Information about customer needs helps motivate suppliers to improve their end of the bargain. Other areas may include cost data, demand forecasts, and new-product design. Operational linkages are direct ties between the internal operations of the buyer and seller firms. These formal arrangements require extensive coordination. This arrangement reduces inventory and carrying costs.
Operational linkages can also be computer connections between buyers and suppliers.
For example, Wal-Mart has a direct computer connection to Procter and Gamble to speed up order and delivery of their products. Cooperation between buyer and supplier may be critical to making the relationship a success. Here both sides need to be aware of the effect of different company cultures and different individual personalities. Contracts spell out the obligations of each party in the relationship and provide protection to both. Clear contracts can help build a relationship because they reduce the chance of misunderstandings.