Supply Chain Management: An International Journal

The art of the possible: relationship management in power regimes and supply chains
Andrew Cox,
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The art of the possible:
relationship
management in power
regimes and supply
chains
Andrew Cox
The author
Andrew Cox is Director, CBSP, Birmingham Business School,
University of Birmingham, Birmingham, UK.
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Keywords
Supply chain management, Buyer-seller relationships, Sourcing
Abstract
This paper outlines the general theoretical approach adopted in
the power regime perspective on sourcing and relationship
management. The paper focuses on the art of the possible. This
means that managers have to develop sourcing relationships
that are appropriate given the circumstances in which they find
themselves. To understand appropriateness it is argued that
buyers and suppliers must understand the five sourcing choices
available and the power circumstances that exist between them
in supply chain networks. Only by understanding the power
regime that exists can buyers and suppliers fully understand
what is the appropriate way for them to manage relationships.
Electronic access
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The current issue and full text archive of this journal is
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www.emeraldinsight.com/1359-8546.htm
Supply Chain Management: An International Journal
Volume 9 · Number 5 · 2004 · pp. 346–356
q Emerald Group Publishing Limited · ISSN 1359-8546
DOI 10.1108/13598540410560739
346
1. Introduction
There is considerable debate about the best way
for buyers to manage business relationships with
suppliers. At one extreme some argue for the
adoption of transparent, win-win partnering; at the
other is the diametrically opposed zero-sum
approach associated with win-lose outcomes.
Given this diversity of opinion about what buyers
should do it is somewhat surprising that there has
not been more emphasis in the literature about
“appropriateness”. This special edition is
unreservedly focused on this issue as it relates to
buyers and suppliers in business transactions.
Each of the articles herein builds on previous
work in the area of power and appropriateness
(Cox, 1997a, b; Cox et al., 1999, 2001, 2002,
2003, 2004). The articles focus on the topic of
what is the most “appropriate” way for a buyer to
manage commercial transactions with suppliers.
As the articles reveal, what is “appropriate” for a
buyer to do depends on the power and leverage
circumstance that they find themselves in. In other
words, the articles demonstrate that there is no
single way of managing business relationships for a
buyer that is always appropriate in all
circumstances. Sourcing competence must,
therefore, rest on buyers understanding not only
what is “ideal” but also what is possible given the
circumstances they are in.
The articles also demonstrate that, while there
may be “ideal” situations for buyers when they
mange suppliers, buyers have to manage business
relationships in a range of very different
circumstances. This implies that competence in
buying requires a detailed knowledge and
understanding of both the buyer and supplier
exchange circumstances that can exist, as well as
the full range of relationship management choices
available for buyers to use, when working with
suppliers in any of these circumstances. This is
another way of saying that buyers need a guide to
action when they confront the universe of real
world circumstances that can occur when
managing supply and suppliers. This is what is
meant by “appropriateness” or the art of the
possible.
This first article begins the discussion by
outlining the debate in the literature about the
relationship management choices available for
buyers in transactions with suppliers. This debate
about options is then linked to an understanding of
the contingent (changing) circumstances that
confront buyers in relationships with suppliers.
From this starting point it is then possible to
explain why it is only by analysing supply chain
networks (and the power regimes operating within
them) that buyers can fully understand
 The art of the possible
Andrew Cox
the relationship management choices available to
them, and make appropriate choices between
alternatives.
To demonstrate the value of this way of thinking
each of the articles in this special edition explains
what the power regime circumstances were for
specific buyers operating within particular
circumstances. By applying this way of thinking it
is possible to explain why it is that buyers normally
have a number of choices, rather than only one,
when they work with suppliers. As a result it is
critical that buyers develop the competence to
choose wisely from amongst a range of alternative
relationship management options when they make
sourcing decisions.
Once this empirical reality has been understood
it is once again necessary to return to a theoretical
consideration of the problem of complexity in
dyadic exchange. This is because all of our
research has demonstrated that, while buyers have
a range of sourcing choices, they cannot make their
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decisions in isolation. This is because they are
involved in a complex and only partially visible
game with suppliers who have their own goals and
motives. Given this the final chapter focuses
squarely on the problem of business relationship
alignment between the buyers and suppliers
involved in dyadic exchange.
This focus on dyadic exchange between the
buyers and suppliers is no accident. This is
because – despite attempts in recent years to
develop a supply chain perspective on business
relationship management – it is clear from our
research that it is the relationship between the
buyers and suppliers in supply networks that is the
fundamental building block of all business
transactions. It is this dyadic exchange that, in our
view, should be understood in far more detail than
it is currently.
This is, however, to run ahead of the argument.
In what follows the basic sourcing options available
to buyers, as they source external resources from
suppliers, is discussed. This is followed by an
analysis of the relationship management choices
available and how buyers can think about
“appropriateness” in selecting from the potential
sourcing options available to them.
2. The sourcing options available for
buyers
In recent years buyers have been offered many
panaceas. Historically buyers were encouraged to
segment their supply requirements using
purchasing portfolio mapping techniques, based
on the relative criticality of spend and the nature of
supply market difficulty (Kraljic, 1983).
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This segmentation approach, with its emphasis on
managing suppliers differently given particular
circumstances, is one that is popular with
consulting firms and more recent exponents of this
approach have argued the case for “balanced
sourcing”. This means using either short-term
competition or longer-term collaboration when it
is the most appropriate way to achieve a buyer’s
goals (Laseter, 1998).
The reason for consultants arguing the case for a
segmented approach is largely a result of the recent
dominance of one view of “appropriateness” in the
sourcing community. Over the last 15 years there
has developed something of an orthodox view in
the procurement community that the most
appropriate way for buyers to manage their
relationships with suppliers is to eschew hard-
nosed short-term and adversarial approaches in
favour of more transparent, equity-based and long-
term, collaborative ways of working. The
beginning of this approach can be seen in the early
writings that incorporated Japanese models into
western business thinking.
In the buying community some of the earliest
writing in this genre were focused on the benefits
of “win-win” negotiations (Carlisle and Parker,
1989; Sako, 1992). These ideas were supported by
a tide of writings bringing the supposed benefits of
Japanese long-term collaborative sourcing
approaches to western companies – especially the
benefits associated with outsourcing, lean
production and supply as practised in the
automotive sector. These approaches – which reify
the benefits of transparent, “win-win” and trusting
long-term arrangements – have been referred to
variously as “lean thinking” (Womack et al., 1990;
Womack and Jones, 1996); “lean supply”
(Lamming, 1993; Lamming et al., 2001);
“network sourcing” (Hines, 1994); and
“partnering” (Macbeth and Ferguson, 1994).
Two broad schools of writing have always
questioned this advice for buyers. First, there are
those who have questioned whether the long-term
collaborative “win-win” approach being
recommended for buyers is always appropriate. In
this school are writers who argue that “lean”
approaches are not always possible because of the
uncertainty and variability of demand and supply
in many industrial and service sectors outside of
the automotive and retail sectors, where “lean
thinking” has been most easily implemented.
Writers in this school argue that there will be
circumstances were “lean” is inappropriate and a
more “agile and responsive” approach is necessary
because of the vagaries of demand and supply
(Bensaou, 1999; Christopher, 2000; Cox and
Townsend, 1998; Fisher, 1997; Harrison and van
Hoek, 2002; Mason-Jones and Towill, 1999;
 The art of the possible
Andrew Cox
Meyer, 1993; Naylor et al., 1999; Stalk and Hoult,
1990; Towill, 1996).
Interestingly enough many, if not all, of the
writers in the “agile” school – while doubting the
universal applicability of the “lean” emphasis on
continuous reduction of waste and inefficiency –
tend to agree that longer-term equity based
approaches, based on trust and transparency
between the buyers and suppliers, are still likely to
be the most appropriate ways in which to manage
within supply chain networks. This is not the
approach taken by the second school.
This school disagrees fundamentally with the
orthodox analysis of the Japanese approach as
presented by “lean” writers. The argument here is
that, rather than being based on trust and equity,
Japanese business practices (while long-term and
collaborative) tend to be characterised by high
levels of buyer dominance over supplicant
suppliers. In other words, the analysis presented by
“lean” writers is descriptively correct, but
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commercially and analytically myopic (Cox,
1997a; Cox et al., 2000; Ramsay, 1994, 1996;
Shimizu, 1996). In essence this school argues that,
while “lean” approaches can be made to work, they
only work when the buyer has a high level of
dominance over suppliers who have to pass value
to the buyer, and often while making only low
returns. This is not an equity-based approach nor
is it one characterised by high levels of trust – it is
about naked (if obfuscated) power.
Given this debate about what is the most
efficacious approach for buyers in their
relationships with suppliers it is clear that the
problem is not really about which school of
thinking is right or wrong. Rather the problem is
one of epistemology. “Lean” and “agile”
approaches have taken their starting point of
analysis from what can be termed a “barefoot
empiricist” approach. Having observed Japanese
business practices “lean” writers have been able to
describe the ways in which Japanese sourcing
models work differently from those in the West.
Because Japanese car firms have been more
successful than western car firms it follows, for
these writers, that if western companies want to be
more successful they should copy Japanese
production and sourcing techniques.
There are serious epistemological problems
with this way of thinking (not least that its
proponents may not properly understand how
commercial leverage occurs in this approach) but
the most obvious weakness – now spotted
empirically by those in the “agile” school – is the
obvious realisation that the high volume and highly
standardised demand and supply circumstances in
the car industry are not replicated in all other types
of industries. In many industries – fashion goods,
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Supply Chain Management: An International Journal
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construction, publishing and film making, for
example – demand and supply circumstances vary
significantly making “lean” approaches to sourcing
very difficult to implement and sustain. Given this
it is obvious that what is appropriate for a buyer to
do in one circumstance (of continuous, high
volume, standardised demand) is unlikely to be
appropriate in another (where there is infrequent,
low volume and non-standard demand).
The problem with this “empiricist realisation” is
that, while it shows us that “appropriateness” must
have some relationship with underlying demand
and supply circumstances, it does not provide a
rigorous and robust methodology for
understanding the full range of sourcing choices
available to buyers when they interact with
suppliers. Nor does this way of thinking specify
clearly what the range of contingent circumstances
are when buyers and suppliers interact with one
another.
To develop a robust and rigorous methodology
for specifying the “appropriateness” of sourcing
options and relationship management choices it is
obvious that what is needed is not a primary focus
on empirical observation. Rather work must focus
on the development of a proper understanding of
the range of theoretically possible sourcing and
relationship management choices available for
buyers, and a robust way of categorising the
contingent circumstances that can occur in dyadic
exchange. This work has to be undertaken
primarily on the basis of deductive reasoning. The
reason for this is that only by first theoretically
specifying the logical choices available to buyers is
it possible to ascertain in the real world (by
empirical observation) whether the full range of
possible sourcing and relationship management
choices have been defined. This process of
deduction, which is then tested by induction from
empirical observation, is the basic scientific
approach that we are reporting in this special
edition.
Space does not allow for a full specification of all
of the issues that need to be addressed in
understanding the full range of sourcing options
available to buyers when they interact with
suppliers – this has been provided elsewhere (Cox
et al., 2003, 2004). The discussion here is based on
a theoretical distinction between buyer sourcing
approaches that links together the level of
involvement buyers can have with suppliers
(reactive or proactive), as well as the nature and
degree of their involvement with suppliers in
developing the supplier’s own competencies (first-
tier and within the supply chain).
As shown in Figure 1 there are four basic
sourcing approaches available to buyers. These are
characterised as follows.
 The art of the possible
Andrew Cox
Figure 1 The four sourcing options for buyers
2.1 Supplier selection
Not all sourcing relationships that buyers have
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with suppliers are long-term and collaborative. On
the contrary the bulk of sourcing is normally based
on relatively short-term contracting relationships,
with the buyer selecting from amongst competent
suppliers in the market, all making their own
supply offerings (in terms of functionality and
cost). The essential role of the buyer is to select
from the available suppliers on the basis of the
currently perceived best trade-off between
functionality and cost. Since the buyer expects
market competition to constantly generate
innovation the buyer relies on short-term
relationship management in order to test the
market again in the near future.
In this way of working the buyer operates in a
fairly arm’s-length, non-collaborative and reactive
mode with suppliers. The buyer passes basic
product or service specification, volume and
timing information to the supplier, but allows the
supplier to develop their own operational and
commercial competencies without significant
buyer involvement in the process of supply
innovation.
2.2 Supply chain sourcing
This way of working is very similar to supplier
selection, but involves the buyer in much more
extensive transaction costs. The buyer uses exactly
the same reactive sourcing techniques as those
used for supplier selection, but now seeks to select
from amongst suppliers, not just at the first-tier,
but from as many tiers as possible from raw
materials through the final delivery of the end
product or service by the first-tier supplier. Once
again, at each tier in the supply chain, the buyer
selects from currently competent suppliers on
the basis of the currently perceive best trade-offs
between functionality and price.
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Supply Chain Management: An International Journal
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The buyer’s role is still essentially reactive and at
arm’s-length, providing limited contractual
information and allowing suppliers in the chain to
provide innovation through competition. This
variant is, however, far more time and resource
intensive because buyers must incur transaction
costs for search, selection and negotiation with
suppliers throughout the supply network rather
than just at the first-tier.
2.3 Supplier development
The two broad theoretical approaches outlined
above are essentially reactive. In that the buyer
makes selection decisions in response to the
supply market offerings made by suppliers acting
freely in markets, that may or may not be highly
competitive. It is possible, however, for buyers to
operate in a far more proactive way. When a buyer
acts proactively it is normal that the relationship
will shift from arm’s-length, with limited
involvement by the buyer in the supplier’s
business, to one in which the relationship becomes
more long-term and highly collaborative.
In this approach the buyer and supplier will
now, jointly, begin to make dedicated investments
in the relationship and create technical bonds and
relationship specific adaptations in order to create
new products and service offerings (in terms of
increased functionality and reduced costs of
ownership) than would have been the case in the
absence of the joint long-term working
relationship. When a buyer and supplier work
together in this way at the first-tier in the supply
chain, and the buyer takes the lead in setting
“stretch” (improvement) targets on functionality
and costs, then we refer to the sourcing approach
as supplier development.
In this way of working the buyer is trading a
long-term relationship for a commitment by the
supplier to provide greater transparency over their
input costs, margins and production techniques
(and vice versa) in order to create innovation
beyond that it would be possible if the buyer
simply allowed market competition to occur. This
approach is much more resource intensive for both
the buyer and supplier than reactive approaches
because it involves transaction costs for
development work rather than just for search,
selection and negotiation. It can also by buyer led
or buyer and supplier jointly managed.
2.4 Supply chain management
It should be clear by now, theoretically, why it is
that supply chain management is both the
potentially most advantageous approach for a
buyer but also the one that is the most difficult
to implement in practice. Supply chain
management has many definitions, but our
 The art of the possible
Andrew Cox
approach here is to define it as a sourcing
technique that involves the buyer undertaking
proactive supplier development work, not only at
the first-tier of the supply chain but also at all
stages in the supply chain from first-tier through to
raw material supply. This definition is, therefore,
similar to the concept of “network sourcing”
(Hines, 1994).
It is clear that, if it is possible for the buyer and
suppliers in a supply chain network to develop
proactive long-term collaborative relationships,
and if these relationships can be directed towards
constant innovation on functionality and cost, then
this must be the most advantageous proposition for
a buyer at the end of the chain. There is also no
empirical doubt that Toyota, Honda and other car
manufacturers have gone some considerable way
to demonstrate that this is possible in the
automotive supply chain. Furthermore, major
retailers (like Wal-mart and Tesco) and global
manufacturers (like Alcoa and Dell) have also
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demonstrated a capability to drive this type of
sourcing approach through their supply chain
networks.
The problem is, however, that just because
some buyers can achieve this does not mean that
everyone else can. The most significant insight that
we believe our research has demonstrated about
supply chain management is that very few
companies are, or ever will be, in a position as
buyers to be able to undertake it in practice. The
reasons for this should be self-evident after a
moment of theoretical reflection.
First, supply chain management is the most
resource intensive requirement for buyers and
suppliers in the chain. It involves not only
transaction costs for the buyer associated with
search, selection and negotiation but it also those
linked to the creation of dedicated investments and
relationship specific adaptations for supplier
development work. It is also clear that these costs
are exponentially increased for buyers in this
sourcing variant because these competencies must
be developed, not just at the first-tier but also
throughout the whole of the supply chain. This is a
massive undertaking and one, our research
demonstrates, that is not really possible for very
many companies primarily because they lack the
internal resources and capabilities to be able to
undertake the work, or to make the long-term
commitments to their suppliers required.
The second reason why this approach is unlikely
to be successfully implemented by buyers is due
the problem of power and leverage. Our research
has demonstrated that supplier development and
supply chain management tend to work best in
circumstances when buyers have dominance over
suppliers or, at the very least, there is an
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Supply Chain Management: An International Journal
Volume 9 · Number 5 · 2004 · 346–356
interdependence in the power relationships
between them (Cox, 1997a; Cox et al., 2000,
2002, 2003, 2004). It is not surprising, therefore,
that many of the companies that have been able to
adopt these approaches normally have high levels
of global volume, with regular and standardised
demand requirements from suppliers who operate
within highly contested markets, and with
relatively low switching costs between them.
This environment closely approximates to
power and leverage situations of buyer dominance
and/or interdependence (Cox et al., 1999, 2000),
and this helps to explain why it is that some power
circumstances are more conducive to the
implementation of supplier development and
supply chain management than others. The
research reported here demonstrates that buyers
rarely operate in supply chains characterised by
extended power situations of buyer dominance or
interdependence, and often have few opportunities
to engineer them. This alone explains why,
whatever some may argue, most practitioners will
never be in a position to implement proactive
approaches, whatever the internal competences
and capabilities of the buyer.
It is clear, therefore, that there is no single way
that buyers ought to work with suppliers. While
one might accept the logic of the argument that –
in an “ideal” world supply chain management
followed by supplier development approaches are
the most desirable for a buyer – practitioners
rarely operate in such a situation, and have limited
opportunities to engineer it. Given this, it is clear
that buyers must strive for the “ideal” but must
also recognise the art of the possible.
This means that buying competence cannot be
judged solely, or even primarily, on whether or not
buyers have engineered proactive approaches in
their supply relationships. On the contrary,
competence requires that buyers know about all of
the sourcing approaches available to them
(including insourcing), and also understand which
approach is the currently most beneficial option, as
well as how it can be implemented effectively. This
is what “appropriateness” means: recognising that
sometimes supply chain management may be the
best; while in other circumstances supplier
selection may be the only option available.
It should be obvious from this discussion that
for anyone to contend that there is always one
approach which all buyers must pursue is
nonsensical (McHugh et al., 2003). Whether or
not a buyer should undertake proactive or reactive
approaches depends on a range of complex choices
both internally within the buyer’s organisation and
externally in the supply chains to be managed
(Cox et al., 2003). While many argue the case for
long-term collaborative approaches as best
 The art of the possible
Andrew Cox
practice sourcing the research reported here shows
that it is rarely the case that buyers have either the
competence or resources to be able to successfully
implement such approaches effectively. In these
circumstances pursuing an alternative sourcing
approach may be the most appropriate and, in
some cases, the only alternative available to buyers.
To develop “appropriateness” in sourcing it is
not enough, however, to know the basic sourcing
options available, one must also know what are the
four basic relationship management choices
available for managing suppliers. Linked with this
one must also understand the four power
circumstances that create the power regimes
within which buyers and suppliers have to manage
their sourcing relationships. This is discussed in
the next section.
3. Relationship management styles and
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power regimes
Our research demonstrates that there is a growing
consensus about the relationship management
outcomes that can exist between the buyers and
suppliers, but less agreement on which
relationship management styles are the most
appropriate for managing particular sourcing
approaches under particular power and leverage
circumstances. The discussion that follows cannot
do justice to the complexity of this topic, but the
basic outlines of a “power and contingency”
approach to relationship alignment and
misalignment is presented here (Cox et al., 2004;
Cox, 2005).
Buyers must select from amongst a range of
sourcing options and implement them. To do so
effectively three elements must be in place. The
first is a specification of the sourcing approaches
available (as described above). The second is an
understanding of the power and leverage
environments within which relationships must be
managed. The third is an understanding of the
relationship management styles that can be used to
manage particular sourcing approaches effectively.
Finally, all of these elements must be brought
together to align a particular sourcing approach
with a specific power and leverage circumstance
using the appropriate relationship management
style.
The only way in which a buyer can understand
whether or not it is possible to undertake reactive
or proactive sourcing (at the first-tier or within the
supply chain) is through strategic source planning.
Strategic source planning involves the buyer’s first
understanding of what is the operational supply
chain (with all of its relevant tiers) for the product
and/or service being sourced. The second aspect
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requires the buyer to undertake an analysis of the
commercial relationships in the supply chain to
understand the gross and net profit margins being
earned by suppliers at each tier and for each dyadic
relationship. Only in this way can the buyer
understand the current power and leverage
situation for all buyers and suppliers in the chain.
This method, of understanding the link between
operational practice and commercial exchange, is
referred to as power regime analysis (Cox et al.,
200, 2002, 2003).
Figures 2 and 3 show the basic building blocks
using the buyer and supplier power matrix to
develop a comprehensive understanding of the
power and leverage situation within a supply chain
power regime. Given that our research
demonstrates that supplier development and
supply chain management sourcing approaches are
only really effective in situations of buyer
dominance (. ) and interdependence ( ¼ ), it will
be obvious from the hypothetical power regime
shown in Figure 3 that supply chain management
is not really possible in this power regime as a
whole. While supplier development activities may
be possible for some buyers with some suppliers in
certain tiers of the supply chain (those marked
with the symbols . or =), for the bulk of the
relationships presented proactive sourcing
approaches are currently not possible. This means
that buyers will normally have to adopt reactive
sourcing approaches. This, as the articles herein
reveal, is a fairly common occurrence when a
power regime analysis is undertaken.
Whichever power and leverage situations
buyers find themselves all business relationships
have to be managed with appropriate relationship
management styles if they are to be effective.
This means that there must be a correlation
between particular ways of working between
buyers and suppliers and successful outcomes.
Successful outcomes for buyers and suppliers
must imply that there is an alignment between
the goals and aspirations of the buyer and those
of the supplier that makes a relationship
successful for both parties to an exchange (Cox
et al., 2004). To understand how these can be
aligned it is first necessary to understand
theoretically the way in which buyers and
suppliers can conduct their relationships with
one another. The basic theoretical choices are
shown in Figure 4.
The figure demonstrates that when a buyer and
supplier interact there are at least two fundamental
aspects to the relationship. The first is the way of
working, which refers to the level of operational
linkage between the two parties. Operationally
buyers and suppliers can choose to make few
dedicated investments in their relationships and
 The art of the possible
Andrew Cox
Figure 2 The power matrix: the attributes of buyer and supplier power
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Figure 3 A hypothetical power regime
operate on a fairly short-term contractual basis.
This arm’s-length way of working involves the
buyer providing only basic specification, volume
and timing information to the supplier, with
the supplier providing the buyer with
limited specification, timing and pricing
information.
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There is, of course, an alternative way of working
known as collaboration. Under a collaborative
relationship approach the buyer and supplier make
extensive dedicated investments in the
relationship. On top of basic specification, timing,
price and volume information both parties will
normally make relationship-specific adaptations to
 The art of the possible
Andrew Cox
Figure 4 Relationship portfolio analysis
their operational processes and provide detailed
information about future product and service road
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maps, as well as creating technical linkages in their
respective operations (Cannon and Perreault,
1999). The aim of this way of working is normally
to create a product or service offering at a cost and/
or functionality that is not currently available in the
market, and could not be created by more arm’s-
length ways of working. Such relationships tend to
be long-term in duration.
The second aspect of a relationship is the
commercial intent of the two parties when they
enter into a transaction. If the buyer or supplier is
primarily interested in maximising their share of
value from the relationship at the expense of the
other side this is referred to as adversarial value
appropriation. If, on the other hand, the intention
of the buyer or supplier is to provide open and
transparent commercial information about profit
margins and the costs of operations, such that any
improvements can be shared relatively equally,
then this is referred to as a non-adversarial value
appropriation.
By bringing these two aspects together it is
clear that there are four basic relationship
management styles that buyers and suppliers can
choose from in order to mange relationships. They
are as follows.
(1) Adversarial arm’s-length, where the
exchange partner seeks to maximise value
share and regularly uses short-term market
testing.
(2) Non-adversarial arm’s-length, where the
exchange partner pays the current market
price without recourse to aggressive
bargaining, but tests the market actively.
(3) Adversarial collaboration, where the exchange
partner provides extensive operational
linkages and relationship-specific adaptations,
353
Supply Chain Management: An International Journal
Volume 9 · Number 5 · 2004 · 346–356
but seeks to maximise the appropriation of
value.
(4) Non-adversarial collaboration, where the
exchange partners operate in a transparent
operational manner with long-term
relationship commitments and share any
resulting commercial value equally.
Clearly four broad options exist for exchange
partners to choose from. The key question for
successful relationship alignment is not, however,
which one of these approaches is the best for
buyers or suppliers to adopt. This is because each
one is an appropriate style under particular
circumstances of transactional exchange. The
correct question must be to ask: “How should each
of the four relationship management styles be
linked with particular sourcing approaches, under
specific power and leverage circumstances, to
create business relationship alignment? How this is
achieved is discussed below.”
4. A way of thinking about
appropriateness in buyer and supplier
exchange
The articles presented here all demonstrate that,
whatever individuals may ideally prefer to do with
relationships, it is not always possible for buyers or
suppliers to achieve their goals. The primary
reason for this is normally because of a lack of
capability and competence internally or non-
conducive power circumstances externally. In
practice both of these obstacles are very difficult to
overcome.
There is, however, a third reason for failure.
This occurs because buyers and suppliers
sometimes misperceive circumstances and pursue
inappropriate relationship management styles,
given the internal and external power
circumstances they are operating in. Our research
demonstrates that these problems can sometimes
be overcome if practitioners have an open mind
and are prepared to change their behaviour to align
relationship management styles appropriately with
power circumstances and the sourcing approach
being adopted.
Overall, our research shows that in order to
align business relationships appropriately buyers
and suppliers have to adopt the power and
relationship linkages shown in Figure 5.
What all of this means (Figure 6) is that there
appears to be a correlation between power and
leverage circumstances and appropriate
relationship management styles and sourcing
options. Our research also indicates that when
buyers and suppliers both manage these three
 The art of the possible
Andrew Cox
Figure 5 Value appropriation, power and relationship management styles
Downloaded by UFMG At 09:31 09 October 2017 (PT)
elements appropriately then relationship
alignment rather than misalignment is achieved
(Cox et al., 2004).
In the articles that follow this point about
appropriateness is made forcefully. The joint paper
that follows indicates quite clearly that, in 12 cases
analysed for a recent EPSRC project into
improved supplier performance, there was
considerable evidence that supply chain
management approaches were rarely possible, and
also that many existing relationships were seriously
misaligned – with buyers failing to understand
“appropriateness” or the art of the possible. Paul
Ireland’s paper also shows that while many in
construction have argued the case for “lean”
supply chain management (partnering)
approaches that, although this can be achieved
sometimes, it is normally impossible because of
problems with the regularity of projects.
Chris Lonsdale argues that in the football
supply chain supplier dominance currently ensures
that value flows primarily to the players rather than
to the football clubs. This means that reactive
supplier selection strategies are normal – unless
the clubs are able to develop their own players –
but even then power passes to these players if they
become established stars. Joe Sanderson
354
Supply Chain Management: An International Journal
Volume 9 · Number 5 · 2004 · 346–356
demonstrates that in the naval shipbuilding there is
very little scope for supply chain management
approaches, and that this is due to a combination
of the lack of conducive external power structures
and internal capability problems within sourcing
companies. Glyn Watson shows that in the movie
industry where there is a high level of risk and
uncertainty to be managed that established film
stars – like soccer players – are also able to
appropriate a disproportionate share of the value
from the studios.
In the final article an attempt is made to explain
why there is often disagreement within the
literature about “appropriateness”. The article
focuses on the issue of whether or not “win-win”
outcomes are feasible, and to what extent
mutuality and value appropriation are
commensurable in dyadic business transactions.
The research reported here demonstrates that
there is still considerable misunderstanding in the
literature about these two concepts, with a failure
to rigorously analyse the inherent tension between
these two aspects of transactional exchange. The
article attempts to show how a more rigorous
approach can be developed so that
“appropriateness” in dyadic exchange throughout
supply chains can be better understood.
 The art of the possible
Andrew Cox
Figure 6 Appropriateness in sourcing strategies, power circumstances and relationship management
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