to the respondent. Also the growth of the retailers has caused that decisions cannot be made by one person anymore and have to be confirmed by multiple people which does not help the speed of the communication. Nevertheless, despite the bad communication, the supplier is still satisfied because they realise that they would not be at this point without the retailer as a customer. Also for the future they predict a lot of growth so bad communication is not a reason to say farewell.

19 spray paint and bicycle parts. Paint is their main article so that is their nickname. The reason for the supplier to still be supplying the retailer is the honesty and cultural overlap between the buyer and supplier and these are also the most important aspects of satisfaction for them. Besides the retailer, they do not have other large customers. They state that the growth of the retailer yearly, 20 to 25%, is enough for them to grow and with other large customers, the growth will be too big and cause problems in their organisation. They have rejected all other offers of other customers and are fully focussed on the retailer. Due to very efficient working and a good cooperation they are able to grow along and remain profitable.

4.2 Dimensions of supplier satisfaction in long buyer-supplier relationships

In the following sections we will take a look, per dimension, what the influence is on supplier satisfaction and what the most important aspects are within the dimensions.

4.2.1 Growth opportunities

Growth opportunities referred to the suppliers’ ability to grow together with the buying firm and to generate new potential business opportunities through the relationship (Hüttinger et al., 2014). In this paper one buying firm was used which grew in the past ten years from a revenue of €400 million to a revenue of €4 billion. All of the suppliers which are interviewed in this research are a supplier of this firm for over 10 years, which means they have been growing along with them. “The growth is really explosive every year. I think we have each year a growth

of 15 to 20% ”(Mat). This growth also means that the buying firm has become one of the

biggest, if not the biggest, customer(s) of the suppliers. Also for the future, there are a lot of growing opportunities between the suppliers and the buying firm.

When growing along with the buying firm, the dependence will also increase for the suppliers. However this does not have to mean that the suppliers will be unsatisfied (Caniels et al., 2017). These suppliers can still be satisfied with the relationship due to the growth opportunities offered by a large buyer. That is also the point of view of the suppliers in this research: “The margins have dropped from the start till now. We saw that coming and that is

logical if you look at the enormous growth” (Paint). Therefore, most of the suppliers compare

the growth opportunities to the profitability of a buying firm. “The low prices, you know that.

20 Along with the growth of the buying firm and also the growth of the suppliers, suppliers are able to gain more advantages in general. “Also in terms of our purchase price. Our supplier

can buy their materials in larger quantities and have a larger warehouse. We have also those benefits, so you can earn a little more on that ” (Light).

4.2.2 Reliability

Reliability is defined as the supplier’s perception that the buying firm is acting in a consisting and reliable manner (Hüttinger et al., 2014). In this research, all suppliers consider the buying firm as very reliable. Many supplier indicate this by mentioning the fixed payment period of orders. “For instance the payments are always on 60 days, that is pleasant for us, but also for

our bank that they know this from our biggest customer” (Textile). The reason that the fixed

payment period is often mentioned is mainly due to unreliable retail customers in the past who caused this. “In the last years we have had a lot a small customer who went bankrupt. If you

accumulate all of those costs you will not be very happy” (Light).

An important aspect in reliability indicated by the suppliers is transparency. “In the past

ten years we have experienced every single thing you can think of, but there is nothing we could not discuss with them (the buying firm)” (Textile). Especially, due to the growth of both the

suppliers and the buying firm, the ability to always be open to each other to discuss certain topics you have never encountered before is considered important. “The buying firm makes

mistakes, we make mistakes, but is all about how you solve those problems together” (Paint).

Other aspects that were mentioned by multiple suppliers to express reliability are honesty and loyalty. “I have not experienced that they said they will do one thing and they end

up doing something else” (Paper).

4.2.3 Relational behaviour

21 openness. “I have already mentioned it a couple of times, but the communication with them

(the buying firm) is clear and straightforward ” (Towel).

The speed of communication between the buying firm and the suppliers is the aspect that was mentioned in five of the eight interviews by the suppliers. “The most important thing

is the speed of the communication. When we have questions or when the buying firm has questions, it is important, not to get an answer immediately, but to at least give an answer and also within a reasonable time” (Textile). Some suppliers have problems with this and have to

wait for multiple weeks to get an answer, which in their opinion is not a “reasonable time”. Not only a fast response is considered as important, but also the time it takes before a decision is made. “You have a lot more to do with new people these days. And of course, I understand that

but you pull out the decision speed” (Perfume).

Clarity in communication, knowing what you can expect from each other and short lines of communication, also define the relational behaviour. “They are strict and it is always

clear what they mean. We get a clear yes or a clear no so we know where we stand in the relationship” (Towel). Suppliers value this direct way of communication and find it important

to have a few contact point where they can ask their specific questions. Downside on this way of working is that some supplier indicate that they have the feeling that sometimes personal opinions prevail. Also when their contact person is not available or slow in reacting, there is no other contact person to help them out. However, the openness of communication is good according to the suppliers. “I think it is important that we keep the lines open to each other. I

also have the personal mobile number of my contact persons so if need to contact them it is always possible” (Towel).

4.2.4 Profitability

Profitability refers to the profit the suppliers receive in the relationship with the buying firm. The buying firm in this research is a discount retailer which means the margin will be low with the suppliers. It is possible for the suppliers to keep those margins low due to the high sales numbers. “I love the volumes. And of course the margins are low, because if the margins are

not low and your buying prices are not perfect, there is no reason to have a discounter as a customer ” (Perfume). Suppliers are also not dissatisfied by low margins. They agree on low

22 “In an extreme case the conclusion can also be that we are not able to deliver an article

anymore because it is not achievable anymore for us” (Towel).

4.3 Comparison of supplier satisfaction with new suppliers

In the previous paragraphs all dimensions are discussed separately. Suppliers indicated what aspects are important for them to become satisfied. However, in order to answer the research question, we also researched when particular dimensions were more important and if the importance of a dimension has changed over time. During the interviews, it became clear that some trade-offs are made between dimensions and that the importance of dimensions changed over time. Those trade-offs and the shift in importance will be discussed in this paragraph.

Ranking with new customers Ranking with long-term customers (>10 years)

1. Growth opportunities 1. Relational behaviour

2. Reliability 2. Reliability

3. Relational behaviour 3. Growth opportunities

4. Profitability 4. Profitability

Table 4.1: Ranking of the dimensions in order of importance, average taken over all suppliers.

As can be seen in table 4.1, profitability is both in the beginning with a new customer as well as with long-term customers the least important dimension according to the suppliers. Some suppliers indicate that profitability can be created by yourself and you do not need a customer for that. “In my opinion profitability is the least important because it is due to your

own performance. It may sound strange but it has never been my main goal ” (Perfume).

Whereas other suppliers declare that profitability is the most important dimension for new customers. “For new customers, profitability is always the first thing we look at. If the

profitability is too low, we do not do it” (Textile). However, five suppliers indicated profitability

as the least important dimension for satisfaction with a new customer, and seven suppliers said the same for long-term customers.

23 not affect the satisfaction of a supplier very much in that relationship, as long as the customer is profitable. In addition, a non-profitable new customers of a supplier cannot be considered as a new customer due to the fact that there will be no relationship between them due to the non-profitability.

In table 4.1, it can also be seen that the other two dimensions, reliability and relational behaviour, respectively stay the same and grow in importance compared to the other dimensions. Suppliers find it hard to judge new customer on how the reliability and the relational behaviour will be. Therefore, measuring satisfaction of new customers based on dimensions you do not have yet discovered is difficult. However, the first impression suppliers get of new customers still remains important for satisfaction. “Last week we had potential new

customers here, and purely based on reliability and mutual respect, you can do very good business” (Paint). In addition, reliability and relational behaviour gain in importance when the

relationship with a customer continues. “Relational behaviour and reliability are things that

you have to experience from the first moment onwards and will gain importance in the long run” (Perfume). Because this shift in importance is mainly caused due to experience as the

relationship progresses, suppliers cannot give specific events that could have caused this.

4.4 Development over time of supplier satisfaction

In past research, the change of supplier satisfaction over time is explained by events that will influence the satisfaction (Hald, 2012). However, in this research no events were detected. When looking back in time with the supplier, suppliers were not able to detect any events that have influenced their satisfaction towards the buying firm: “In the past 25 years, there were no

specific difficulties between both parties” (Paint) or “No, definitely no specific events”

(Perfume). Some supplier indicated some events that defined their satisfaction. However, those events happened internally within the supplier itself and not within in the relationship between the buyer and supplier: “It influenced satisfaction when we calculated our stock on a new way” (Paper) or “When we started delivering by containers instead of trucks” (Textile). On the contrary, suppliers think it is a change that happens over time which is not caused by specific events. “You have to find it out in the beginning, everything that I consider now as important, I

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5. DISCUSSION

5.1 Theoretical implications

This research has focussed on the dimensions that influence supplier satisfaction in a buyer-supplier relationship. The focus of this paper was on long term buyer-buyer-supplier relationships to see how the dimensions of supplier satisfaction change over time. This research has extended the knowledge on the known dimensions of supplier satisfaction of Vos et al. (2016) and Hüttinger et al. (2014). Those papers have found the dimensions of supplier satisfaction but have not found differences with the time aspect in a buyer-supplier relationship. This paper has extended the literature by adding the time aspect in the relationship between the dimensions and supplier satisfaction. Therefore, this research answers to the call for research to investigate supplier satisfaction in different stages of a relationship (Pulles et al., 2016), and on the importance and rankings of the dimensions (Ramsay et al., 2013).

When taking a look at the standardized beta coefficient, one can rank the dimension found by Vos et al. (2016) and Hüttinger et al. (2014). The first thing that stands out in table 5.1 is the profitability differences. Profitability was not yet found by Hüttinger et al. (2014) but it was added to the model by Vos et al. (2016). However, profitability scored very high considering the standardized beta coefficient in the research of Vos et al. (2016), whereas in this research profitability was considered least important for both new customers as well as for long term customers. When leaving profitability out of the equation, the results for both papers, long-term customers in this paper and Vos et al. (2016), are exactly the same for long term buyer-supplier relationships. This can be explained by the fact that 75% of the sample of Vos et al. (2016) has been in the researched buyer-supplier relationship for more than 10 years. This would also suggest that the shift of importance of the dimension would happen in the first 10 years of a buyer-supplier relationship.

New customers Long-term customers Vos et al. (2016) Hüttinger et al. (2014)

1. Growth opportunities 1. Relational behaviour 1. Profitability 1. Relational behaviour

2. Reliability 2. Reliability 2. Relational behaviour 2. Growth opportunity

3. Relational behaviour 3. Growth opportunities 3. Reliability 3. Reliability

4. Profitability 4. Profitability 4. Growth opportunities

25 The results of the paper of Hüttinger et al. (2014) are more different compared to our research. The only similarity between the researches is that relational behaviour can be considered as the most important dimension. Hüttinger et al. (2014) did also not find any differences between buyer-supplier relationships less than ten years and above ten years. Their sample also consisted for 75% out of long term relationships longer than 10 years, which leads to three researches with all three different rankings of dimension of supplier satisfaction. On the other hand, the rankings of Vos et al. (2016) and Hüttinger et al. (2014) can also be influenced by the small percentage of short term relationships in their sample.

5.2 Managerial implications

This study has several managerial implications for buyer supplier relationships. It indicates how the dimensions of supplier satisfaction establish in long-term buyer-supplier relationships. This can be used by buying firms in order to keep their suppliers satisfied in a long-term relationship. Therefore, it is important to score high on relational behaviour and reliability whereas profitability is less important. Buying firms can sharpen their prices when needed however it has to remain profitable for their suppliers.

The fact that the changes in supplier satisfaction are not event-based, can also be used by buying firms. An heavy discussion between both parties would not immediately lead to dissatisfaction but will change linear over time as the relationship develops. However, when a buying firm scores low on the mentioned dimensions, suppliers will always have the possibility to stop the relationship. Especially, when suppliers are harder to find this can be an important aspect.

5.3 Limitations

26 in that time period. Therefore, it could be that there were events that affected their satisfaction, but they did not remember them anymore. iii) The biggest difference between the weights of the dimensions between this research and the paper of Vos et al. (2016) is the profitability. This could possibly be caused by the fact that not all interviewees in our sample could influence the profitability. Some interviewees only had contact with the buying firm for operational reasons but were not involved when negotiating the prices of products.

5.4 Suggestion for further research

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6. CONCLUSION

This research had the purpose of identifying the effect of time on the relationship between the dimensions of supplier satisfaction and supplier satisfaction in buyer-supplier relationships. With buying firms reducing their supplier base, they get more dependent on their supplier in which supplier satisfaction helps to become a preferred customer of those suppliers. In this study, multiple narrative case studies were conducted, with 8 semi-structured interviews with long-term suppliers of a Dutch discount retailer. These data was supported by secondary data in terms of documents of the retailer.

In this research, supplier satisfaction was measured according to four dimensions: growth opportunity, reliability, relational behaviour and profitability. These dimensions were examined at the suppliers to see how they have developed over time. The dimension were also ranked by suppliers and differences occurred between new customers and long-term customers of the suppliers. Growth opportunity was mentioned as most important for new customers whereas relational behaviour was ranked as most important for long-term customers. When taking a deeper look into those changes, the suppliers indicated that events were not the cause of those changes. It happens over time in a linear manner.

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8. APPENDIX A: Research Protocol

In order to be transparent and consistent with the data collection of the interviews, this Appendix A will present the research protocol of this paper. It includes the steps that are taken before, during and after the interviews.

8.1 Pre-interview

In the first step of finding participants for the research, the researcher reached out to several buyers and planners within the buying firm with the question if there were suppliers that they have a long relationship with and if there was a specific person within that supplier that also have been in that relationship for a long time. This resulted in a list of suppliers that could possibly be used for this research. To make sure those suppliers really have a long relationship with the buying firm, old order confirmations were checked between those suppliers and the buyers of the buying firm. After that, a shortlist of ten possible participants were made that suited the case selection criteria. Those suppliers were then called by the researcher. During that call, the research was explained and suppliers were asked if they wanted to participate. When they agreed, an invitation was send via e-mail with a short introduction of the research and with a request to already think about events that caused satisfaction or dissatisfaction in relationship with the buying firm over time.

8.2 Interview protocol

In this chapter, the interview protocol will be discussed. All of the text presented in the following of section 8.2 is used by the interviewer as in the interviews as explanation towards the interviewee.

8.2.1 Introduction

32 The research in this paper will be about supplier satisfaction, so your satisfaction in relation with the buying firm. I will do eight interviews at different suppliers of the buying firm to ask about supplier satisfaction. I will research how the satisfaction has started, what defines satisfaction for suppliers and how this develops over time. I am in particular looking for supplier that have a relationship with the buying firm for over 10 years, so that is one of the reason whereby you are selected. I will use this 10 year relationship to discover was causes the satisfaction in the first stages of a relationship and how this develops towards a longer relationship. This is the research in very broadly said, it will all get more clear during the interview and the questions.

 Could you give an introduction about who you are, what your position is within the company, how long you are working here and what your relation is to the buying firm?

8.2.2 Supplier satisfaction

Supplier satisfaction is defined as a positive affective state resulting from an overall positive evaluation of the aspects of a supplier’s working relationship with the buying firm. Every supplier can have their own aspects that define their satisfaction towards the buying firm. It can also change over time what you find important or what you find less important.

 What are the aspects for you that define your satisfaction or dissatisfaction towards the buying firm?

 How did the relation with the buying firm start?  Is there a lot changed since the beginning?

 How do you feel now about the relationship with the buying firm?  How has the satisfaction been over the years with the buying firm?  Why have you satisfied/dissatisfied?

 Has it always been the same or did it change over time?  Have there been large fluctuations?

8.2.3 Time

33 - Did it affect your satisfaction for a long or short period of time?

- When did this event happen?

 Are there other events that affected your satisfaction?

 In a previous question you mentioned aspects that define your satisfaction, do you think those aspects became more or less important over time in defining your satisfaction?

- Why do you think it became more or less important?

8.2.4 Dimensions

In the literature, different dimensions are found that define supplier satisfaction in a different industry and I also want to discuss them with you. You can see them on this paper (shown in section 8.2.5).

 Do you think growth opportunities that the relationship with the buying firm offers you, have an impact on your satisfaction?

 Do you think the reliability of the buying firm has an impact on your satisfaction?  Do you think relational behaviour of the buying firm has an impact on your satisfaction?  Do you think the profitability that the relationship with the buying firm gives you

impacts your satisfaction?

 When ranking the four dimensions, what dimension do you consider as the most important in a new relationship and how would you rate the other dimensions?

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8.2.5 Dimensions shown to the suppliers

GROWTH OPPORTUNITIES

Growth opportunities refers to the suppliers’ ability to grow together with the

buying firm and to generate new potential business opportunities through the

relationship.

RELIABILITY

Reliability is defined as the suppliers’ perception that the buying firm acts in

a consistent as well as reliable manner and fulfils its agreements.

RELATIONAL BEHAVIOUR

Relational behaviour refers to the buying firm’s behaviour towards the

supplier with regards to the relational focus of exchange capturing multiple

facets of the exchange behaviour such as solidarity, mutuality, and

flexibility.

PROFITABILITY

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8.3 Post interview

After an interview was conducted, a transcript was made of the interview. If there were any additional questions that had to be asked to the supplier, the researcher was able to ask the question to the supplier via e-mail afterwards. The transcripts were send to the suppliers for their confirmation. After all interviews were conducted and transcribed, the process of coding the interviews could start. The first step in the process of coding the interviews was to identify and label the concept behind each sentence. For instance, this sentence of the textile supplier: “We live in a 24 hour world, than it should not be possible to wait for an answer for over 3,4

or 5 weeks. Those are exceptions but it should never happen ” (Textile). This sentence was