Understanding the Relationship Between Small & Medium Enterprises (SMES) and Suppliers

SMEs discerned the need of implementing proper supply chain management practices, especially maintaining a good relationship with the partners. Previous literatures have indicated that a close relationship between SME's owner-managers and suppliers provides various benefits such as operation and performance improvement, smooth delivery of goods and services to the final destinations, and better negotiation of price and delivery schedule. Thus, this paper intended to understand the Malaysian's food industry SME relationship with their suppliers. By employing Social Exchange Theory (SET) as a supporting theory, this study intended to understand how elements such as trust, communication, commitment, and bargaining power of buyer develop and maintain the relationship with the suppliers. The results obtained from single case study which was a semi-structured interview that was conducted with the owner-manager, as well as the suppliers. The findings indicated that the SME realised the importance of maintaining good relationship with the suppliers. Among all elements, loyalty, under the commitment element is considered to be unnecessarily important to maintain the relationship with the suppliers by the SME's owner-manager. Meanwhile, trust and communication are the most crucial elements to maintain the relationship.