Supply Chain Management: Managing SME's Relationship With Suppliers And Customers

It is an undeniable fact that supply chain management practice is becoming more and more crucial in today’s business environment as it facilitates organizations to more smooth operations and management. However, the awareness to develop and maintain relationship with the suppliers and customers is still low especially for the small and medium enterprises (SME's). Realizing this issue, the researcher attempted to conduct the study on SME's understanding regarding the importance of managing the relationship with their suppliers and customers. With the employment of social exchange theory, this study highlighted elements such as trust, communication, commitment and bargaining power of buyer in supply chain practices to support the main goal of this study. To understand the supply chain management practices of the SME, this study has employed
the single case study approach on a local food company. The data was collected from a semi-structured interview with the company’s owner, which comprised of open ended questions, as well as participant observation and documents review. The findings suggest that trust, communication and bargaining power of buyer are crucial in managing SME’s relationship with both suppliers and customers. Meanwhile, the analysis from the interview reveals that loyalty, which has been studied to understand commitment, is not essential to maintain the relationship.