Supply chain friends: The good, the bad, and the ugly

The importance of firms developing close relationships with suppliers has been well recognized by supply chain managers. However, business relationships ultimately progress due to individuals within firms interacting over time. Our results from in-depth interviews with supply chain managers revealed that decisions made by managers within the supply chain can’t be accurately explained or fully understood without accounting for the important influence of the friendships managers across firms develop with each other. This is of significant importance for senior managers since supply chain costs typically account for 60% to 90% of a company's total costs. In this article, we seek to shed some light on the implications of developing personal relationships with counterparts within the supply chain. We conclude by providing guidelines that upper management can follow to enhance the potential positive benefits associated with the inherent development of personal relationships/friendships and, equally important, mitigate the potential negative impact of such relationships.