Managing supplier relationship: case studies of small and medium asian grocery retailers in Melbourne

Despite its recognition by both practitioners and academics as a standard purchasing portfolio model, the Kraljic matrix, or its variants, has not included power as one of its framing dimensions. Mainstream literature on supplier relationship management has repeatedly pointed to the role of power in shaping supplier management posture of large buying firms. In comparative terms, not only are there fewer studies on how small buyers manage their relationships with suppliers, sharp contradictions also exist among findings on supplier management practices of small retailers. This study addresses the question: “How do small and medium Asian grocery retailers (SMAGRs) manage their relationships with suppliers in relation to their power positions under different circumstances?” Using the Kraljic matrix as its analytical base, this study incorporates power relations, in addition to the strategic importance and supply risks of the items purchased, as a third dimension to examine the relationship management strategies SMAGRs used to deal with different suppliers. Based on a multiple case study of eight SMAGRs in Melbourne, this study found that SMAGRs used a mix of supplier relationship management strategies simultaneously to deal with the same supplier group for different purchase items. SMAGRs also displayed creativity in leveraging on trade exchanges and relationship management to generate transactional and relational power to augment their market power, bolstering their bargaining power in trade negotiations. The findings led to the development of nine working propositions and seven sub-propositions. The theoretical and practical implications of these working propositions were discussed and directions for further studies recommended.