Price volatility integration – the problem of the price volatility is not a new phenomenon. It can disturb the continuation of the project, being the most sensitive issue for the procurement of the materials. It wants precise weighting of cost expectedness against volume and length of the contract. It is important for many organizations to establish the exact volume of volatility, which can be adjusted. The opposite is also sometimes true for the supplier, as it can help in developing commitment, to get surety in smooth pricing, especially in the long time contracts, for minimizing the exposure and risk (Hutt and Speh, 2014). The profitability of any organizations can also be ensured by including the margins into account. An open book policy and the negotiated margin are perfect which allows both parties to earn benefit from the fluctuations in pricing.
Reduced cost – during the in initial building of the contracts, the establishment cost is high. Thus by building the lasting relationship with the supplier, cost reduction can be attained. Sometimes, re-tendering or termination of the contract before the stipulated date increases the cost substantially, without any gain in the project. In such instance, the relations of buyer-supplier relationship help in avoiding such circumstances.
Increased efficiency – As the frequency of material requirement in the project is increasing rapidly, it helps the buyer to establish the friendly relationship with the supplier. It also helps in developing the better understanding of the clients, market and the business process. Greater integration of the business is increased along with greater stakeholder involvement. A gray area is mostly reduced along with the improvement of services.
Outsourcing – the uncritical activities which can be outsourced to avail better benefits render more capability to develop the relationship among buyer-supplier. It helps the buyers in harnessing the particular product, and reduction in the internal workloads to increase the efficiencies.
Integration helps in reducing the supplier number, formation for more smooth and effective supply chain. Reduction in the internal loads can provide opportunity in minimization of costs through scale economy (Mathur, 2008).