SUMMARY
Purpose -- The purpose of this qualitative study is to find out how companies manage their relationship with different suppliers to ensure their performance. The aim of the research is to understand how supplier portfolio affects companies’ decision both in selecting and managing the relationship with their suppliers.Design/methodology/approach -- A case study approach is employed to undertake the research, where data collected from semi-structure interviews and companies’ reports.Findings -- Presents indications from a study of three MNCs in FMCG sector in Indonesia regarding their practices in managing risks involved in supplier portfolio. Supplier evaluation criteria still limited on operational criteria, and supplier selection is influenced by politics and buyer’s previous experience. Key risks perceived by companies mainly regarding unperformed suppliers as expected and supplier’s opportunistic behavior, and unstable economic/political condition. Using portfolio model, current relationship with their suppliers is mapped. Most of the companies have not aligned the type of their relationship with the appropriate type of contract and performance measurement. Moreover, a formal supplier rating has not found in all companies, let alone supplier development initiativesResearch limitations -- There are several limitations of the research approach including researcher’s personal bias, limited access to companies and time constraints.Practical implications -- The research findings highlight the implications of applying relationship portfolio model in a practical setting. As well as identifying the key risks in the relationship, the research highlights strategies such as periodic bidding, gaining updated information about suppliers, and setting median price.Originality -- There have not been any studies regarding risk management in a buyer-supplier relationship in MNCs from developed countries operating in emerging country, particularly in Indonesia. The findings have given the first explanation of what companies perceived as key risks in managing their supplier portfolio in the specific context.