A Value-Based Approach for Sustainable Supplier-Customer Relationships: The Case of the Indian Steel Industry

The steel industry, which has endured years of mediocre performance due to a supply glut and consequent depressed world prices, has seen considerable resurgence during the last several months. The ever-widening demand-supply gap, and greatly increased input costs have resulted in prices firming up. The sharp increase in steel prices without any let-up is an issue that steel customers have found difficult to grapple with. Many customers believe that the steel industry is behaving opportunistically. The paper attempts to understand the dynamics of the Indian steel industry. Although the steel industry caters to both consumer (B2C) and business (B2B) markets, the focus of the paper is on the business markets, which accounts for 80% of the market. After presenting a picture of who the suppliers and customers of the steel industry are, the paper presents the various forces at play in the industry, a conceptual model to understand supplier-customer relationships in the industry, and traces the sources of animosity and hostility between the supplier and the customer firms. Forging meaningful value-based long-term relationships between supplier and customer firms as a way forward is explored. The paper presents possible remedies to the malady of distrust between customer and supplier firms. Collaborative working between competing suppliers and active pan-industry collaborative forums to bring better cooperation and trust between customer and supplier firms are essential first steps to bring normalcy back into the industry’s functioning.