In business markets, both buyers and sellers may be motivated to develop a close working relationship for the benefit of both. Such relationships may help both firms improve profits, decrease costs, and reduce relative risk. Both supplier and buyer benefit when they can share information. 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.