Academic journal article Annals of Business Administrative Science

Making Gatekeepers in Supplier Systems: A Case for Offering Customer Solutions

Academic journal article Annals of Business Administrative Science

Making Gatekeepers in Supplier Systems: A Case for Offering Customer Solutions

Article excerpt

1. Introduction

Customers sometimes ask suppliers for customized components. In these cases, suppliers can choose one of two options: adopt the strategy of accepting the request and responding to the customer, or take a standardization strategy (Takashima, 1998). In recent years, however, there has been greater interest in the solution business on the part of both businessmen and researchers, and the solution business has gained traction as a third option. Still, Tuli, Kohli, and Bharadwaj (2007) noted that many studies define the solution business as the simple bundling of products and services, with little regard for the perspective of the customer, and they also identified a gap between customers and suppliers in understanding proposed solutions. Suppliers appear to have a broader array of information than customers do, so they can be expected to propose solutions. Discussions regarding the solution business in Japan also contend that suppliers have access to a broader range of information and can leverage this information in making proposals to customers (Kuwashima, 2013; Tomita, 2009). In addition, Tomita (2007) discussed solution strategies in a case study of Sumitomo 3M Limited. He noted that customer technical centers (CTCs) exhibited Sumitomo 3M's technologies and products and that the company's creation of an internal CTC promoted customer problem discovery and solutions. This CTC deepened customer trust and made it easier to propose solutions. Nobeoka (2011) likewise emphasized that CTCs can provide meaningful value to the solutions that are proposed to customers.1 Thus, the solution business is not just a combination of products and services; rather, it is a series of processes for providing recommendations to customers and therefore requires anticipating the needs of customers. This, in turn, requires developing relationships of trust with customers, recognizing customers' needs through close communication, and tying these needs to the appropriate internal technologies.

Much prior research has noted the impact of promoting close communication and information sharing in cooperation between customers and suppliers (Asanuma, 1989; Clark & Fujimoto, 1991; Dyer, 2000; Konno, 2007). However, cooperation between suppliers and customers is not a simple matter, because there is always a risk of information spillover in the process of cooperation (Nakagawa & Song, 2016). Accordingly, deciding whom to cooperate with is a critical issue. Konno (2003) researched on this topic by surveying Japanese automotive suppliers. He asserted that suppliers that develop cooperative relationships with highly competent customers and transact with a broad range of customers tend to outperform other suppliers that do not. This is because suppliers with cooperative relationships are able to acquire information and use processes to develop resources and competencies through their established relationships to their advantage.

Therefore, when a supplier transacts with multiple customers, the way that suppliers interact with customers and how they apply their internal technologies to those customers' needs and problems is critical. To resolve these problems, this paper discusses management for an effective solution business by focusing on the professional organization for offering customer solutions (POOCS) created by Company A, a global materials supplier, and by explaining the ties between customer interactions through Company A's POOCS and technologies.

2. Case

2.1. Background of Company A

This paper is a case study of Company A, a global materials company headquartered outside of Japan. Company A's goal is to solve problems related to population growth using science developed in-house, which focuses on increasing and securing food production; reducing reliance on fossil fuels; and protecting human lives, property, and the environment. Company A's products and technologies are wide-ranging, and its business lines include agriculture, high-performance chemicals and materials, security systems, nutrition and foods, and electronics. …

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