A Value - based approach for sustainable supplier-customer relationships: the case of the Indian Steel Industry

Abstract

The Indian steel industry has been at the receiving end for the last several months, as the unabated stream of media reports indicate. The steel industry, which has endured years of mediocre performance, due to a supply glut and consequent depressed world prices, has suddenly appeared on the radar screens of most companies, and even retail customers. With a widening demand-supply gap, and greatly increased input costs, especially over the last about one year, prices have firmed up. Customers, for many of whom steel is an important raw material, are finding that the steel prices continue their northward climb without any let-up. Many customers feel that the steel industry is making super-normal profits in the process, and using the situation opportunistically to their advantage. In this article, we seek to understand the current situation that is perhaps best characterized by simmering supplier-customer distrust. We then explore ways of building sustainable supplier-customer relationship in the context of business markets. While the case the Indian steel industry is discussed, the lessons are more widely transportable to business markets in general. Although the steel industry caters to both consumer (B2C) and business (B2B) markets, our focus will be on the business markets, which constitutes over 80% of the Indian steel industry.