The purchasing department's leadership role in developing and maintaining a preferred customer status

Developing and maintaining a preferred customer status is one of the main objectives of organizations that want to obtain a better access to supplier's information, resources, and innovation. This paper addresses the extent and the nature of the purchasing department's leadership role in the process of developing and maintaining a preferred customer status. A qualitative exploratory approach based on eleven cases has been used in order to take into consideration the context specific to the buyer-supplier relationship in a preferred customer scenario.Our study shows that the purchasing department performs four main categories of roles: (1) identifies and selects the best supplier, (2) structures and segments the supply base, (3) builds close relationships with selected suppliers and (4) develops working relationships, using an effective communication. Each of these roles is related to three key components of the purchasing department's capabilities: boundary, relational, and coordination. These four categories of roles illustrate supply's ability to recognize and understand the specifics of the preferred customer situation. Based on our analysis, the purchasing department should be viewed as extending an organization's resource base, making the organization more competitive.Our analysis also shows that the purchasing managers' leadership is critical for the development and the coordination of activities with selected suppliers, as well as proper communication with them. Specifically, the purchasing manager's transformational leadership generates more internal user and supplier involvement through the creation and articulation of a common vision, by establishing shared goals with other organizational units, and by focusing on activities that benefit the organization; this allows to move from initiative-driven efforts to an “institutionalized preferred customer status management” in the organization.