The arms-length vendor relationship is a "one-and-done" transactional model. Select the vendor (supplier) and place the order for immediate fulfillment. Cost is fixed per item, unit, or project. Minimal information is shared - usually only a purchase order or purchase card transaction at the time of the order placement. This ordering process may occur online or by telephone. In this type of relationship, no competitive advantage exists. Specifically, the supplier is providing items to anyone, including competitors.
Examples of this type of vendor relationship are:
- big box stores,
- multinational e-commerce shopping (e.g., Amazon), or
- large industrial supply companies (e.g., Grainger).
An online order takes seconds to complete, the item is either in stock or not, the estimated ship date is usually provided, and payment is usually made at the time of the order. Not much going on in the way of a vendor relationship, and that is why the term "arms-length" is used.
Think in the following terms: Your laboratory needs printer ink right away, and you want to order an overnight shipment of the product. As long as your purchasing department/institution allows this method, the order may be placed immediately.
