Reciprocity in Buying
 

In certain business situations a buyer may give preference to a supplier who also happens to be his customer. This relationship is known as reciprocity. It is something like "I buy from you if you buy from me"

 

One of the main questions for which this , otherwise simple way of buying, is always under the scanner of purchasing ethics is its undue ability to restrict competition and fair play.

One of the major roles that any purchaser plays for his firm is in cost reduction arena which is attempted by generating competition among the suppliers.
This principle gets a jolt through reciprocity in buying. However, when factors such as quality, after sales service, price etc are equal normally a buyer would like to buy

from his customer , if for nothing  then at least for having a good working relationship.
However, the distinct disadvantages of reciprocal buying outweigh the limited and narrow advantage that a firm may derive out of it. Some of the main disadvantages of reciprocity are  not being able to follow the well laid criteria of quality, price and service.
 

 

A purchasing executive should not indulge in reciprocity on his initiative when the terms and conditions are not equal with other suppliers. It is often found that less efficient manufacturers and distributors gain by reciprocity what they are unable to gain by price and quality. Since this tends to discourage competition and might lead to higher prices and fewer suppliers, reciprocity should be practiced on a selective basis.

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