Getting Closer and Nicer:

Partnerships in the Supply

Chain
Paul Matthyssens and Christophe Van den Bulte

T HE BUYER OF A GERMAN &CtrOniCS company

recently declared that ‘following an obvious change
in attitude taking place with regard to openness and
co-operation between companies, we will have to
modify the relationship with our suppliers substan-
tially’. He presented the so-called SUCCESS pro-
gramme as an answer to this challenge. SUCCESS
stands for Supplier Customer Co-operation to Effi-
ciently Support mutual Success. It is the formation of suppliers (Figure 1).This is perhaps best illustrated
intercompany, cross-functional teams which tackle by the practices of the British and American car
aspects of entrepreneurial concern, such as quality, manufacturersm4 They tried to realize a minimal cost
logistics, R & D and production. The intent is to bring per unit for components and consequently used
considerable increases in productivity for both tactics that are characteristic of tough negotiators.
partners. Such a co-operative approach will lead to Playing different suppliers off against each other,
much higher profit increases than could be realized continuously threatening ‘backward integration’,
via individual actions, he concluded. using shadow cost calculations and refusing to sign
In the past decade the industrial customer has contracts which extended over more than 1 year,
radically changed. This inevitably leads the most were common practices. Moreover, a low price was
responsive suppliers to change their marketing not enough. They also demanded service, total
strategy. This article aims at introducing general consistency and high production flexibility. When a
managers to these developments. First the most supplier wanted to sell a system on which he could
important changes in buying behaviour during the earn a considerable margin, they did not hesitate to
1980s and early 199Os-increased co-operation, out- ‘reverse engineer it’, look for suppliers for the
sourcing, and globalization-are sketched and ana- subcomponents and reassemble the system from the
lysed. Next, we propose relationship marketing as a parts. In the case of breakthrough innovations they
suitable response to these changes and we discuss even forced their suppliers to license the patent to
the emerging areas to which suppliers should pay competitive suppliers.
special attention during the 1990s. This model was also widely applied outside the car
manufacturing sector. Heinz, for instance, always
exacted price reductions from its four bottle sup-
pliers via a system of punishments and rewards.
Evolutions in Buying Behaviour This antagonistic model had serious disadvant-
Until the middle of the 1980s purchasers typically ages. Firstly, the exploited suppliers were not pre-
operated in an antagonistic mode towards their pared or able to invest in new machines or products.

Long Range Planning, Vol. 27, No. 1, pp. 72 to 83. 1994

Copyright 0 1994 Elsevier Science Ltd
Printed in Great Britain. All rights reserved
002466301/94 $6.00 + .OO
 Co-operative model

interaction and
tough negotiations communication
(annually) (on-going)

price is central quality and competence of

the supplier are central

short term contracts

long term, close relationships

‘multiple sourcing’,
tendency to dual and single
several suppliers for each
sourcing
component

outsourcing and
threat of buying co-makership
the suppliers

strategic supply management

tactical purchasing

The purchasing companies began to realise that very simple message: goods must flow as smoothly as
antagonism leads to short term savings only. In the possible through the system and waste should be
meantime increased competitive pressure forced eliminated. To achieve the ideal flow, the following
them to innovate more quickly and to provide a aspects are essentialV
higher quality and reliability. In order to achieve this,
q Total quality management, including preventive
the support of the suppliers was vital.’ A second
maintenance of machinery, to forestall break-
important disadvantage was that working with a
downs, defects and remakes. The quality of the
large number of different suppliers led to inconsisten-
goods supplied is crucial; to avoid the necessity
cies in input, congestion in production and cumber-
for a goods-in inventory, the supplier has to carry
some administrative procedures. It was very difficult
out the quality control himself, or work on the
to manage this complexity.
basis of zero defects. Often the supplier is involved
In addition to these negative implications, new
from the design stage of new products in order to
insights into inventory, production and quality
arrive at optimal quality (the so-called co-design).
pushed buyers in the direction of a so-called co-
Where there are no reliable suppliers, supplier
operative model in which close ties between sup-
development programmes, joint investment pro-
pliers and buyers develop in a strategic perspective
grammes and pro-active planning will have to be
(Figure 1).Besides research and development comple-
set up.
mentarity and leverage and total quality manage-
ment, the Just-in-Time concept has a key role in the q Extreme simplification of the production process
change in attitude. through improved lay-out of the factories, reduced
In essense JIT is a (production) philosophy with a set-up times, design for manufacturability, etc. A

Long Range Planning Vol. 27 February 1994

 balanced and trouble-free production-and if in the past the supplier with the lowest price
possible balanced demand through synchromar- normally received the order, today an increasing
keting-are also aimed at. number of customers appear to take other criteria
into consideration. More and more buyers raise the
1 The timing of the incoming flow of goods has to be question of how the capital investment can contri-
strictly synchronized. This requires careful con- bute in the long term to strengthening their competi-
sultation between supplier and buyer about tive position. This brought Picanol, the world leader
production planning. True JIT-producers do not in weaving technology, to design machines with
demand that their suppliers keep free capacity or lower set-up times, with the aim of reducing the costs
take rush orders: ‘Delivering just-in-time means to its customers and to increase their mix flexibility.
planning in plenty of time’, as Westbrook puts it. When selecting suppliers, companies also increas-
q Competent and motivated employees, a must for ingly take into consideration the staying power of the
Total Quality Management and the rapid identifi- supplier and even his growth potential. When buying
cation and solving of problems. an operation system, the risk of losing the ability to
acquire or to fully use complementary products in the
On the whole, Eisenhardt and Wescottl’ observe, future is given considerable importance.14 Respons-
JIT leads to a much greater sense of holistic and iveness, the degree to which a supplier is prepared to
harmonious interrelationships among processes and respond to his customer’s unique wants, is another
people inside as well as outside the organization. consideration. Therefore, customers prefer suppliers
JIT buyers approach their suppliers from a long who already have a long track record.“‘16 Purchasers
term perspective. Companies such as Deere and in the most progressive companies now pay more
Caterpillar organize joint workshops with their attention to total cost management and life cycle
suppliers, share the savings and inceasingly work costing. When determining the total net cost for the
with contracts of between 24 and 36 months. They full life duration of the product, they take into
also tend to engage in single and dual sourcing: co- account not only the purchasing price, but also the
operation and involvement typically results in a cost of financing, maintenance, poor delivery per-
reduction in the number of partners. formance and quality deficiency. Such total value
A British producer of industrial heat and chilling purchasing is still exceptional, but changes are
equipment has a programme of dramatically reducing occurring.
the number of its suppliers. In the buying office, a Asea Brown Boveri is a good case in point. The
huge scoreboard indicates the actual number of company distributes a brochure to its suppliers, ‘ABB
suppliers vs the reduced number to be reached at the and our suppliers-Expectations of the relationship’.
end of the year. In less than 3 years, the total number The company defines supply management as the
of suppliers has been reduced by 60 per cent. controlled concentration of purchases of selected
According to the chief electronics buyer, companies commodities and services from preferred, certified
who want to remain on her list of suppliers will have suppliers. The goal is the development of a competi-
to excel1 in the following areas: customer orientation, tive advantage through the implementation of long
a continuous preoccupation with cost reduction, a term, total cost reduction opportunities of mutual
high price/quality and service/delivery performance benefit to the supplier, ABB and ABB’s customers.
(speed up the process, reduce inventories). The company expects from its suppliers error-free
The suppliers confirm these new attitudes. Studies quality and delivery, compressed cycle times, a
of the American car manufacturing sector, once the reasonable price, innovative engineering capability
classic example of the adversarial mentality, identi- and a portion of total cost improvements. In return, a
fied a much longer duration of supplier-buyer rela- co-operative supplier can expect a long term relation-
tionships, larger customer-specific investments by ship and a share in overall cost reduction. ABB
suppliers, and more open communication between a expresses its willingness to co-operate with high
large number of functionaries of both companies. performing vendors not only on paper. In the field,
More emphasis on product quality and on value suppliers report a change in ABB’s attitude.
analysis is also reported.7,11-‘3 Parallel with the development towards a more co-
We notice a parallel development in the purchasing operative model, the importance of outsourcing is
of machinery and other ‘foundation goods’. Whereas growing. Co-operation and contracting out activities

Getting Closer and Nicer: Partnerships in the Supply Chain

that do not belong to the core business, external rationalizing. In this process even reliable suppliers
coupling and internal decoupling, often occur can bite the dust. Also, concentration of demand and
together and frequently result in more or less densely centralization of purchases increase the bargaining
structured networks of separate but entangled power of customers and heighten the competition
corporations.‘7 In order to be able to respond flexibly between suppliers. In some industries, marketers are
to technological and commercial changes, many already experiencing some of the less pleasant effects
Original Equipment Manufacturers (OEMs) reduce of the current trends.
their production base and transfer it to suppliers. In In sum, purchasing has evolved to supply
such value-adding partnerships the different parties management” and in certain cases to supply chain
work closely together to optimize the flow of goods management.g ‘Clearly the nature of purchasing
and services. Instead of components, whole sub- changes . . . from a price-fixing operation to a
systems arelbeing supp ied to the OEM who in turn capacity/technology matching function responsible
assembles and commercializes the final product. for technical as well as commercial decisions’.l
Sometimes the assembling and the physical distribu- Other logical consequences are increased co-
tion happen externally. operative behaviour and long term relationships
A case in point is the Gevamix, an automatic film among firms. However, one should keep firmly in
processing device designed and commercialized by mind that partnerships between suppliers and
Agfa-Gevaert. The production of the electronic sub- buyers are far from idyllic. ‘There is nothing romantic
system is contracted out to a small local electronics or soft-headed about Japanese contracting practices’,
company called IC Systems, which supplies it to a top economist Oliver Williamsonz2 argues. ‘What
small plastics moulding firm, Plastigi. The latter seems to distinguish these practices is that they have
installs it in a housing, equipped with bowls, pumps, been raised to a higher level of refinement than are
fittings and connections, and dispatches the finished observed elsewhere.’ As the purchasing manager of
product world-wide on Agfa-Gevaert’s instructions. Janssen Pharmaceutics observed, ‘The path to co-
As a result of increased outsourcing and value- makership is strewn with technical, procedural and
adding partnerships, a company needs a smaller but financial yardsticks and with management and
technologically more competent supplier base. This organizational quality audit sessions’.23
pattern is clearly discernible in the automobile This in turn implies that supply decisions are
industry.*a~ZO The above mentioned Plastigi also becoming more complex (or that companies are
assembles a sub-system for Bosch (but to which it has becoming aware of their complexity) and that more
made important design changes) to be used by a functionaries participate in the so-called buying
coach manufacturer. In this kind of Japanese-styled centre or decision making unit (DMLJ). In companies
‘tiering’, the OEM deals with only a few first-tier that attach a lot of importance to quality, delivery
suppliers directly. These have the responsibility for performance and the strategic capabilities of their
managing the procurement of parts or sub-systems suppliers, and in companies with a global sourcing
from second-tier suppliers.’ strategy, the lateral and vertical involvement across
Increasingly, not only production but also a large departments and hierarchy levels can be substantial
number of supporting in-house functions are con- even for relatively simple components.‘2,24 In addition,
tracted out. The rapid rise in cleaning, catering and increased networking often extends the DMU even
factoring companies and the reduction of staff beyond the purchasing firm’s boundaries.
services in favour of external consultants, is a prime This evolution of effective purchasing from a
example. looked-down-upon clerical/technical towards a criti-
AS well as the trend towards co-operation and cal business function has a direct bearing on the job
outsourcing, we observe an internationalization and environment and job description of the purchaser.
even globalization of the purchasing function in From purchasing tactician he evolves into a supply
certain industries. This is both a driving force and a strategist. Instead of waiting for the initiatives of
consequence of increased networking.17 The large potential suppliers and then reacting, he takes a
number of mergers, takeovers and joint ventures proactive approach. He becomes an initiator who
which are taking place in Europe often have contacts, develops and tries to convince suppliers to
upstream implications. After the realization of such manufacture new products that are tailor-made or to
co-operation agreements, companies very often start serve as a second source. As well as a ‘reverse

Long Range Planning Vol. 27 February 19%

marketer’,*25 he is also a market researcher looking In a power strategy, supplier and buyer see each
for alternative suppliers. other as opponents: the customer wants to buy a
certain product from a supplier at a certain price and
that is all. There is a rigid boundary between the
activities of both parties. The buyer’s role is restricted
Purchasing Strategies to negotiating with potential suppliers about price
At the end of the 1980s the Wissema Group charted and additional conditions.
the status of purchasing strategy. This study2” The tuning strategy involves more than price and
confirms the developments described above but at delivery conditions. It is important how the total offer
the same time qualifies them. can be adapted to the requirements of the buying
While purchasing was for a very long time aimed at organization as far as packaging, logistics, appli-
keeping purchasing expenditure as low as possible, cation, etc. are concerned. The boundary between
today its contribution to the competitiveness of the supplying and buying parties is flexible. To achieve
company comes first and foremost. Not only effi- the minimum total acquisition cost, the buyer con-
ciency but also speed and flexibility of delivery, sults other departments in his company.
quality, and innovativeness are required. The co-operation strategy goes a step further. It is
Developments in and around the purchasing not decided beforehand which product the company
function have led to other, diverse relationships with will buy. After determing the purchasing requirement
suppliers. These supplier relations form the basis of a in terms of the functions the product will have to
multitude of purchasing strategies, which can be fulfil, it is developed together with the selected
reduced to three archetypes (Table 1). supplier. As a result overlaps between the activities
of both parties occur and the boundary between them
becomes very vague. The buyer functions as broker
*Reverse marketer’ is a firm which uses a marketing approach to and liaison between internal users and the supplier.
its suppliers. He is responsible for managing the joint efforts.

Power Tuning Co-operation

strategy strategy strategy

Boundary with supplier stiff, rigid flexible vague, secured mutual access

Relationship with supplier antagonistic distribution of tasks mutual goals and overlapping
activities

Selection criteria price and purchasing total acquisition cost, competences

conditions cost of ownership

Selection techniques quotations, competitive supply market research and total screening
tendering etc. vendor rating

Object of exchange product augmented product or performance

application

Product specification given, developed entirely by tentative proposal with request based on a functional
one of both parties for augmentation or cost description (early supplier
engineering involvement)

Logistics and quality control independent distribution of tasks integrated

Number of suppliers many ‘equal’ suppliers a number of ‘preferred a small numer of ‘co-makers’
suppliers’ and ‘prime vendors’ and ‘partners’
Role of the purchasers
-External technical and tactical specialist reverse marketer relationship manager

-Internal follower team leader liaison, broker

Source: partly based on Wissema et al. (1989).

Getting Closer and Nicer: Partnerships in the Supply Chain

 The selected purchasing strategy will differ core processes and outsource the rest, and the
depending on the business strategy, the competences increasing internationalization of corporate life, there
and the power of the company. Generally speaking is generally speaking a distinct shift to more co-
companies use different purchasing strategies simul- operative purchasing strategies.
taneously. In fact, the approach is determined by the After summarizing and qualifying the change in
nature of the purchased products and the resulting the attitude of purchasing companies towards sup-
complexity of the purchasing market and the pur- pliers, a change in perspective is called for. In the
chasing requirements. following sections the implications for the strategy of
In Figure 2 the three purchasing strategies, the two the supplier will be examined in greater detail.
underlying dimensions and the co-operation spec-
trum are combined in one schematic overview.
Changes in production, quality and innovation
strategy and a growing experience with the pur-
Evolution in Industrial Marketing
chased product or with the purchasing market often The evolution in industrial marketing will be dis-
lead to a change in purchasing strategy. As a result of cussed by means of a dual scheme (Figure 3). In the
the rise in TQM, JIT and related concepts, the growing left-hand column the most important marketing
importance of rapid innovation, the trend to focus on management attitudes of the 1980s are listed. The

Long Range Planning Vol. 27 February 1994

 Transactional
Marketing

Basic philosophy: Basic philosophy:

l product /market as unit of lcustomer as unit of
marketing planning and marketing planning and
organization organization
lstimulus - response linteractive
laimed at laimed at relationships,
transactions co-operation
lproduct investments lmarket investments

Management approach: Management approach:

lmarket analysis and lcustomer analysis and
segmentation classification
lsales/negotiation lrelationship building,
techniques of the team and consultative
individual salesman selling
lsales management laccount management
lperformance of the lservice and quality of the
product whole marketing system
lshort term profit llong term profit

attention was focused on market segmentationz7 and top four companies rose from about 50 per cent in
on product and sales strategy as core elements in the 1986 to about 70 per cent in 1990 after some big
marketing mix. The right-hand column of Figure 3 takeovers (UGTC by Michelin, Firestone by Bridge-
sketches the fundamental philosophy and market stone, Armstrong by Pirelli). Suppliers of steel cord
approach that have gained ground in recent years. and rubber cannot ignore this new reality, which
Two groups of factors contribute to the rise of implies that the loss of only one customer can have
relationship marketing. Obviously the change in dramatic consequences.
purchasing attitudes and behaviour leads to changes Conventional industrial marketing is no longer
in marketing, but that is not all. The increased enough. A new marketing philosophy and
competitive pressure and the growing concentration approach-relationship marketing-is needed. Com-
in demand, result in a reorientation. Highly success- panies have to take the customer as the starting point
ful companies in the Far East make long term of their marketing planning and organization rather
investments in markets, look for more profitable than the product/market combination.
niches and subsequently acquire the biggest share of
the market, using a total quality approach.28~2g Also
the flood of acquisitions and mergers leads to an
increased concentration on new potential markets. In
Relationship Marketing
the tyre industry for example the market shares of the Relationship marketing is built on a basic philosophy

Getting Closer and Nicer: Partnerships in the Supply Chain

which is not directly aimed at immediate transactions its most important customers from a holistic
but is based on building, supporting and extending perspective. It does not focus on the product being
customer relationships.30 Only companies that have offered but on finding solutions to complex problems
developed sufficiently close relationships-Ted by providing expertise and after-sales follow-up. A
Levitt uses the word ‘marriages’-can call their relationship marketer tries to be a consultant to his
marketing a success. Both parties therefore have to customer. As well as using technical and business
create structural (between companies) as well as arguments, he tries to quantify the cost and profit
social (between persons) ties. implications of his solution by calculating for the
Marketing efforts are no longer considered stimuli customer what the cost of his unsolved problem is
to which an immediate response is expected, but as and which economic advantages his own system and
market investments through which the distance partnership offer.
between the parties becomes gradually smaller and is The approach relies on a team of people who can
replaced by trust and interlacing. The boundaries analyse and solve the problems and requirements of
between supplier and customer become vague. the customer from the perspective of their different
Figure 3 shows that relationship marketing is not types of expertise. Such a problem solving unit
only a new philosophical attitude but also implies a mirrors the customer’s decision making unit. Due to
new management approach. the complexity of the numerous transactions and
A first pillar of relationship marketing is the relations with key customers, such teams can consist
evaluation and classification of customers. It is of a large number of people with different functions
imperative to identify the key customers or key and from different divisions and levels. Teamwork
accounts. This is less straightforward than it may though is not easy: ‘It is possible for a sales team to
seem. Firstly, a lot of managers and salesmen are still spend more time getting co-ordinated than selling’.32
inclined to think that a high turnover also implies a Good internal ‘tuning’ is absolutely necessary, not
high contribution to the profit. However, after only in the sales activity but also throughout the
analysing the profitability of its customers, a syn- whole company, in order to achieve a good delivered
thetic resin manufacturer concluded that 13 per cent quality.
of his turnover was realized through customers with In relationship marketing quality means more than
a very negative contribution!31 This clearly shows technical quality. Product service in particular has
that turnover is a poor yardstick in identifying key become a key element in marketing.33,34 Service
customers. Secondly, a minority of marketers and should not be a ‘luxury item’, only provided in
sales people who are oriented towards contribution favourable market conditions, but a vital component.
are often only concerned with the present profit Many European firms offer extra services to large
contribution of customers, but not with future customers. DSM for example not only sells granules
potential. for moulding car bumpers but also helps car manu-
Therefore the company might underestimate facturers with creating and testing new designs. Such
‘tomorrow’s customers’ who show a strong growth extra services strengthen the relationship between
potential as a result of market and technological supplier and customer and can also increase profit-
developments. A selective investment in such cus- ability.
tomers may be called for. Open communication channels with the customer,
Finally it should be emphasized that a customer reliability, simplicity, accuracy and speed are crucial
can be valuable even if he does not generate a direct to service quality and should be monitored thor-
financial profit. Prestigious customers such as ESA or oughly on a regular basis by means of a service
Airbus can be used as references. Other customers audit.35 Service excellence can only be achieved if all
can be useful as a first access to a completely new employees are customer, service and quality minded.
market or act as a ‘beach-head’ to a big divisionalized This requires internal marketing. Relationship mar-
company. Still other customers can help their sup- keting implies a high degree of internal involvement
pliers in acquiring or extending new technological and co-operation. Indeed, partnerships generally
and commercial skills. Customer analysis and classi- tend to involve both very high inter- and intra-
fication should allow the identification of the key organizational dependencies and so tend to increase
customers-partners for the future. the requirements for intraorganizational integ-
In relationship marketing the company approaches ration.36,37

Long Range Planning Vol. 27 February 1994

Managing Key Accounts ment support can the necessary reversal in industrial
marketing be realized.
Long term and intensive interaction with customers
requires an organizational underpinning. Account
management can be the answer because it regards the
customer as the unit of planning, co-ordination and Relationship Marketing-Some
control for all functional activities. At present Problems
companies of very different sizes have adopted this
approach, contrary to the situation some 10 years ago Relationship marketing seems to signpost the new
when only big companies used it.38*3g road for industrial marketing. With more and more
In a large number of businesses, account manage- customers striving for co-operative relations, and
ment has become a necessity as a result of the co- with increased competitive pressures, many mar-
operative purchasing attitude and the concentration keters are forced to make extra investments in service
on the customer which have been discussed above. and quality. They have no option but to look at the
Globalization too favours account management. Cus- complete marketing system from the relationship
tomers with subsidiaries in different countries who perspective. However, a qualification is called for.
co-ordinate their purchasing wish to hear one and the Relationship marketing is not always possible or
same tune from the supplier. They do not want to be desirable.
confronted with price inconsistencies between separ- In some situations where the cost and the risk of
ate deliveries to different subsidiaries. It may also be switching suppliers is low (e.g. computer terminals),
necessary to introduce the system because the largest the customer does not need an extra service and
competitors use it. certainly does not want to pay for it.” Only to the
Account management can only succeed when extent that suppliers can differentiate their aug-
structural changes are formally introduced which mented product from their competitors’ products can
give the account manager enough authority and they convince their customers to remain loyal. A
means to effectively realize his solutions. Only to the creative service for instance can provide scope for a
degree in which new remuneration systems, aimed at certain degree of relationship marketing, but joint
promoting teamwork among affiliates and divisions, product development and other forms of close co-
are implemented and a clear communication pro- operation do not seem feasible in these cases.
cedure is established, can efficient account teams be Another qualification is pointed out by DeBruicker
built. Therefore, remuneration often contains a group and Summe.‘l The more experience a customer has
bonus. Communication channels have to be open and with a product the less need there will be for
informal. Each member of the team has to have a clear supporting programmes from the supplier. In certain
picture of his role in reaching the sales targets. One of cases the customer will break down a product into
the ways in which IBM tries to achieve this goal is by components, buy these from low price manufacturers
organizing, on a yearly basis, an account seminar and assemble the product himself. Extras such as
with the aim of drawing up an account plan. The full advice and technical support are appreciated mainly
account team participates in it. by inexperienced customers.
Companies that develop relationship market- Relationship marketing is the right method only
ing cannot expect an immediate profit. A lot of when the customer values co-operation. It is possible
investments and sacrifices have to be made. These to erect, via tight relationships, structural and social
efforts will only result in a strengthened competitive barriers that become obstacles preventing experi-
position and higher profits after some years. More- enced customers to change suppliers.
over, not all buyers will be convinced in equal
measure of the advantages of this new approach, and
organizational obstacles within the company will
lead to further delays. The concept of relationship
Implications for Management
building has to be marketed both externally and Lately interdependence and co-operation have been
internally. key words in areas such as product innovation,
Only in flexible and market oriented companies international management and strategic manage-
with a strategic perspective and with top manage- ment. The insight is gaining ground that competition

Getting Closer and Nicer: Partnerships in the Supply Chain

determines how the profit cake will be divided, but tains a section covering the medium term prospects
also that it is possible through co-operation to bake a such as technical support for specific applications,
bigger cake.42 The development towards co-operation service, consultancy and advice. A financial projec-
in the business world also affects the marketing- tion for the next 5 years completes the plan.
purchasing activity. Good relations between supplier Marketers finally have to realize that striving for
and customer are advantageous to both parties. Some and maintaining service quality and partnerships
of the important implications are shown below. with other companies increases the need for more co-
Marketing executives have to question their tradi- ordination within their own company. Therefore they
tional ‘one shot prescription’. They must be willing to have to make sure that they have the support of other
invest in customer development, as well as in market departments and of top management. Total quality
share. They have to identify their key customers and and intensified functional interdependence and inter-
determine whether relationship marketing is useful facing mean that the internal tasks of a marketer
in their situation. Anderson and Narus43 provide a become a key management concern. Many corpor-
valuable frame of reference for deciding which ations are turning to planning and communication
customers to select for a collaborative relationship. techniques and procedures such as Quality Function
Marketing managers must fight the attitude to Deployment (QFD) to effectively manage functional
accept every order or to use sales revenue as the only interfacing.
parameter to assess customers. Indeed, they must Top managers can stimulate the evolution of their
stimulate their product and sales managers to select company to partnership marketing by taking several
key customers within certain priority segments based actions. Firstly, they must back marketing managers
on a number of attractiveness criteria, such as by delegating authority and demonstrating clear
compatibility, technical learning, and profit potential. support, by attending account meetings, approving
Marketing managers should also promote planning changes in compensation systems, promoting team-
for individual customer accounts. In many industries, work, etc. Secondly, they have to keep in mind that
Account Plans are as important as Product Plans partnering, especially with international customers,
nowadays. A good account plan starts from an cuts across division and country boundaries. They
analysis of customer applications. It presents a should accept that established company structures
situation analysis of the industry, and analysis and planning procedures may come to be questioned.
applications and strategic issues relating to specific Finally, top management must enhance marketing
customers; a strategy section should tackle the muscle and flexibility since these underlie the market
question ‘where do we want to go with this customer drive of the 1990s.
and this partnership ?’ The Account Plan also con-

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Long Range Planning Vol. 27 February 1994

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The authors are grateful to Prof. J. de Rijcke for helpful comments on an earlier draft.

Long Range Planning Vol. 27 February 1994