Safeguarding supply chain relationships

A framework to explain the variety of trading relationships that exist between firms is presented. The present focus is on the need for buyers and suppliers to insure that specific transactions occur. These transactions are integral to the effective execution of the operations strategy of these firms. The techniques used to insure that these transactions occur as intended are called safeguards. Models of the relationships between buyer and supplier in a supply chain are prescribed using principles of game theory and transaction cost economics. Appropriate approaches to quantitative modeling are suggested for the safeguards required by each firm.