Table 3.
Description different type of contracts (as illustrated in Fig. 4).
| Quadrant (Q) No. | Type of contract | Buyer-supplier relationship | Description |
|---|---|---|---|
| 1 | Market contract | "Spot"/minimal contact | Buyer buys from market; minimal contracting is involved; since market mechanism has limitations, sustainability principles need to be applied by the buyerto ensure stakeholders concerns are addressed (concerned customers, suppliers, environmental footprints of products etc.). |
| 2 | Transactional contracts- R | Specific transaction focused - focus on risk reduction | Buyer buys from multiple suppliers; relationship is assumed to be discrete, but risk in the network needs to be assessed/addressed. Sustainability principles and stakeholder concerns must be addressed. |
| 3 | Transactional contracts- C | Specific transaction focused - focus on cost/complexity reduction | Buyer buys from multiple suppliers; relationship is assumed to be discrete, but suppliers in the network need to be chosen with thorough cost (total cost, design, processes) evaluation. Sustainability principles and stakeholder concerns must be addressed. |
| 4 | Transaction-oriented strategic contracts - CR | Strategic focus -focus on fewer suppliers may be needed | Buyer may buy from a fewer pre-selected suppliers - strategic suppliers; relationship is assumed to be discrete; but due to higher risk and cost (design complexity) tougher selection and more frequent/closer monitoring would be necessary. Sustainability principles and stakeholder concerns must be addressed. |
| 5 | Transaction oriented contract -CRB, with shared norms | Strategic focus -focus on fewer suppliers is needed | Buyer buys from a few pre-selected suppliers; relationship needs to be strategic but may be transaction-oriented. Shared norms ensure higher mutual understand, trust, and commitment levels. Sustainability principles and stakeholder concerns must be addressed. |
| 6 | Relational focus - RB | Strategic and relational focus - focus on few supplier benefits and individual supplier/network risk | Buyer engages with strategic supplier only; Deeper study of benefits offered by supplier and risks/risk mitigation is needed; higher levels of trust/commitment is needed; Transaction itself is not the focus of relationship. Higher commitment to implementing sustainability principles and stakeholder (a wider set) concerns is needed. |
| 7 | Relational focus - CB | Strategic and relational focus - few suppliers need to be the focus; close engagement to ensure supplier benefits and cost/complexity is well addressed | Buyer engages with strategic supplier only; Deeper study of benefits offered by supplier and cost/complexity mitigation is needed; higher levels of trust/commitment is needed; Transaction itself is not the focus of relationship. Higher commitment to implementing sustainability principles and stakeholder (a wider set) concerns is needed. |
| 8 | Relational focus - RCB or partial vertical integration (VI) | Strategic and relational focus - few suppliers need to be the focus; close engagement to ensure supplier risks, benefits and cost/complexity is well addressed | Buyer engages with strategic supplier only; Deeper study of benefits offered by supplier, risk involved and cost/complexity mitigation is needed; higher levels of trust/commitment is needed; Transaction itself is not the focus of relationship. Higher commitment to implementing sustainability principles and stakeholder (a wider set) concerns is needed. |