Supplier–customer relationships: A case study of power dynamics

• We study how low-power suppliers re-balance the power dynamic with strategic customers.
• Suppliers develop a two-step service process to create a countervailing power.
• The study highlights some counterintuitive findings on supplier performance driver.

Against the backdrop of earlier research on power in supplier–customer relationships, our study focuses on the power dynamics, which lead low-power suppliers to re-balance their power relationship with strategic customers. An in-depth qualitative study is used to examine the case of a network made of several dyads (FMCG strategic customers/corrugated packaging suppliers).Our findings are slightly counter-intuitive: a new stream of literature tends to show that supplier performance is relationship-driven. We find here that the supplier performance is process-driven: to reach the targeted level of performance and to move out from a low-power position, the suppliers develop a two-step process. First, suppliers shift their focus from a product centric approach to a customer business process one, supplying “Process Support Services”. Second, suppliers initiate “Performance Process Services” to position themselves to outsource the customer’s business processes, hence creating interdependency and a countervailing power with the strategic customer.