An examination of the role of supplier relationship management in cost savings: A case study of BUA Cement in Bauchi State.
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Background of the study
Supplier Relationship Management (SRM) refers to the strategic approach organizations take in managing their interactions with suppliers to ensure that they receive optimal value from these relationships (Hugos, 2023). Effective SRM practices can lead to cost savings, improved product quality, and enhanced collaboration between companies and suppliers (Choi & Lee, 2024). In highly competitive industries like cement manufacturing, managing supplier relationships efficiently can significantly reduce costs and improve a company’s competitive advantage (Muthu et al., 2023).
BUA Cement, one of Nigeria's largest cement producers, operates in a cost-sensitive environment, where effective supplier management is crucial for profitability and operational efficiency. Bauchi State, home to one of BUA Cement’s key production facilities, serves as a critical location for evaluating how SRM practices contribute to cost savings. Supplier relationships in the cement industry, including raw material procurement, transportation, and energy supply, are often complex and highly competitive. BUA Cement’s SRM strategies aim to reduce procurement costs, optimize supply chain performance, and foster long-term partnerships with key suppliers (Ali & Hussain, 2024).
This study explores how BUA Cement’s SRM practices contribute to cost savings, focusing on Bauchi State as a case study. Understanding the link between SRM and cost reduction in a large manufacturing firm like BUA Cement can provide valuable insights for other organizations in the cement industry and beyond.
Statement of the problem
While SRM has been recognized as a key driver of cost savings and competitive advantage, there is a lack of empirical evidence on its impact in the cement manufacturing sector in Nigeria. BUA Cement, despite its successful market positioning, faces challenges in managing supplier relationships effectively to minimize costs while maintaining product quality and timely supply (Okoro et al., 2023). The dynamics of supplier relations, including price negotiations, delivery times, and quality control, are critical to understanding how SRM can lead to cost savings in the cement sector. This study will examine how BUA Cement’s SRM strategies in Bauchi State contribute to cost savings and the challenges that the company faces in optimizing supplier relationships.
Objectives of the study
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To evaluate the role of SRM in driving cost savings for BUA Cement in Bauchi State.
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To assess the impact of SRM on supplier collaboration and long-term relationships at BUA Cement in Bauchi State.
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To identify the key challenges BUA Cement faces in implementing effective SRM practices in Bauchi State.
Research questions
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How does SRM contribute to cost savings for BUA Cement in Bauchi State?
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What is the impact of SRM on supplier collaboration and long-term relationships at BUA Cement in Bauchi State?
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What are the key challenges BUA Cement faces in implementing effective SRM practices in Bauchi State?
Research hypotheses
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SRM practices significantly contribute to cost savings for BUA Cement in Bauchi State.
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SRM practices positively impact supplier collaboration and long-term relationships at BUA Cement in Bauchi State.
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BUA Cement faces challenges in optimizing SRM practices due to factors such as supplier resistance and market volatility.
Scope and limitations of the study
This study will focus on BUA Cement’s SRM practices in Bauchi State and evaluate their impact on cost savings and supplier relationships. Data will be collected through interviews with BUA Cement’s procurement and supply chain managers, as well as surveys with suppliers. The study is limited by the scope of BUA Cement’s operations in Bauchi State and may not fully capture the dynamics of SRM in other regions or industries.
Definitions of terms
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Supplier Relationship Management (SRM): The strategic approach to managing interactions with suppliers to ensure that both parties derive optimal value from their relationship.
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Cost savings: The reduction of expenditures in the supply chain through better procurement practices, supplier negotiations, and resource optimization.
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Supplier collaboration: The cooperative relationship between a company and its suppliers, aimed at achieving mutual benefits, such as improved product quality and cost efficiency.
