Strategic Management of Suppliers: an Australian Case Study

2017-06-05T03:14:07Z (GMT) by Comer, Mark Beaumont, Nicholas
This paper describes Telstra's (Australia's dominant telecommunications company) change from ad hoc to strategic management of its numerous suppliers and the resulting benefits. The need for change, recognized by top management, required careful planning and execution. The change had many ramifications; mostly beneficial but painful for some supplanted suppliers and employees reluctant to adapt to a new culture. Benefits of the new approach were: rationalization of the number of suppliers; a more rational and fruitful approach to procurement; the professionalisation of procurement personnel; classification and consequently different treatment of suppliers; and, most importantly, changing the relationship between the company and its key suppliers from one of attempted exploitation and short term thinking to long-term, mutually profitable co-operation. The changed approach required cultural change within the procurement function but suppliers came to appreciate the company's fact-based, rational, and commercial approach. Data for this study was obtained from interviews and surveys. The study demonstrates the advantages and difficulties of changing to rational procurement practices that support corporate objectives.