A relationship approach to construction supply chains
| DOI | https://doi.org/10.1108/02635570810858741 |
| Date | 21 March 2008 |
| Pages | 310-327 |
| Published date | 21 March 2008 |
| Author | Peter R. Davis |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
A relationship approach
to construction supply chains
Peter R. Davis
Faculty of the Built Environment Art and Design,
Curtin University of Technology, Perth, Australia
Abstract
Purpose – The purpose of this paper is to establish the influence that relationship variables have on
construction supply chains. The objective is to show where thoughtful use of relationship marketing
(RM) techniques can benefit construction supply chains.
Design/methodology/approach – A questionnaire developed from a focus group outcome and
literature concerning RM was used to extract information about commitment, trust and satisfaction in
upstream and downstream construction supply chain relationships. A cohort of 898 construction
industry managers developed from several comprehensive sample frames responded to the
questionnaire. Data was analysed using exploratory and non-parametric confirmatory statistical
techniques, including Spe arman’s
r
non-parametric correlat ion matrix, Kruskal-Wallis te st,
Mann-Whitney Utest and principal axis factor analysis.
Findings – The results indicate that construction actors differentiate between relationship and
traditional marketing factors in their supply chain activities. It is shown they engender specific RM
techniques in their construction project environment.
Practical implications – RM has the potential to provide organisations with significant supply
chain benefits, particularly long-term value to clients. Benefit may manifest from commitment, trust
and satisfaction. These three variables are all fundamental to supply chain activities.
Originality/value – The paper uses a RM knowledge base to develop an increased understanding of
supply chain benefit variables. The value of the paper is that it enables construction stakeholders with
the tools to develop long-term relationships in their heterogeneous construction environment.
Keywords Supply chain management, Relationshipmarketing, Construction industry,Australia
Paper type Research paper
Introduction
Relationship marketing (RM) embodies international, industrial and services
marketing and in a business context is superseding traditional marketing theory
(Gummesson, 1999). RM’s relevance to construction supply chains can be attributed to
two components; the first is that marketing fails to recognise important
interrelationships within a traditional marketing mix, the second is RM’s application
to service industries that have grown exponentially in recent times (Christopher et al.,
1991; Kotler and Armstrong, 1993).
RM research largely resides in the domain of industrial and services sectors;
however the research that follows shows that RM can be applied to and provides
benefit to construction supply chain activities. Two benefits include; client retention
and value-adding product benefits (Christopher et al., 1991; Nickels and Wood, 1997;
Gummesson, 1999). Relationship building attributes include; a desire to continue a
commitment relationship; a belief that a relationship partner will be trustworth y and
perform effectively and finally there is an understanding of a client’s problem s and
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0263-5577.htm
IMDS
108,3
310
Received 7 October 2007
Revised 14 November 2007
Accepted 6 December 2007
Industrial Management & Data
Systems
Vol. 108 No. 3, 2008
pp. 310-327
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635570810858741
value will be added to the end product (Day and Barksdale, 1992; Patterson, 1995;
Doney and Cannon, 1997).
Relationship marketing (RM)
RM is an approach to marketing that draws on traditional/transactional marketing and
incorporates thinking that makes it materially different from its traditional founding
(Gordon, 1998, p. 9). Essentially, RM attempts to create value for customer s and share
that value with the key stakeholders in a venture. The value created is not required to
be purchased; a RM plan identifies potential, informs relationships and creates value
with customers (Gronroos, 1994). The parties will work together to design and realign
processes to support value. Fundamentally there is continuous and collaborative effort
together with mutual understanding that long-term commitment will create
increasingly tight bonds. These bonds will become a chain of relationships (Gordon,
1998, p. 10; Tomer, 1998, p. 210). Gummesson (1999, p. 2) describes this relationship
chain as a complex network incorporating upstream and downstream interactions.
RM impacts on a company’s customers and the scope of its business (Gordon, 1998),
the indications are that every firm can benefit from RM, although in some sectors it
may be easier than others (Gronroos, 1996, p. 12).
Characteristics/principles of relationship marketing
In Table I, the principles of RM are shown in column one. These represent a benchmark
that most writers accept differentiates RM from traditional transactional marketing.
Commentary is shown in column two following several contemporary writers
identified that contribute to a RM knowledge base.
Following Table I, Ferguson and Brown (1991, p. 145) and Wilson (1995) indicate
that RM has a potential to enhance goal achievement, cement long-term relationships,
and establish performance standards from which to recruit new members. Gummesson
(1995, p. 113) refers to strategy where both parties voluntarily remain loyal to each
other by retaining the relationship. Another principle of RM is resource allocatio n;
Gronroos (1990, p. 5) elaborates the concept of resources beyond the core product itself
to include personnel, technology, knowledge and time (Gronroos, 1996, p. 7). These
factors have an effect on a customer’s perception of quality and satisfaction. Interaction
and information exchange is highlighted as a RM principle by Donaldson and O’Toole
(2001, p. 12). This concept being supported by Gordon (1998, p. 10) who refers to the
creation of a chain of relationships and by Gummesson (1999, p. 2) as a network of
relationships. Transaction costs are noted by Donaldson and O’Toole (2001, p. 33) in
the context of switching cost associated with RM. For example, “Trust, typically
associated with RM creates an atmosphere where costly financial safeguards and
checks are not needed.” It is proposed that through continually dealing with a
particular organisation, a client will develop levels of commitment and trust that is not
evident in transactional marketing. The end result using RM is value for the client as
well as satisfaction (Berry and Parasuraman, 1991; Nickels and Wood, 1997).
Key attributes of relationship marketing
There are several consider ations when developing a RM strategy within an
organisation. For example, Wilson (1995) provides an extensive list of relationship
variables established from theoretical and empirical research. This section concentrates
Construction
supply chains
311
To continue reading
Request your trial