UEA research confirms fair treatment by supermarkets key to suppliers’ performance

Fair treatment by supermarkets is key to suppliers’ performance. Picture: Getty Images/iStockphoto

Fair treatment by supermarkets is key to suppliers’ performance. Picture: Getty Images/iStockphoto - Credit: Getty Images/iStockphoto

Small suppliers who believe they are fairly treated by big supermarkets will put more resources into their relationship with buyers and perform better, according to academics at the University of East Anglia (UEA).

The research explored the concept of relational justice, specifically how small-scale food and drink producers perceive their treatment by 'key customers' - in this case supermarkets – and the impact this has on their allocation of resources and business performance.

Published in Supply Chain Management: an International Journal, the findings show that the way supermarket buyers treat their suppliers matters more for their suppliers' performance than their status as key customers.

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The study also suggests that the length of time a small producer has been supplying a supermarket makes no difference to how they perceive their treatment.

Rather, suppliers form their perceptions of fairness relatively quickly, so buyers should establish good relationships from the outset when taking on new producers, particularly when they are small business with limited resources.

Researchers Dr Ricardo Santana and Prof Andrew Fearne, of UEA's Norwich Business School, say the findings are highly relevant given the increasing scrutiny of supermarket buyer behaviour and its impact on suppliers.

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'Positive and negative exchanges can have unexpected consequences that ultimately determine the health of a relationship and resulting performance outcomes,' said Dr Santana. 'Managing buyer-supplier relationships is, therefore, a challenging social task that involves tackling behavioural issues and power dynamics between the buyer and the supplier.

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'Larger retailers should design strategies to enhance necessary elements of relational justice and should empower and encourage buyers and category managers to foster social elements, for example by offering the supplier the opportunity to provide input on decisions that affect the relationship, and fairly rewarding the suppliers who invest in the relationship by meeting standards and deadlines.'