Any relationship can be determined by three states. Either you have the power, where you are then negotiating from a position of strength and the other party from weakness, or they have the power and the situation is reversed, or you are equally balanced, in which case you are interdependent. In the example of many large supermarkets, they negotiate from a position of power, they can do this as they have many reserve suppliers waiting to take the place of the incumbent. In other situations, maybe technology or a patent results in no or limited alternatives, meaning the supplier is negotiating from the position of strength. The position of balance is established where partnerships, relationships and trust has been established.

It is extremely important to understand the power regimes within your supply chain as this will then enable you to react to the relationships below your supplier. If your supply chain has lower levels of supplier power then this is going to be reflected in your product costs and possibly delivery. If for example you are reducing costs, you may only be able to effect the levels which you have influence over, meaning that the cost saving will have to be condensed in these areas. Reacting to the findings of this profiling tool means a strategy can be developed with your supply chain to establish the desired power balance..

This profiling tool can be used in conjunction with Value chain modelling, if you are modelling your

Supply chain, then you can overlay the power regime and establish a joint strategy for cost saving and control.

Understanding the power regimes is essential for supply chain management and control.