Buyers are individuals or organizations who purchase products from suppliers. Buyers can be customers who buy finished products from manufacturers or retailers who buy raw materials. The relationship between buyer and seller can be short-term (one-time or low-commitment purchase) or long-term (including periodic purchases under an established contract).
Short and long term buyer-seller relationships each have their advantages and disadvantages. If you need a certain amount of flexibility, a short-term relationship can help. For example, in a short-term contract, the buyer can choose to change suppliers for the next purchase.
It can also be useful in markets where material prices fluctuate and long term efforts are bad. Fierce competition for short-term contracts can also offer price reductions and opportunities for specials.
However, short-term consent has its drawbacks. They generally offer very little flexibility in the scope of payment and ordering. For example, under a short-term contract, a new supplier needs to confirm the order and pay for it promptly.
Since there is no trusting relationship between the two, establishing a relationship between a buyer and a seller also reduces the chances of sharing market information.
Building strong buy-sell relationships over a period of time offers many benefits. Both groups have a greater sense of commitment. In other words, you are more reliable when you place orders and pay.
Once the relationship is established, the scope of the reduction may increase and the payment term may be more flexible. Trust between buyers and sellers grows over time and hence it is likely that information, forecast, knowledge and customers will be shared between buyers and sellers.
However, long-term buyer-seller relationships usually involve advanced adaptation and maintenance tasks. As you may need to enter into long term contracts, it is very important to accurately forecast the future performance and needs of these two companies.
Establish supply chain partnerships between organizations to ensure a certain degree of stability and encourage all participants to make long-term efforts to achieve results.