Supplier initiated open book accounting: Using accounting information to initiate changes in a services supply chain

In this chapter, we present a case of a supplier that initiated an open book accounting arrangement with its largest buyer to enact changes in the relationship. The supplier delivered bread and pastry products to its buyers, who operate restaurants and eating facilities. Logistics services were a key part of the supplier offerings: the supplier offered over 500 different products of which 70% were sourced from third-party suppliers to some 2,000 customer locations, and since food has a limited shelf life, these locations needed to be serviced multiple times per week. The supplier offered to open its books to its major buyer, a catering firm which managed restaurant locations for its clients. The open book process led to a more intensive relationship, whereby the buyer agreed to adaptations in its processes to achieve savings in the logistics costs. Furthermore, the buyer and the supplier cooperated in the development of new service offerings for the customers of the buyer’s clients. The returns from the relationship improved for both parties: the buyer achieved savings through lower purchase prices and reduced logistics costs, while the supplier obtained efficiency gains on increased transaction volumes