1. Introduction

Supplier Relationship Management (SRM) has evolved from a strategic procurement activity to a strategic business function integral to competitive advantage in contemporary supply chains. Supplier relationship management (SRM) is a methodical process for assessing and collaborating with suppliers of products, materials, and services to a company, figuring out how each supplier contributes to its success, and creating plans to boost performance [1]. In today’s globalized market, firms view SRM as essential for optimizing costs, enhancing customer satisfaction, and managing risks. The effective management of supplier relationships not only improves supply chain performance but also contributes significantly to a company’s long-term profitability. This essay will discuss the current status of SRM, evaluate barriers to its effective implementation, critically analyze the roles of power and trust, and provide a case study on Walmart to illustrate successful SRM practices.

2. Literature review

2.1. Current status of supplier relationship management

The strategic importance of SRM has grown significantly in recent years as companies recognize the value of developing closer relationships with key suppliers. Supplier relationship management is essential to contemporary corporate operations. Supply chain disruption is avoided, strategic relationships are fostered, and supplier management is improved by using effective supplier relationship management techniques [2]. Traditionally, supplier interactions were largely transactional, focusing primarily on price negotiation and cost reduction. However, modern SRM practices emphasize collaboration, long-term partnerships, and shared value creation, which align with broader supply chain strategies aimed at achieving efficiency and responsiveness [3]. Firms such as Apple and Toyota have integrated SRM into their strategic supply chain frameworks, enabling them to foster innovation and enhance flexibility by working closely with their suppliers [4].

The shift towards more strategic SRM is largely driven by globalization, which has expanded the geographical scope of supply chains, making them more complex and challenging to manage [5]. As supply chains now span multiple countries and continents, companies are exposed to heightened risks and uncertainties, including geopolitical instability, currency fluctuations, and regulatory differences, which necessitate the adoption of more sophisticated and adaptive SRM practices. Additionally, global supply chains increase the chances of disruptions due to natural disasters or political issues in any region, further emphasizing the need for strategic SRM [6].

Similarly, sustainability and corporate social responsibility have a significant impact on SRM. Grant contends that in recent years, companies have displayed more focus on supplier compliance with ethical standards such as fair labor practices and human rights, as well as concerns relative to environmental laws designed to reduce carbon emissions while encouraging sustainable sourcing[7]. This trend has made SRM an essential mechanism through which suppliers are compelled to not only deliver on cost and quality requirements but also on broader ethical and environmental requirements.

Various leading companies have adopted technologies such as Supplier Relationship Management software to facilitate procurement, monitor and evaluate supplier performance, and ensure they adhere to the contract terms and conditions. Supplier relationship management software solutions can help enhance and ease business relations between companies and their suppliers [8]. Suppliers establish solid, reliable, and profitable business relations with organisations by using SRM solutions. Digital transformation has given firms the ability to gain more supply chain visibility and improve relations within the supply chain system[9]. Even with many advances, strategic SRM implementations are still not present in every industry, and some industries are much more developed than others in integrating SRM into their supply chain management programmes, such as the automotive and electronics industries.

2.2. Barriers to supplier relationship management

Despite the strategic benefits of SRM, numerous challenges are commonly encountered when firms try to adopt it. A key issue is the fragmented nature of supply chain ownership, which makes the coordination of supplier interactions across different entities to be complex. The contemporary supply chains are more global and complex than traditional ones. This means that a global assembly line having operations almost entirely across the world is used to make numerous product pieces by piece. Butollo notes that supply chain fragmentation occurs when a business source parts and materials and use multiple manufacturer and suppliers for the production and delivery of the business goods and services for specialised, localized and risk minimization purposes [10]. Internal inconsistencies with how firms manage distinct aspects of supply relationships can sometimes create fragmentation [11].

In other situations, the search for better and innovative solutions to reduce costs, improve the quality of products, or increase production yields results in supply chain fragmentation. As a company’s strategic business outsourcing grows, more work is subcontracted to focus on core activities. The company must work with a larger network of suppliers, each having particular policies and objectives. This fragmentation may have a negative impact on supply chain strategies, leading to lower quality outputs. Because labour and material requirements are subject to global norms and standards, geographic fragmentation may impact quality [12]. It can be challenging to oversee numerous suppliers and guarantee the superior quality of a broad range of items when there is fragmentation among them. Furthermore, fragmentation can lead to inefficiencies and additional costs when it comes to businesses being in the right place at the right time and at the most affordable price. [13]. For instance, geographic dispersion may lead to higher transportation expenses and problems with cross-border compliance. Workflows may become slowed down by complex, inefficient, and expensive team transitions when an organisation undergoes operational and organisational fragmentation.

Lastly, fragmentation may lead to longer lead times and may cause delays because companies need to coordinate transportation of the goods between the suppliers, the time zones, departments, and functions, which may take time and may experience bottleneck at some point. Any stoppage that emanates from a supply chain disruption may have a deep impact. The manufacturing sector is the most sensitive to long lead times and delays since time loss adversely impacts business performance.

Globalization exacerbates these problems by bringing physical about a huge physical distance between firms and their suppliers, which in turn hampers communication and logistics management. Globalization according to Keohane and Nye can be defined as the growing interconnectedness and the interdependence among countries and regions across the world[14]. International supply chains bring about various risks like geopolitical instability, fluctuations of currency, and the differences in regulations, which make it difficult to manage supplier’s performance. For instance, in the automobile industry which relies on supplier networks across the globe, disruptions have frequently occurred because of natural disasters and political tensions, highlighting the importance of sound SRM practices in mitigating risks [15]. Global supply networks are vulnerable to a number of risks, which may include trade disputes between countries, natural disasters, regional economic downturns, and unstable geopolitical conditions.

A disruption in one region of the world might lead to delays in supply, product shortages and increased prices in other subcategories of the supply chain. According to Muchiri , there is the need for supply chain managers to develop proper risk mitigation plans to improve the resilience and responsiveness of supply chain network[16]. When operating in different countries, it is a requirement to adhere to different regulatory systems and set compliance standards. Different countries have different trade policies, customs, and standards for products. Adhering to such regulations may prove strenuous and time-consuming, and neglecting it may attract fines, legal issues, or even delay in shipment of goods. The process of managing inventories becomes even more challenging when the supply chain networks are overly distributed [16]. Some may find it difficult to balance between reducing holding costs and meeting demand fluctuations with the distribution of inventory throughout a number of locations. Low inventory might lead to stockouts and unsatisfied customers, while excessive inventory may lead to tie up of capital.

Another significant challenge is the shortening of product life cycles due to the active introduction of new technologies and ever-changing customer preferences. Firms are pressured to innovate and introduce more new products to the market faster than before, which puts pressure on the supplier who now has to offer products with shorter lead times and higher levels of customization[17]. This is especially the case in electronics industry, where companies like Samsung and Sony are always releasing new versions of their products to the market in attempt to outdo existing competitors [18].

SRM also faces the challenge of demanding customers who are constantly asking for product quality, delivery times and low prices. This has pressured companies to set strict performance standards for their suppliers, thereby increasing the pressure on SRM practices. The trend towards just-in-time inventory management which seeks to keep stocks and associated costs low makes this task more difficult as suppliers must be in a position to quickly respond to fluctuations in demand without compromising on quality [19].

2.3. Analysis of power and trust in buyer-supplier relationships

Power and trust issues play a crucial role in defining the nature and the results of the buyer-supplier relationships, which affects their long-term stability and productivity within the supply chain. In any buyer-supplier relationship, power dynamics always influence how negotiations will be conducted and the conditions of engagement [20]. When organizations mature, trust is created between buyer and seller organizations. As such, these relationships evolve and therein lies more dependencies for both parties to perform as necessary. Buyer organizations need to understand the intricacies of the buyer-seller relationship as holding too much power, may not be beneficial to the buyer organization at the end of the day. On one hand, companies with substantial market power, such as large retailers or manufacturers, can leverage their buying strength to negotiate favorable terms, often focusing on cost reduction and stringent service level agreements. On the other hand, trust is crucial as it facilitates collaboration, providing the opportunity for mutual value creation based on cooperation in problem-solving and information sharing among the firms.

2.3.1. Power dynamics in buyer-supplier relationships

Power dynamics in buyer-supplier relations arise due to the differences in size, market position, and supply chain strategic significance of the involved parties. When buyers have a considerable market power, they are inclined to imposing negotiation terms that further their interests, like lower prices, faster delivery times and more strict quality metrics [21]. This is particularly evident in industries where there are a few buyers that control a significant market share. For instance, due to its large market base, Walmart has bargaining power over suppliers which helps in negotiating lower prices, demanding high levels of services, and implementing cost-saving measures such as the just-in-time inventory management [22]. Such practices allow Walmart to maintain its cost leadership strategy which helps in setting lower prices and maintaining a high level of competitive advantage.

While the use of power can be advantageous to the buyer by providing satisfactory financial gains in the initial stages, it can be disadvantageous by straining supplier relationships. According to Makkonen et al., suppliers often find themselves pressured into accepting unfavourable contracts which in turn lower their profit margins and opportunities for growth[23]. This situation can result in tension in the relations if suppliers consider what the buyer is offering them as exploitative or unsustainable. In the long run, this imbalance has a detrimental effect as it reduces the motivation of the supplier to respond to the needs of the buyer, potentially leading to challenges like reduced product quality, delayed deliveries, and exit of supplier from the partnerships [24]. Therefore, while power may be a strategic weapon for achieving short-term gains, it can be counterproductive if used excessively or inappropriately by destabilise the supply chain in the long run.

Other types of power distribution can also be observed in industries where the buyer has many sourcing options, whereas the suppliers depend on a few key buyers. In such cases, according to Glavee-Geo et al., suppliers may have little bargaining power and could be forced to comply with the demands of buyers to retain their business[25]. This may lead to the development of dependency where suppliers are limited in their ability to negotiate terms or resist cost-cutting measures that weaken the already skewed power balance. For example, in the automotive industry, companies like Ford or General Motors dominates large-scale automotive manufacturers over small-scale component suppliers who may barely break even when pressured to continually lower prices [26]. Such a dynamic can stifle innovation and lead to cost consciousness where value is achieved at the expense of other strategic goals such as quality and process advancements.

2.3.2. The role of trust in building collaborative relationships

Although power dynamics define the status of buyer-supplier relationships, trust is the cornerstone of efficient and sustainable buyer-supplier relationships. Trust enables supply chain partners to exchange information and collaborate as well as to solve problems more effectively and efficiently. Agarwal and Narayana also support the opinion stating that when the level of trust is high, partners are inclined to act in each other’s best interests, leading to increased levels of commitment and collaboration [27]. This leads to reduced extensive contract formulation and extensive performance monitoring since the parties involved are more likely to uphold the informal mutual understandings and be more concerned with the relationship’s long-term success and sustainability over short-term gains.

Trust can also enhance flexibility, to improve the supply chain responses to adapt to some changes or shocks in the market. For instance, according to Faruquee et al. , in a situation of unexpected demand spikes, a trusted supplier is more willing and ready to ensure they meet the buyers’ needs, even if it requires re-prioritizing other orders [28]. Programs like Collaborative Planning, Forecasting, and Replenishment (CPFR) shows how much trust-driven collaboration can enhance supply chain responsiveness. CPFR encourages close cooperation between buyers and suppliers in sharing forecasts, planning inventory replenishments, and jointly addressing potential issues, resulting in improved supply chain responsiveness and efficiency [29]. The establishment of trust is one way through which firms can build stronger supply chain that can cope with the fluctuations and other uncertainties of the market.

Trust in buyer-supplier relationships is a process that is built over time as it requires consistency, transparency, and open communication from both parties [27]. Some of the trust-building actions may include sharing cost savings from process improvements, involving suppliers in decision-making, and joint investments in training or technology investments. For instance, Japanese automakers like Toyota are known for cultivating long-term relationships with their suppliers, based on mutual trust and collaboration. Toyota's keiretsu network emphasizes supplier development and quality improvement through close cooperation, resulting in highly efficient and reliable supply chains. Such practices highlight the positive impact of trust on supply chain integration and overall performance.

2.3.3. Balancing power and trust in supplier relationships

According to Bounlutay , trust and power are two-way streets, and having too much power at the outset of a business partnership will only hurt it later on since mistrust may begin to grow[26]. A fine balance of power usage as well as the development of trust between buyer-seller organizations need to be maintained and it is important that the appropriate representatives are selected. When one party exercises excessive power over the other, it can lead to opportunistic behaviour, eroding trust and damaging the partnership over time [30]. Opportunism occurs when a party prioritizes its interests at the expense of the partner, such as by renegotiating contracts to obtain more favourable terms or demanding last-minute changes without compensating the supplier. These actions may benefit the dominant party in the short term but can lead to mistrust and reluctance on the part of the weaker partner to cooperate fully in the future.

To address power imbalances, companies need to balance control and trust in supplier relationships [31]. Practical measures to maintain this balance may include establishing fair and transparent practices, such as sharing the benefits of cost savings and collectively contributing to the development of process improvements. Regular communication and clear expectations also help build mutual respect and fairness.

Power can be used strategically to build trust. For example, large buyers can negotiate lower raw material prices, passing savings to suppliers, reducing costs for both and promoting partnership [31]. Another approach is investing in supplier development, such as training, technology upgrades, or financial support, which boosts supplier growth and strengthens collaboration.

2.4. Case study: The impact of buyer-supplier relationship management on Walmart’s business performance

Walmart has over the years adopted innovative supply chain strategies which focus on reducing cost, ensuring responsiveness and supplier relationship management (SRM). These innovative supply chain strategies have led to remarkable success in the retail sector. Walmart has built a strong supply chain network of suppliers, logistics operations, and retail outlets to ensure customer demands are met on time while also ensuring the company maintains its competitive advantage through cost leadership [32]. Buying power, cross-docking, integrated information technology and the use of sustainable sourcing all explain the company's SRM strategy in line with how SRM practices can improve business performance and customer satisfaction.

2.4.1. Leveraging purchasing power for economies of scale

Walmart's success as a global retail leader can be largely attributed to its strategic approach to managing buyer-supplier relationships. The first advantage of its Buyer-Supplier Relationship is the Cost optimization and economies of scale. Walmart can negotiate for bulky purchases which are often discounted. The consolidation of its purchasing volumes across a big network of suppliers and stores ensures that Walmart can secure favorable prices that enable the company to maintain its strategy of “everyday low pricing”. The strategy helps attract consumers who are price-sensitive while also improving the profitability of suppliers through the provision of consistently high volume of business. This strategy is a critical component of Walmart’s cost leadership approach, as it ensures that the company can remain competitive on pricing while still maintaining healthy profit margins [33]. The ability to negotiate favorable terms with suppliers is largely due to Walmart’s considerable purchasing power, which gives it leverage in the negotiation process.

2.4.2. Cross-docking and inventory management

Another advantage of Walmart’s Buyer-Supplier Relationship is the improved supply chain responsiveness. The company’s cross-docking which is supported by close collaboration with suppliers improves its supply chain efficiency. This technology allows products from suppliers to be transferred directly to delivery trains travelling to shops, eliminating the need to stock them in warehouses. Cross-docking as an approach cuts inventory holding costs greatly, reduces storage needs and fastens the circulation of products in the supply network [34]. With cross-docking, Walmart is also able to avoid holding large stocks, which lessen the costs of storing goods, potential loss of stocks to obsolescence, damage or theft. Thus, Walmart can easily update its stores with the latest products thus offering high availability of products, and new products to match the changing market needs.

The cross-docking system also allows just-in-time inventory management, where inventory is replenished when only needed [35]. This reduces the proportion of capital tied up in stock while also ensuring inventory is always available whenever a customers need it. Walmart keeping the inventory levels low while ensuring that it maintains frequent deliveries, improves the supply chain’s responsiveness, where the company can meet fluctuating consumer demand effectively. This logistics strategy is especially useful in sectors such as grocery retail, as the products are perishable and the demand is unpredictable.

2.4.3. Investment in information technology

In addition, the company's investment in data-driven decision-making through integrated information technology systems has increased supply chain visibility and coordination. Walmart's proprietary Retail Link system, for instance, is a powerful data-sharing platform that allows suppliers to access real-time sales data. This transparency enables suppliers to monitor product sales and inventory levels across Walmart’s stores, allowing them to adjust production schedules and inventory replenishment accordingly. The integration of suppliers into Walmart’s IT ecosystem ensures that both parties are aligned in terms of inventory management, demand forecasting, and supply chain planning, facilitating more accurate just-in-time deliveries [26]. The use of IT extends beyond data sharing where Walmart also employs advanced analytics and machine learning to predict demand patterns, optimize inventory levels, and enhance logistics planning. Predictive analytics helps Walmart identify trends in consumer behaviour, allowing the company and its suppliers to anticipate future demand and avoid stockouts or excess inventory [36]. This capability is particularly important for seasonal products or items with volatile demand, where accurate forecasting can significantly impact sales performance. Walmart’s investment in IT has thus transformed its SRM into a data-driven process, where decisions are based on real-time information, leading to improved coordination and efficiency across the supply chain.

2.4.4. Sustainable sourcing and ethical supply chain practices

Another critical aspect of Walmart’s SRM strategy is sustainable sourcing and ethical supply chain management. The company acknowledges that its supply chain operation has a significant impact on the environment and society, and it has addressed ways and means of engaging suppliers toward Sustainability. Walmart has developed several guidelines referred to as the “Sustainability Index” that quantify the effects of products on the environment and encourage suppliers to embrace sustainable procedures [37]. The guidelines focus on different issues like reduction of greenhouse gas emissions, high energy efficiency and minimizing wastes in the manufacturing process. Suppliers scoring highly on the Sustainability Index are likely to enjoy stronger relations with Walmart, including being granted preferred supplier status, or access to new business propositions.

Walmart uses ethical sourcing to ensure suppliers follow fair labour and human rights standards. Schirnhofer explains that their “Standards for Suppliers” policy requires suppliers to ensure worker safety, fair wages, and non-discrimination. Walmart regularly checks suppliers to ensure these standards are met and helps them fix any issues [38]. This approach reduces supply chain risks and improves Walmart’s brand image by connecting supplier management with social responsibility.

3. Conclusion

This paper has discussed the role of Supplier Relationship Management (SRM) with regards to improving supply chain competitiveness and organizational effectiveness. Globalization, increased complexity and challenges, and the imperative for sustainable and resilient supply chains have made the SRM function a strategic imperative, rather than a transactional one. SRM, however, presents numerous challenges including supply chain fragmentation, globalization and the shortening product life cycles. SRM largely involves power dynamics and building of trust between suppliers and buyers. Trust is important for building strong, long-term relationships and power imbalances can result in exploitation of one party which in the end may lead to reduced collaboration between suppliers and buyers. The paper has discussed the case study of Walmart illustrating the practical application of SRM principles. SRM becomes effective in driving operational efficiency and cutting costs, as well as enhancing supply chain resilience, as applied by Walmart through cross-docking, IT investment, sustainable sourcing, and ethical practice. Suppliers using SRM thus have a valuable tool to improve supply chain performance and gain competitive advantage. Therefore, strategic supplier relationship management helps companies to minimize risks, improve their innovative practices, and sustain long-term success.

Although this paper focused on a single case, it provides a valuable example of how SRM practices can support resilient business strategies. Future research could investigate cross-industry comparisons or the long-term role of digital SRM tools in building supply chain resilience. In summary, strategic SRM is not only about cost and efficiency—it is a core enabler of resilience, innovation, and sustainable growth in today’s complex global environment.